Curaleaf President & Incoming CEO Joe Bayern joins Yahoo Finance Live to discuss the outlook for the marijuana industry in the new year and explain why all Americans should have legal access to cannabis products.
ZACK GUZMAN: Welcome back to "Yahoo Finance Live." It's been a busy week in cannabis. Not only did we get news of a merger between Canadian giants Tilray and Aphria to create the largest cannabis company by revenue but we also got New Jersey's state assembly passing the bill that will lay the groundwork for legal sales of marijuana. That should begin next year in New Jersey.
And for more on all that, let's bring in the incoming CEO at US multistate operator in Curaleaf. Joining us now is Joe Bayern, and here he is. Joe, it's good to be chatting with you again.
I mean, we could put the Curaleaf stock up here because that stock's now trading at a new all-time high. I guess we can start on the deal between Aphria and Tilray because there's a lot of talk about potential, at some point, expansion by them into the US market. For you as a company that's already operating here in the US, does that maybe put pressure on you guys to accelerate the buildout, maybe invest a bit more now to maintain your lead? How does that deal maybe change Curaleaf's strategy?
JOE BAYERN: Yeah, I don't think it really changes our strategy very much. You know, we've always been very focused on just building out a platform in the US, which we think is the most attractive market in the world. So we're going to continue to do that. You know, we have a very simple strategy. We want to create national brands in the cannabis industry. And in order to do that, we need to continue to build out our national platform.
So while there, you know, is some movement around us and some activity in the space, you know, we're very focused on what we need to do to build out our business, which is continue to build out our platform and build brands that people love and can trust.
ZACK GUZMAN: Yeah, and when we look at it too, I mean, you know, those Canadian companies have seen growth slowing. You guys, by focusing in on what you've been doing here, have not had the same problem. But your background is in beverages. You used to be the CEO at Voss. Before that, also at Cadbury Schweppes. Is there may be a push for Curaleaf to maybe at one point focus in on beverages here, or what's kind of the portfolio mix you're thinking is going to be able to help you guys continue the growth you've seen so far?
JOE BAYERN: Yeah, I certainly expect to leverage my background in the beverage industry. I think at some point beverages will become an important sector in cannabis or segment of cannabis. But we're really focused on bringing a multitude of different form factors to the marketplace.
As you know, today cannabis is roughly 50% flower, but we think the big growth opportunity coming forward is going to be, you know, alternate form factors for consumers who are not yet consumers in the marketplace. So whether it's beverages or potentially gummies or other edibles or tinctures or lotions, we believe all of those will play a role in helping to bring new consumers into the marketplace.
ZACK GUZMAN: How do you see that playing out though? Are you looking maybe to partner up eventually with a beverage giant? Aphria obviously bought out SweetWater, an Atlanta-based craft brewer, earlier this year for $300 million. We know that Canopy Growth, largely backed by Constellation Brands, is going to be expanding with their beverages here this summer. How quickly are you looking for something like that, and what might the strategy be? Is this a go-it-alone kind of deal at Curaleaf?
JOE BAYERN: Well, we'll see how-- it's hard to predict how the future unfolds. I'm not sure SweetWater was the beverage giant that people would be thinking about, but, you know, I think there is an attractive opportunity to bring trusted brands into the marketplace.
I think we're building, you know, a unique platform in the marketplace. We're now available in 23 different states. We have over 2 million square feet of cultivation. So we're creating a distribution platform that, you know, is going to be attractive to our company as well as potential strategic investors.
So, you know, we're really focused on building out the science behind the plant today because, at the end of the day, the thing that's going to tip the scale is creating differentiated products in the marketplace. So we continue to invest in research and development behind major technologies, new product development, and commercialization of new products, and we'll continue to do that for Curaleaf. But if the right opportunity comes along to partner with some kind of strategic player, we'd be happy to entertain that discussion.
ZACK GUZMAN: Yeah, you talk about the US footprint there. Obviously being based in Massachusetts, you've got a little bit of maybe an advantage there to operate in one of the states we were talking about coming online next year. And New Jersey, the state assembly there voted to kind of lay out the framework, including a cap at 37 cultivation licenses for when that rolls out. The governor there has talked about waiting a bit before we start to see retail sales come through there, hopefully by at some point next year but certainly not at the beginning of January.
What do those plans look like to you guys as you build that out? I mean, 37 cap of licenses will probably help companies like yours that are already there operating in New Jersey kind of establish and maintain their lead there. But what do plans look like to grow that out, and how quickly can you act on it?
JOE BAYERN: Yeah, you know, we're very excited about New Jersey. Obviously they're moving pretty quickly. We're very excited that the legislation has been finalized and now just waiting for the governor's signature because we think it could be not only a very attractive market on its own but we think it's really going to act as a catalyst for the rest of the Northeast states to think about adult use.
So we think it's a great market. We have a leading position in the marketplace. We're the number-one player in New Jersey, and we continue to prepare for adult use by building out our cultivation and bringing new products into the marketplace.
So we're expanding our footprint in retail. We're expanding our footprint in capacity of cultivation. We're expanding our distribution capabilities, and we're expanding our product portfolio. So we are ready for the change to adult use, and we're very excited about it.
ZACK GUZMAN: How quickly do you think that accelerates maybe the pressure on some neighboring states there, including New York, to pull forward their plans on cannabis? We had talked to Joe Lusardi, your predecessor, about that, saying it's going to be pretty intense for Governor Cuomo to see that happening in New Jersey and not do something similar here. So what are your expectations?
JOE BAYERN: I have to agree with Joe. You know, it would be hard for us to believe that New York, Connecticut, Pennsylvania aren't seriously thinking about accelerating their entry into adult use. I know we've been working with several of those state legislative groups to help think about what an effective program could look like. But I think not only is there momentum from a consumer perspective of people accepting cannabis and wanting cannabis to be legalized, but obviously there's a lot of pressure on these states from a fiscal standpoint. And there aren't many other sectors that are growing the way cannabis is growing, creating jobs, creating tax revenue. So we would find it very difficult to believe that people are not seriously considering adult use very quickly.
ZACK GUZMAN: Yeah, and as we see states legalizing, it is interesting because, you know, it seems like if the Senate stays Republican controlled, getting the MORE Act of course the House passed it, which would legalize cannabis federally. It's interesting because it seems like that keeps getting pushed out. I was surprised to hear your chairman, Boris Jordan, talking about why it might not be good to get the MORE Act because it could embolden the illicit market.
But it seems to me that the social issues here are pretty keen. And New Jersey, they're going to be distributing about 70% of those tax revenues back to communities of color that have been impacted by America's war on cannabis. There are a lot of activists out there who want the MORE Act because it would address some of those issues.
And I guess once you have companies like yours profiting off this, a lot of people are decrying the fact that you still have many Americans who are locked up in jail for selling cannabis here. What do you make of maybe the push on the social-justice front and what New Jersey's doing and what we've seen in states like Illinois do to redirect some of those tax revenues back to communities of color impacted by all this? How do you weigh maybe those pros versus obviously the capitalist nature of maybe being a company in this space wanting to maintain control over selling cannabis here? How do you weigh all those things as you see legalization move forward?
JOE BAYERN: Yeah, there are a lot of moving pieces there. I think, you know, first and foremost, we believe that everybody in the US should have access to high-quality, affordable cannabis products. So we're a strong advocate for having availability of cannabis across the US.
How that rolls out is-- there are a lot of nuances involved in that. And I think today we see a path where, you know, on a state-by-state basis, more and more states are adopting adult-use programs for many of the reasons we just talked about, which is not only the ability to give people what they're looking for-- you know, consumers what they're asking for-- but also to create tax revenue and create jobs in the state.
So we're pleased that those tax revenues are finding their way to social-equity programs. We want to create opportunities for all communities in different states, whether, you know, they are socially advantaged or disadvantaged.
You know, we are focused on how do we actually create opportunities in the marketplace? So whether it's through government funding or mentoring programs that we're rolling out at Curaleaf or working somehow with people who want to get into the industry from a financing standpoint or some kind of franchising scenario, you know, we're always looking for ways to create new opportunities in the marketplace.
So I think it's going to be a combination of all those things over the next couple of years as the market matures. I think going all the way to full legalization will take some time, especially, as you said, if the Senate is Republican. But I think the continued momentum behind cannabis will help. You know, we certainly have the wind at our back. And as we work with these states to roll out programs, it's not only about bringing cannabis into the marketplace but it's creating opportunities for all these different communities.
ZACK GUZMAN: All right, Curaleaf president and incoming CEO Joe Bayern. Appreciate you joining us there on that, and happy holidays, sir.
JOE BAYERN: My pleasure. Thank you.