skip to Main Content
MariMed CEO Jon Levine and the Making of a Cinderella Story

Norwood, Massachusetts-based MariMed Inc. (MRMD; OTCQX) underwent a profound loss in December of last year with the unexpected passing of Bob Fireman, its co-founder and chief executive and a man who, as I quickly learned during an interview in December 2021 for Cannabis Business Executive, was an effusive and energetic cheerleader for MariMed’s message of quality and value, and a categorically likeable fellow. Often referred to as a visionary, one could only guess the extent to which his loss was a blow to the company, especially during a rough patch for the cannabis industry, when leadership and clarity of vision is paramount for any company. Could MariMed veer off-course as a result?

The answer is not only a solid no, but it turns out that the reasons why MariMed, which recently released its Q4 earnings, remains so solidly on course are the same reasons why Bob Fireman was considered a visionary. As co-founder and CEO Jon Levine explained during a recent call, the values that define MariMed have remained the same since he and Fireman began developing them back in 2005, when the friends and partners first dipped their entrepreneurial toes into the wild west of California cannabis. It’s a story Fireman recounted in 2001, and in Rashomon fashion, Levine also shared.

Jon Levine, CEO

The story involves a rooftop garden business Fireman was trying to export to California during a time when Gavin Newsom was mayor of San Francisco. “Bob was waiting for his rooftop garden to get permitted in California when he found out that he couldn’t get the permit or the funding,” recalled Levine. “He asked his staff to return to the New England area, but they said, ‘We have something we want to show you. While we’ve been waiting, we opened a grow house in Aptos, California.’ They put a business plan together and Bob shared it with me, and sure enough, I flew out to Aptos, where I learned about cannabis in 24 hours. I said, there’s something here, and that’s how Bob and I got into the cannabis business.

“From there, we grew from managing and owning a facility in California to buying real estate and helping a group open the first cultivation and dispensary in Rhode Island,” he continued. “We did the real estate and the financing for that deal, along with writing applications for many other people, and that’s how MariMed came about. We were writing applications, managing real estate, and advising people on how to run cannabis facilities, but it all started with Bob and me in California on a whim.”

The lessons learned were sourced from the ground up. “MariMed started out as a consulting company, working with others to get their applications approved, and when they won, we would build out their facilities, and we would monitor and run the build-out, the training of the staff, the oversight, the front end, the back end,” said Levine. “We built those companies into profitable organizations which we eventually rolled into MariMed when we decided it was time to move over to the plant-touching side.

“Our goal is to help people’s lives every day through the products and actions and values that we make, and that hasn’t changed,” he added. “Those are the same values we’re out here working for today, to continue building this company to help people, and I think we’ve done a very good job. We’re expanding into multiple states – we’re entering Missouri now and Ohio this year – and we’re very excited about our growth.”

Even though MariMed is based in the Boston suburb of Norwood, Massachusetts is the only New England state on the list of six states where it has or is expecting imminent ownership or management footprints. The others include Illinois, Maryland, Delaware, Ohio, and Missouri, with the latter two slated to become operational later this year.

“We’re on track to open up a processing center in Missouri mid-year of 2023, with a processing license,” said Levine. “We’re also hopefully opening up a retail store in Ohio before mid-year that we won the retail cannabis license for. That is supposed to be in Q2, and we’re very hopeful that they’re still on track with regulatory approval.” He added that hindered regulatory approval has slowed development in many states, “but we’re hoping that Ohio moves a little quicker.

“We’re also growing deeper in states that we’re already in, like Illinois, where we’re building out a brand-new cultivation and processing center on a license that we purchased for craft grow and processing,” he continued. “We’ll be building that out this year, with our first products hitting the Illinois market once again. Betty’s Eddie’s was in that market several years ago and was the number one edible, and we’re very happy to bring it back to Illinois as the manufacturer of that product, along with our other products – Bubby’s Baked, Vibations, and our Nature’s Heritage flower. So, we’re happy to get back into that state with our edibles, but we’re really happy about becoming fully vertical in the state of Illinois.”

The company is also expanding in Massachusetts. “We have an additional two dispensaries that we’re opening,” said Levine. “One, which we just finished with the purchase for, is Ermont, in Quincy, and we’re waiting for regulatory approval in Beverly. Once we have that, we’ll have our maximum licenses within that state for retail locations, but we will still have the ability to add an additional medical license.”

I asked if he had any concerns about over-saturation of retail or production in the Massachusetts market. “I grew up here in Massachusetts with Bob,” said Levine. “We’re very excited about the Massachusetts market. There was some price repression in 2022, as there’s an overabundance of flower on the market, but our Nature’s Heritage is still a top-selling flower, we still are on the top-shelf pricing, and that’s because of the quality of flower that we produce. We like to grow more as a craft-type grower, where we give a lot of love and care to our flower, but then our branded products, Betty’s Eddies, Vibations, and Bubby’s Baked, have also been very successful as we continue to build in this market.”

The addition of new stores will only help, he added. “Beverly is adult-use and Ermont is medical today until we’re able to add adult-use, which we’ve applied for,” he said. “That will give us three dispensaries, two with medical and rec, and one that is just rec until we can find another host agreement or get Beverly to support us in a hosting agreement for medical, after which we’ll have our maximum of three each.

“The Massachusetts market currently has over 200 dispensaries, and I’d say we presently service about 95 percent of the market with our branded products through our wholesale business,” he said. “Adding the dispensaries onto that, we will also expand our grow and processing facility, which will handle the increased demand for our products not just in our stores, but in every store in Massachusetts.”

Massachusetts is a special market, noted Levine. “My background was in mass merchandising in the manufacturing sporting goods business, and it was amazing to learn that the Northeast was a very dedicated, loyal area where, once you get into this market, it is really a great market,” he said. “Today, this market still supports the mom-and-pops, and I think cannabis is interesting because of the way that New England is capping the number of licenses you can have, which keeps that local flair, and I think there’s still plenty of market in this economy for all of the dispensaries that are here. The problem is that some people just don’t know how to manage them correctly, which is how we got Ermont, and we’re very excited to be able to go in there and fix that [store] and put in a nice facility to bring back customers and give them the customer service and the loyalty programs that we have to offer.”

I asked about Maine, which I thought MariMed had a footprint in. “We have nothing in Maine right now other than two partners we do branded product licensing with,” explained Levine. “They produce our Betty’s Eddie’s, Vibations, and Bubby’s Baked, and put them into the market there for a royalty.”

Moving a little farther south, MariMed is also in Maryland, where it currently operates one cultivation/processing facility and a retail dispensary. Despite seeing a big pricing decrease last year across the entire market in every state, Levine is decidedly upbeat. “Maryland will see an increase in demand, and the supply will level out, which will help pricing level and actually maybe go up a little bit,” he said. “I think the state is doing a terrific job trying to make sure that they get the laws written correctly so that there is a fair market where you can have expansion but still have limited licenses that will keep the consumers happy, so that the prices are at a level which are reasonable but with a good and steady supply [of product] across the state.

“There’s competition out there, but that’s all right,” he added. “That’s what business is all about, having fair competition and a level playing field. This is a regular business like any other business, and you just have to understand how to grow at the right number and keep your margins and pricing at the level that it needs to be to be competitive.”

The Primacy of Brands

Creating brands that resonate with consumers has been a centerpiece of the MariMed strategy from the get-go, and it’s also the reason why they are only in a handful of states. “We’re not in every state because we want to have the Coca-Cola,” said Levine. “We want to make sure that the products that are out there are consistent and that you’re going to get that same taste, quality, and effect every time. That’s why we took our time finding partnerships and making sure that Betty’s Eddie’s or Vibations are number one in each state as we brought them in.

“That’s also the reason we’re able to successfully launch additional flavors or new products such as the Betty Eddies Ice Cream,” he pointed out. “We’re expanding those markets but also keeping it under control so we don’t lose that consistency and flavor, so that customers will always want to go with Betty’s or Bubby’s or Vibations, because they know the name and they know the quality that they’re going to get.”

According to Levine, branding is an essential component of the growth of both MariMed and the cannabis industry. “Branded products are the future of this whole industry,” he stated flatly. “And that’s where we’re trying to have the biggest growth, through our Bubby’s Baked, our Betty’s Eddie’s, Vibations, InHouse; those are the things that will be the key to the future. Who’s going to make that one brand that’s really known worldwide or countrywide?” The same commitment to consistency and quality applies to the company’s retail brand, Panacea Wellness.

I wondered if MariMed gets a lot of outreach from people that want to carry their brands, but are located in states MariMed is not currently in. “Yes, we have those conversations quite frequently,” he said. “But again, it’s finding a partner that has similar beliefs and thoughts as us, but also has a facility that’s going to grow and manufacture the proper oils or flower that we want to put into our products, that are willing to follow our SOPs and guidelines, and allow us to come in there and monitor how they’re doing, so that we can make sure that when we send out Betty’s Eddie’s, it’s Betty’s Eddie’s with the same quality, same taste, same flavors, same effects.”

There are other factors that make states more or less attractive from a cannabis perspective. “California is a very tough market, a very large market,” said Levine of the Golden State, where he and Fireman cut their teeth. “When you’re talking about the size and the amount of population that you can reach, it’s a different country. It’s the controls that are a little bit unorthodox compared to what we’re presently dealing with in states such as Massachusetts, Maryland, Ohio, and Illinois, where there are more controls.

“It’s part of the issue that New York is going to see,” he added. “Their control over licenses and the people that are selling illegally right now is out of control. I think that’s what affects those markets, because you can’t make the margins that you need to make, which is why we haven’t been able to get a partner in California to carry our Betty’s and Bubby’s and Vibations. The margins are so low that they can’t afford to pay a royalty and make anything because the market there is so competitive, and there’s very little control by the state.”

Florida, on the other hand, would seem to be tailor-made for MariMed. “Florida is a great state,” enthused Levine. “Unfortunately, it’s a seed-to-sale state, so it’s all about producing, manufacturing, growing, and then selling all your own products within your own retail stores. There are a lot of licenses down there, and we’ve looked, but we haven’t found a partner or a license that we would want to purchase for the right price. People still feel that their locations are worth a lot more money than they truly are. We’ve been very diligent to not overspend for anything that we do to grow our business. We’re very patient, and we’re tactfully that way to make sure we have a strong balance sheet and income statement.”

Fiscally Disciplined

The ability to say no was an original formulation of the company. “Bob and I were both in agreement that we needed to be more disciplined,” said Levine. “We weren’t going to go out, raise money to buy to expand our business, and not care whether it made money or cash flow. We’ve always been very diligent to make sure that everything that we did was financially reasonable and the right move for our shareholders, which are our number one priority.

“Finding the right deals that make the most sense without putting stress onto our stock or our cash flow are very important,” he added, “and we are still following that same strategy today. Don’t rush to be number one by just buying and having no profit. We want to have both. We want to have the profits, grow the business, and be in positive cash flow, like we’ve been doing and will continue to do.”

MariMed ‘s discipline would seem to be especially valuable in an economic environment that can change on a dime, like a banking crisis striking out of nowhere. “Yes, this is a very scary time, not just for the cannabis industry, which has a very difficult time being able to get money,” said Levine. “Borrowing money is very difficult because we don’t get the traditional banking. Most bankers are not willing to talk to us if they’re one of the big banks, and if you get an account in those banks it’s because you don’t have just cannabis but are doing other things. Credit unions and local banks have been very helpful to work with us for depository, but there’s very little money available out there, and the debt market and the capital markets have all dried up.”

MariMed exercised extreme discipline even during the gold rush days, he added. “Bob and I had an opportunity to go to Canada before that market even hit the levels that it had hit, but that wasn’t how we were trying to grow,” said Levine. “We were growing by setting-up facilities that we built from the ground up, and bringing in the teams and the people to manage them and train them using the same SOPs. We built a great management team here at MariMed, and we know how to bring in people to do everything at each of the locations and maintain them.

“So, we get consistency,” he continued, “but it also brings with it the positives: the positive income, the positive cash flow, a very strong balance sheet. And yeah, banking is going to be very tough. It’s not going to help that we won’t be able to get the Safe Banking Act passed easily because there are bigger bank issues that are not about cannabis, but about the real world and the rest of the banking community that we all have to be worried about.”

In addition to self-discipline, did MariMed have contingency plans in place for the unknown? “That was one of the most important parts that Bob always preached,” said Levine. “Bob always said to me, ‘You’ve got to make sure that the costs are all in line, that we can produce a pound of flower that will be lower than what the lowest price could possibly be on the market.’ We have strived to be able to do that in every market that we’re in and maintain that. It’s understanding how to operate around the 280E rules. That is something that we’re constantly reviewing and making sure that we’re prepared for, but we build every facility, and we do everything that we do really for the future.

“We just got our cGMP certification in Maryland for our kitchen,” he cited as an example. “Those are the types of things that are going to be required as legalization comes on. You have to be compliant with the Food and Drug Administration if you want to be able to operate. So doing those things now prepares you for the future, but you have to do them now and do them right so that the cost is still in line with the ability to keep your margins and cash flow.”

I asked Levine, who had worked in the real estate industry, what he is seeing in the commercial real estate market. “I’m still in the real estate industry,” he corrected me. “I’m seeing prices not dropping even though rates are going way up. So, the bargain deals still aren’t there on the real estate. However, owning the real estate is still much better in this industry. The fact is, rents are so high that we prefer to own our facilities, because you’re safer and it’s a lot easier.”

What about the prospects for M&A in general and with MariMed specifically? “We’re always looking to acquire, but we don’t want to be acquired,” said Levine. “With M&A, I think real values are starting to come back down to reality, that the large dollars are no longer real, and that you can sell a license in the area where they should be sold. There was so much money on the market when the Canadian market was going crazy, and everybody had money to spend because they were raising it through equity or capital. Now that money has dried up, so there’s not as much to purchase out there with high-priced numbers.

“I think we’ve done a great job of waiting,” he added, “and we’re now able to pick the ones that best fit us that we can turn around and make more money with, or that are licenses that haven’t been built out where we can build them out in the fashion that we know they should be built out, and are not overpriced.”

As it continues its steady expansion, MariMed is hiring. “We’re looking to add about 200 employees this year to our current 600,” said Levine. “We’re going to be hiring people from the mid-top-level to the beginning-entry-levels, where we’re going to need security and trimmers and packagers and growers, and the people to manage those people, at our facilities as we continue our expansion.

“I would like to hire local,” he added. “Local is always the number one priority, but being a company of our size, we also like to offer our employees the ability to expand within the company and move from state to state. So, we’re always willing to add people from other states that are already working for us, but it’s preferable to hire employees that are local to the communities that are supporting us.”

As a final question, I asked Levine how he viewed MariMed in terms of its size as a multistate operator. “I’d have to say that we’re a tier two, and we’re working our way to be a tier one player as quickly as possible.” he answered without hesitation.

It was a comment that aligned with his remarks during the earnings call in early March, when he compared the road MariMed has traveled with the fortitude and talent it takes to succeed in the NCAA Division I basketball tournament. “If cannabis had its own version of March Madness, I think MariMed would be the Cinderella story,” said Levine. “We earned our way into the tournament, but no one gave us a shot to win.”

Tom Hymes

Tom Hymes

Tom Hymes, CBE Contributing Writer, is a Connecticut-based writer and editor with over 20 years’ experience covering highly regulated industries. He was born and raised in New York City. He can be reached at [email protected].

This Post Has 0 Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

Recent Stories

Dug In: Big Island Grown’s Deep Cannabis Roots

Big Island Grown (BIG) is a vertically integrated cannabis company based in Kailua-Kona, Hawaii County, on the Big Island of Hawaii, whose reach now extends to several islands in the…

Unlock the Secrets of Social Media for Cannabis Brands

There are three primary ways that brands can use social media platforms for marketing: organic posts, shared posts, and paid posts. With paid posts still off limits to most businesses…

California’s Cannabis Industry Conundrum and the Road Ahead

By Aaron Pelley, Attorney at Harris Sliwoski Despite continuously surpassing every other state with recreational cannabis in terms of total retail sales, California’s cannabis industry has faced continuous and far-reaching…

The High Rate of Dependence Among Medical Cannabis Users

The difference between medicinal and recreational marijuana has always been arbitrary. For example, after legalizing recreational cannabis, California initially required each cultivated seedling to be designated by growers as either…

More Categories

Back To Top
×Close search
Search