Navigating the Highs and Lows of Cannabis Business with Frank Perullo Broadcasting live from MJ BizCon in Las Vegas, Karson Humiston had the pleasure of sitting down with Frank Perullo, the co-founder of Ascend Wellness, a name that's become synonymous with success in the cannabis industry.
Broadcasting live from MJ BizCon in Las Vegas, Karson Humiston had the pleasure of sitting down with Frank Perullo, the co-founder of Ascend Wellness, a name that's become synonymous with success in the cannabis industry.
They dove into a rich conversation about the evolution of the cannabis industry, Ascend's growth, and the challenges and triumphs of being a cannabis entrepreneur. Frank's journey began in 2012 when Massachusetts passed its medical cannabis law. As a political consultant and lobbyist, he saw an opportunity where others hesitated, leading to the creation of a cannabis practice that leveraged his expertise in land use and advocacy.
The pivotal moment for Ascend came in 2018, as adult-use cannabis was on the horizon in Massachusetts. Frank teamed up with his business partner, Abner Curtin, to leverage their combined skills in investing and consulting within the cannabis space. They faced the daunting task of securing their first retail license in downtown Boston without any direct cannabis experience. Through strategic hiring and a relentless work ethic, they not only secured the license but also expanded into Illinois and Michigan, setting the stage for Ascend's presence in seven states.
Frank shared insights on building a team that embodies intellectual curiosity, a high motor, and a customer-centric approach. He emphasized the importance of perseverance and the ability to navigate the industry's unique challenges and barriers.
As Ascend grew, Frank transitioned into a director role, focusing on expanding into new markets and working with government partners to advance the industry. He stressed the significance of founders stepping back at the right time to allow their companies to flourish under new leadership.
Reflecting on the state of the industry, Frank predicted that 2024 could be a monumental year, especially if the government removes the burdensome 280E tax code. He highlighted the importance of focusing on quality and customer service as key differentiators for successful companies.
Frank also shared his perspective on state programs, praising New Jersey's rollout and critiquing New York's over-regulation. He advised politicians to create a regulatory framework that encourages a thriving, legal market.
Looking ahead, Frank is excited about the job creation potential within Ascend and the broader industry. He expressed pride in working in cannabis, citing the plant's power to improve lives and the industry's unique community.
In closing, Frank's passion for cannabis and his commitment to the industry's growth were palpable. His story is a testament to the entrepreneurial spirit that drives the cannabis industry forward, and it's clear that Ascend Wellness is poised to continue making waves in the years to come. https://www.awholdings.com/
TIMESTAMP:
00:00:17 - Introduction to the Podcast
00:00:27 - Frank Perullo and Ascend Wellness
00:01:13 - Evolution of MJ BizCon
00:01:23 - Changes in the Cannabis Industry
00:01:34 - Frank's Background Before Cannabis
00:01:48 - Frank's Entry into the Cannabis Industry
00:02:50 - Formation of Ascend and Licensing
00:03:53 - Pursuing the First Retail License
00:04:52 - Recruitment and Licensing Challenges
00:05:04 - Expansion of Ascend Wellness
00:05:49 - Building a Hardworking Team
00:06:24 - Traits of Successful Cannabis Industry Workers
00:07:22 - Transitioning to a Director Role
00:07:54 - Hiring a New CEO
00:08:05 - Frank's Current Role at Ascend
00:09:01 - Advice for Founders
00:09:12 - Frank's Day-to-Day Activities
00:10:21 - State of the Cannabis Industry in 2024
00:10:57 - Impact of 280E Tax Code on the Industry
00:11:53 - Advice for Politicians on Cannabis Program Rollouts
00:12:55 - Successful State Cannabis Programs
00:13:58 - The Importance of Strategy in Business
00:14:23 - The Future of Ascend Wellness
00:15:30 - Creating Jobs in the Cannabis Industry
00:16:33 - Lessons from Operating in Michigan
00:20:34 - Frank's Excitement for Ascend's Future
00:21:08 - Why Frank is Proud to Work in Cannabis
QUOTES:
"I think that cannabis founders, myself included, have a couple of loose screws, because who would sign up for this? It's a little crazy." - 00:01:34-00:01:44
"And I thought the opportunity was right to sort of step into a place where those white shoe lobbyists, the more formal folks who wear the suit and ties every day, would not wait." - 00:02:10-00:02:20
"And I remember calling you and saying, we need someone with real great retail and cannabis retail experience." - 00:04:04-00:04:15
"It was hard to find talent. It was hard to get construction going. Everything was a challenge." - 00:05:14-00:05:24
"You seem to have been an underdog who ultimately outperformed a ton of people, how did you scale that talent that you have to other people?" - 00:05:49-00:06:09
"Are you intellectually curious? Do you have a high motor? Can you withstand lots of pivots and changes and not drive yourself crazy?" - 00:06:34-00:06:55
"You have to stay level and you have to take the good with the bad and you have to realize that you got to get up the next day whether it was a great day or a terrible day and do it all over again." - 00:11:18-00:11:29
"We walked away from the deal with MedMen in New York. You heard it here first." - 00:15:30-00:15:41
"Strategy is what you don't do. So how you allocate capital and what you focus on really matters." - 00:16:33-00:16:44
"I am most excited about the jobs we're going to create over the next coming years." - 00:21:08-00:21:19
Karson Humiston: Hey everybody, and welcome back to another episode of the Proud to Work in Cannabis podcast. We're here live from MJ BizCon in Las Vegas. Very excited to have Frank Perullo, who is the co-founder of Ascend Wellness. I'm sure everybody here has heard of Ascend, but we're gonna talk a lot about it today. Frank and I have known each other for, feels like a long time in the industry, but this is the first time in a while that we've actually got to sit down, so I've been really excited for this all day. Thank you for being here today, Frank.
Frank Perullo: Really appreciate it. This is really wonderful to be able to be here and spend some time with you and all the folks in the industry.
Karson Humiston: So Frank, how many times have you been to MJ BizCon?
Frank Perullo: I think this is my seventh.
Karson Humiston: So the first time that you went, was it still at the Rio or was it already in the convention center?
Frank Perullo: It was at the Rio and a lot of the parties were in houses rented outside of the Strip. It was a different conference.
Karson Humiston: It was a very different conference back then. It's funny because a lot of the people we've had on today were like reminiscing about back then to now and it really hasn't been that long, but it feels like a really long period of time. Yes. I want to talk about all the ways the industry has changed and how your business has grown, but before we do that, I think that cannabis founders, myself included, have a couple of loose screws, because who would sign up for this? It's a little crazy. So I'd like to dig into what you were doing before cannabis that led you on this path. So could you walk us through your life pre-cannabis in a nutshell?
Frank Perullo: So that goes back to when I was 14, because I started consuming cannabis when I was 14. But professionally, in 2012, Massachusetts passed the medical law there. And no one wanted to take on cannabis as, you know, an ancillary industry in Massachusetts where I was a political consultant and lobbyist. And I thought the opportunity was right to sort of step into a place where those white shoe lobbyists, the more formal folks who wear the suit and ties every day, would not wait. So we started a cannabis practice and started taking the lessons we had learned from all land use matters and advocacy up at the state house and in city halls and put those actions into work for the cannabis industry and built a really good practice around getting businesses off the ground in Massachusetts.
Karson Humiston: And then at some point you thought to yourself, I'm going to do this.
Frank Perullo: So fast forward to 2018 as adult use was coming to Massachusetts. We had passed it a few years earlier. And Massachusetts, like most of the large legislative items or ballot questions, it takes a while to implement. We're very deliberate. So it took a few years. And as it approached, I was approached by my now business partner, Abner Curtin, who was investing in the space. And I was consulting to the space. He thought that combined we would be able to do a better job than his investments and my clients. So we formed Ascend in April of 2018.
Karson Humiston: So you formed Ascend, then you went for a license, which you had some experience with, so that was a competitive advantage that you had out of the gate. What was the process of winning the license and actually getting operational like?
Frank Perullo: Yeah, so we started in Massachusetts and the company was going to be a Massachusetts Vertical and that was it.
Karson Humiston: I remember working with you back in those days and helping find some of those early retail staff.
Frank Perullo: That's right. We were going for our first retail license that we were pursuing was in downtown Boston. And we had no cannabis experience. And I remember calling you and saying, we need someone with real great retail and cannabis retail experience. Because, you know, to pursue our license in downtown Boston, there were none issued at that point. So we were going to be, or trying to be, the first retail store permitted in Boston to serve BdellU's customers.
Karson Humiston: And I remember when we did that, we said, OK, so here's what we'll do with the candidates. It'll be a conditional job offer. And then you could put them on the license. And then if you win, then you get to go on it. I remember the candidates were so hoping that you got the license. They were constantly calling Kelsey Applebaum, who was the recruiter on the team that was working with you guys. The candidates were so excited and hoping that you were getting the license. They were like, do we know if they got the license? Do we know if we actually got the job? And you did. We did. And some folks moved out.
Frank Perullo: We did, yeah. And we, you know, that store took a while to get open and operating. And in between, we acquired assets in Illinois and Michigan and, you know, and so on. And, you know, now we're in seven states, Berkeley in six. But those early days, it was hard to find, it was hard to do everything, right? It was hard to find talent. It was hard to get construction going. Everything was a challenge. What we were trying to do was, you know, it took other MSOs one, two years, can we do it in six months? So, because we, you know, we started in 2018 and the GTIs and the Curaleafs were the companies that we were looking up to saying, can we do that? Can we do it better? Can we do it quicker?
Karson Humiston: And so when you think about building a team in those early days and finding people that had the mindset of can we do it better, can we do it faster, how do we outwork people, right? I mean I think we've had so many great people on this podcast and a common thread is outworking everybody else, right? You seem to have been an underdog who ultimately outperformed a ton of people, how did you scale that talent that you have to other people? Because I think a lot of founders struggle with this. It's like I can outwork everybody, but how do I get my staff to outwork everyone and I think that's something that you and Abner and the team at Ascend and board members like Emily Paxia, like you guys just everyone around you works so hard and it's like a contagion. I want to know like how do I get my employees to work as hard as Ascend employees?
Frank Perullo: Yeah, I think you're looking for traits, right? So cannabis knowledge back, even back in 2018 and certainly well before, this industry is a lot older than that. Who has experience? Who doesn't? Do you look for someone from CPG? We went through all of those various machinations, but what we ended up coming to was Are you intellectually curious? Do you have a high motor? Can you withstand lots of pivots and changes and not drive yourself crazy? And constantly look for the truth. And I would say the last thing that I also was interested in is are you interested in keeping the customer always with you, right? Whether you're growing the cannabis or you're serving a customer at retail, is that customer the most important thing to you? So, and taking yourself out of that, the ego out of it. Those are the traits we look for. And, you know, it was some of the best talent within those parameters, cannabis or not.
Karson Humiston: So as the founder, you have watched the business grow. At what point did you decide to really move more into a director role and work on the business versus in the business and for when you give advice to other founders, what's the right moment to take a little bit of a step up? I know you recently hired an incredible CEO. As a founder myself, I sometimes think about like what is the right, when is the right, how do you know when the right moment to move to a director role.
Frank Perullo: It's now. It's now for you.
Karson Humiston: It's now for me. Make the move. I'm done.
Frank Perullo: See you guys. That's it. It's an interesting inflection point where you have a bunch in these businesses. And for me, and Abner to some degree I'm sure as well, over the last two years we're approaching 2,000 to 3,000 employees, we're approaching operations in seven states and we had, neither of us had ever run organizations of that size. And at some point, you have to remove the, well, we know more than others mantra. Because we built the company, we made most decisions, and a very tight command and control is not what's going to get you there. You need to bring an organization in that's going to fight for the customers and the employees every day. And so I think It was a hard decision to make because it's your baby, but it's the right decision and it's a decision that I hope most founders in this industry make at some point. Because I think it helps the company take the next step and build a team that again puts the customer first.
Karson Humiston: So as you've gone through that transition, what does your day-to-day look like now versus for so many years I can imagine you were in the business, grinding it out, doing every single job. You can possibly imagine whether it's stepping in and being a buntender or going to work in the growth. We've talked about it, you've worn literally every hat. What is your day in the life look like now?
Frank Perullo: Well on Mondays I grind up about a quarter of weed and I roll my joints for the week. Perfect. And then seriously though, it is interesting. I'm trying to help the company expand into new markets, expand into our current markets, and look for ways that we can work and partner with government, both local, state, and federally, to try and move our company and industry along. I think we've been formed as an industry with government as a partner, whether we like it or not, and whether they're a good partner or not. sometimes they are, sometimes they're not. So what I've been trying to do is find where that intersection can be and how we can work with them to create a better industry because they're state by state and city by city and the entirety of it has a lot of things to iterate on and I think we've been trying to do that.
Karson Humiston: I want to get into talking about just state of the industry, but one more personal question for you before I go there. If you could look at yourself in 2018 when you were getting ready to start opening up your first dispensary, what piece of advice would you give yourself? There's a lot of… Or would you give yourself? There's a lot of people out there that are opening their first dispensary, opening their first cultivation facility in a new market, getting going, that look to you, rightfully so, as a leader. what would you tell yourself and what should those folks be telling themselves as they embark on this journey?
Frank Perullo: Yeah, I often quote this interesting Simpsons episode where, you know, Homer's talking about the highs and the lows and, you know, he talks about how the creamy middles are the best. So what I tell every business owner is you can't get too caught up in how good things are today because tomorrow they'll be terrible. You have to stay level and you have to take the good with the bad and you have to realize that you got to get up the next day whether it was a great day or a terrible day and do it all over again. So the perseverance, the will to continue and keep going and don't let anything sort of stop you. There's lots in this industry that try to stop you. There's always barriers of entry, barriers of moving forward, there's barriers thrown in our way more than any other industry that I've seen and I've been a part of a few and you have to just get up and shake it off and move on.
Karson Humiston: I was listening to this podcast the other day, I need to figure out who it was because now I've quoted it a bunch of times, but he was like, people's heartbeats go up and down and up and down and up and down. And he was like, when your heartbeat goes flat, you're dead. And he was like, so you want your heartbeat to be going up and down. And he was like, and the important thing is that when you're on a downbeat, know that you know, there's an upbeat coming. So hunker down, but when you're in an upbeat, don't get too, you know, on your high horse because you can get too overconfident because there's a downbeat coming right around the corner. And even in the last five years of cannabis, right? We've had some great ups, and right, you know, now, arguably, well, not arguably, we are in, we have been in a little bit of a challenging moment. But for me, and I'm really curious to get your take, I'm excited about the next upbeat, which I'm hoping is 2024. So, you know, right now, as I said, we're opening this, we're sitting here in November 2023, we're waiting to hear from HHS, you know, what are your predictions for 2024 for the space at large, you know, and yeah, I'd be curious to think about how you and the team at Ascend are thinking about how to capitalize on this, what could be, you know, the biggest coming years we've ever seen in space.
Frank Perullo: Yeah, I think it's very notable you look at the public companies that you can measure most readily and you're starting to see the good and the bad separate themselves. You're starting to see the companies that are focusing on quality on the customer and right sizing and it's still delivering the quality for the customer and for their employees frankly. So for me, it's watching that shake out from the single state operators, the single dispensary operators, all the way up to the multi-states, and hope that people focus on their quality of delivering great product or a great service, and letting that guide them to wherever success is for those companies. And you're starting to see that, and I think that's where we're going to see in 24 more well-defined. Hopefully the government being our partner will help that along. The removal of 280E is the most important factor for most of these businesses, large, small, and everything in between. Safer would be great, but it doesn't add 10, 15, 20% to everyone's bottom line. So I'm hoping that that is the catalyst and government can actually help this industry. We need a break. We need government to help us. So that's what I hope I say.
Karson Humiston: And especially with 280E going away, I mean, there's the cash flow that would come back into the businesses, gives people the opportunity to hire, expand, fuel their own growth, control their own destiny. In the last, I guess like, call it two-ish years that we've been in this capital constraint environment, what decisions do you think that you guys made really well that have allowed you, I know you just talked about, we're seeing the separation between the good companies and the not good companies. You guys being one of the good companies, what do you think are the decisions that you made that have put you in this position to be a great company? Because again, we just talked about up beat, down beat. So there's going to be another down beat. What do people need to do when that happens? Because we've seen some companies just close down, full blown. I mean, we saw last week Grassdoor in California. just had to unfortunately close down. We saw a lot of businesses close down and I think it's easy to blame the market, blame other people, but at the end of the day we're all in together and we are seeing some companies rise to the top. What decisions did you guys make that allowed you to rise to the top and not be a business that failed?
Frank Perullo: Yeah, that's an easy one. We walked away from the deal with MedMen in New York. You heard it here first. What it took, $73 million off the balance sheet and the New York market has proven to be absolute worst market in the country. It's very comparable to California, depending on your take on the California market, but obviously with the taxes and the various, with the regulatory framework, I don't see how it's really been a success. New York has been, I think, worse. So not taking the cash off our balance sheet, not entering a market that clearly has not been fruitful for anyone other than the black market dealers or the gray market dealers or folks who can operate without a license and that's been I think an experiment and a failure in the state of New York. So that for us, right, was very easily the best decision we decided not to make and I think companies do need to realize that strategy is what you don't do. So how you allocate capital and what you focus on really matters. And some of those good companies, some of the companies that are rising to the top are narrowing their focus, they're doing fewer things much better, and they're going to come out to be a success.
Karson Humiston: It's funny because the over-regulation in the state of New York I think has borderline killed killed the program so far. What states do you think have done it well? And if you were giving advice to a politician, how would you tell them to roll out the program based on what you've seen? Because at the end of the day, New York, I think, had all the right intentions. But we're sitting here now, there could be 70,000 full-time jobs, and what, there's 3,000? There could be tons of businesses generating tens of millions, billions of dollars in tax revenue, and we're not seeing that. Instead, we're seeing thriving bodegas where you can walk in and buy products. So I think the government itself overcomplicated it and it didn't work out. So if you're giving advice to a politician that's trying to open up a new state, how do you tell them to go about doing it?
Frank Perullo: We've had some successful launches throughout the country. I think most recently were states that we operated in. New Jersey was a great example. New Jersey had too tight of a medical market, very limited license. But if you want to be operating in New Jersey, you can secure real estate and go get a license. So you've seen licenses being issued, stores starting to open up, and you saw a fairly successful rollout there. I think there are plenty of examples from Michigan to Illinois, although I think the social equity market in Illinois was certainly It took too long for them to get those licenses and we're still seeing the capital constraints weigh on those licenses open. I wish we could have seen those licenses open up a lot quicker. But when you look across the country, there are states that got it right. There are states that moved expeditiously and really cared about the industry being successful and set up a licensing and regulatory framework that helped that. Again, the government can be a partner by creating a system that can work or it can hamper it like they have in New York.
Karson Humiston: And that's a great point around Michigan has been, even in terms of states where jobs were created. Last year was the first year that we saw a decline in jobs year over year, so 2% drop. Places like California and Colorado lost jobs. Places like Florida, Missouri and Michigan, New Jersey created jobs. And so we've seen in these states that have done it right, you know, we've actually been able to have cannabis get people to work, which is super cool.
Frank Perullo: What you're seeing in Michigan is, you know, the black market was thriving. It was a great market. A lot of people call it the California, the Midwest due to the state's love of cannabis. But what you're seeing is acceptance into the regulated market. Right. There's a lot of stores. It's available. and it's well-priced.
Karson Humiston: Well-priced.
Frank Perullo: Now, you know, a lot of, I'm sure, maybe my investors or folks are saying Michigan's a really tough state to operate in. The price of cannabis is too cheap. But if you're, again, growing quality cannabis, providing a good service to the customer, you can succeed there. And it's taught us as a company a lot of lessons of how to actually be successful. It's unlimited license state. It's a state where if you want a license, you want to grow or sell, you can do it. And I love that about the state and I think it really forced us to get good at certain things.
Karson Humiston: Well, I know that we're coming up on time here and you have other more important meetings to get to. So my final question to you is when you look forward to Ascend, what are you most excited about for your company and where you're going as a business in 2024 and beyond?
Frank Perullo: Great question. I am most excited about the jobs we're going to create. over the next coming years. that's great or I get the look of fear.
Karson Humiston: Well, now you can bring this cup and you can bring your double bag. Actually, I do have one more question. Why are you proud to work in cannabis? When you tell your kids and their parents, friends, why you're proud to work in cannabis, what do you say?
Frank Perullo: I think it's the power of the plant is really meaningful to me. I'm not, I like to consume alcohol. I like a lot of things, but there's nothing like cannabis to make, you know, whatever it is ailing you better, right? Whether it's to relax, whether it's to treat pain, it really is something that I think that makes people's lives better in whatever way it does personally for them. And for me, it's always done that since, you know, 30 plus years ago. But I'm very proud to say I work in Canvas. I'm proud that we get to create these jobs and bring folks into the industry. I think this industry is, you know, unlike anything that I've been a part of. And that's what I'm most excited about. We have lots of opportunities. We're going to open another three stores this month and another probably 10 next year. So we're, you know, we're going to continue to grow and continue to bring folks into this industry.
Karson Humiston: Well, cheers to being proud to work in cannabis. Cheers. Thank you for coming on to our podcast. It was great to have you here, and can't wait to do another one.
Frank Perullo: Really appreciate you having me, and really nice to be here. Thank you. Of course. Appreciate it.