Navigating the Missouri Cannabis Market with John Pennington After a brief hiatus, Karson Humiston returns with an engaging conversation with John Pennington, the co-founder and CEO of Proper Cannabis in Missouri. John shared his early entrepreneurial spirit, from shoveling driveways as a kid to running a business in high school and college. His transition into the cannabis industry was influenced by his work in real estate and his involvement in building Missouri's largest non-profit methadone treatment center. This experience opened his eyes to the potential of cannabis as a regulated industry.
Navigating the Missouri Cannabis Market with John Pennington
After a brief hiatus, Karson Humiston returns with an engaging conversation with John Pennington, the co-founder and CEO of Proper Cannabis in Missouri. John shared his early entrepreneurial spirit, from shoveling driveways as a kid to running a business in high school and college. His transition into the cannabis industry was influenced by his work in real estate and his involvement in building Missouri's largest non-profit methadone treatment center. This experience opened his eyes to the potential of cannabis as a regulated industry.
They discuss the importance of having a clear vision and mission, and how John successfully scaled Proper Cannabis from a preliminary idea to a leading company with over 450 employees. He emphasized the significance of writing down goals, empowering teams, and fostering a strong company culture. Proper Cannabis is known for its low turnover rate, which John attributes to the intentional culture they've built, where every team member feels valued and connected.
John also highlighted the rapid growth of the Missouri cannabis market, which has expanded significantly since the legalization of adult-use cannabis. Proper Cannabis has become a market leader in various product categories, including pre-rolls, concentrates, and edibles.
One of the most inspiring parts of our conversation was John's commitment to social justice. He teaches a class called "Business, Purpose, and the Bible" in the St. Louis County jail system, helping inmates find hope and purpose. This aligns with his broader mission to advocate for policy changes in Washington, D.C., and support re-entry programs for formerly incarcerated individuals.
Looking ahead, John envisions Proper Cannabis expanding beyond Missouri and becoming a multi-state operator while maintaining its strong ethos and commitment to quality. His dedication to both business success and social impact makes him a standout entrepreneur in the cannabis industry.
https://www.propercannabis.com/
John Pennington:
Hey everybody, and welcome back to another episode of the Proud to Work in Cannabis podcast. We've taken a couple week break. I'm so sorry, it's been a little bit chaotic, but I am really excited because I have a guest today. I canceled on him once, he did cancel on me once, let the record be known, but I have John Pennington, who is the co-founder and CEO of Proper Cannabis in Missouri. John and I had a really awesome first conversation with each other where we ended up just going into our entrepreneurial stories and it was just like a super fun conversation. And we've decided to continue it with a couple thousand people from the cannabis industry listening in. So John, thank you for being here. How's it going today?
Karson Humiston: Hey, good morning. I guess you're in a mountain time for another 45. Good afternoon for everybody else. Things are great. I'm here at the conference table at our headquarters in St. Louis and life is good.
John Pennington: John has such a great positive attitude just in general. You know, you talk to a lot of people in the cannabis, well, listen, in the cannabis industry, the last few weeks have been really good for the cannabis industry. We actually have not done an episode since President Biden announced our rescheduling. So people are in a better mood, but even when people weren't in a good mood in cannabis, John was always seemingly in a good mood in cannabis. So John, I want to kick this off to you. you're like the definition of an, of an entrepreneur. Where did you get this entrepreneurial spirit from and why did you decide to be an entrepreneur?
Karson Humiston: Oh, we only have 30 minutes, right? So I guess we had to give you the cliff notes. I mean, you know, I think at the core, even like as a kid, you know, like when it snowed out, I was out first thing in the morning before my family members, older brothers, friends, like shoveling driveways. And then you know, got into the, got into the, um, you know, graph cutting business. I always love sports cards as a kid. I love puzzles and Legos as a kid. I like putting things together. And then I started my own little business in high school. And then I got into the asphalt business kind of in college. I went to school in Boulder. I was running the business from Boulder, Colorado. And I, I had to work, I didn't grow up with, you know, with, any wealth. You know, my parents made me work for, you know, you know, baseball shoes and basketball shoes. And I think, you know, like any business, when you have to do things and you find things you like, and you can make a dollar and you can build your team and you can find employees to want to work for you, like, so it just kind of started at an early age. And, you know, here we are in my adult life. And I think some of that, that same love and spirit kind of, it's just kind of in me, I guess.
John Pennington: Well, we'll have some time to go back to some of those early businesses, but people are here listening because they're. Interested in the cannabis business and so. You know, why cannabis 1st off why Missouri cannabis and why proper cannabis.
Karson Humiston: Yeah. So, you know, a little background. I was in the real estate development and investment space for, for many years. I still have a company that my brother and other partner run. And, and about seven, eight years ago, we built the state of Missouri's largest non-for-profit methadone treatment center, you know, and methadone is used to treat your very opiate addicts or users. And it was during that tenure when I worked with like the, the local drug task force, the Missouri Health and Human Services. I helped secure funding for this group that needed grants to fund their business. And I was just shocked by how many people didn't know what they were doing and how many roadblocks it faced. I've been around cannabis since I was a kid. I mean, I self-medicated in high school. I played a lot of sports. I went to Boulder. We grew it in our closets. But somebody got wind of what I was doing in real estate and particularly in the methadone clinic. And this was in 2018 when there was three different laws that were jockeying to get on the ballot. And a couple of people came to me and said, Hey, we're going to start this trade association. And would you want to get involved? And I kind of raised my hand. I said, Hey, if the mission behind it is to make sure that there's standardizations and expectations with how we would want the industry to function, I can get behind that. And then you kind of fast forward a few months. I started reading the laws. It made sense. I left Colorado a couple years after the state became legal. So I was aware of it from a periphery. And when I started reading the law, I went to my real estate partners and I just said, Hey guys, I don't want to be reactionary to this business. I can compete. I can build the right team and vision and, you know, in 2018, kind of the preliminary vision in my mind was formed.
John Pennington: All right. So preliminary vision, we have a lot of people on here that really want to be entrepreneurs. And I'm always like, be careful what you wish for, but preliminary vision is formed in your mind. How do you go from the preliminary vision to the last time you and I caught up, you have over 300 employees, the leader in the Missouri market. Talk to us about those like early days of getting the thing from nothing to something, because that's where I think, you know, I think people like you and me, it's just so obvious. It's like, you just start putting one foot in front of the next and you go. But for people that have never started a business, they're like, Oh my God. How did it go from like a thing in John's brain to a thing with 300 employees dominating the Missouri market?
Karson Humiston: So I joke, but it's serious. I think one night I was under the influence of maybe, you know, five milligrams of an edible and I actually do not like edibles personally.
John Pennington: You know, neither do I, like I had a few bad experiences and I'm just like, I'm just not interested.
Karson Humiston: They, I can't settle down, but as a result of this particular experience, I was just up writing and I was kind of business planning and I was journaling. I was writing things down and, and it just kept falling and free fall. And then the next night, um, I unveiled to my wife, we were in our living room and I just kind of communicated the things that I wrote down. And, and she's like, how'd you come up with that? Like, well, you know how my mind works and here it is. Um, you know, I think when you think about cannabis, uh, and. outside of the plant itself. I think what people don't fully always connect is, you know, we're making something, we're converting something, we're designing something, we're servicing somebody, there's customers and patients that you're interacting with. And I just believe that I could build a company that interconnected all those things. And, as you know, in your line of work and what you do, it starts with people, right? And and how do you find people that can buy into the vision and believe in you and then realize that they have an important role and not just a role of responsibility and a position to do things that they're good at. So the vision matriculated, I went to a business partner or two, I went to my real estate partners or two and I'm a huge, huge, huge believer that I teach this. is how do you get something from up here, on paper, out? And when you can do that, I mean, that's executing on things that you think about. It's simple, but hard, but that's kind of how my mind works. I was a history and psychology major, even though I went to school for engineering, I walked out with a history and psychology degree. So, you know, how do you get things that are in your mind and matriculate them? You got to talk about them, you got to write them down, you got to keep sharing them, and then you're more apt to achieve them.
John Pennington: I could not agree more. And I think that piece of advice for folks listening, even if you're not an entrepreneur is so important. So many people just like, and I fall into the trap too of like, you just spin and spin and spin in your mind. And so like exactly what John just said of like getting it from your mind on paper out, um, outside of writing things down, which I find is super helpful for me. we actually just had a sales trainer that came in here and he said, goals on paper aren't goals. They need to be somewhere where you're looking at them. So I'm sitting at my desk right now and I have our annual goals taped onto my desktop. And right below it, I have what I need to do in May, what I personally need to do in May. And there's very specific things. And if I don't have that, I just find myself like, I don't Where am I going?
Karson Humiston: Wandering.
John Pennington: I'm wandering. If you don't have a destination, you're just like setting a ship into the ocean. So writing it down sounds like it works for you and me. What other tactical skills can you give to people that like want straight up, how do I get shit done?
Karson Humiston: Well, I mean, you know, I'm a big believer like in modeling, like in any business or any line of work or any activity, you know, You first kind of define, hey, what do you want? What are you looking for? What are your gifts? What are your skills, et cetera, et cetera. Then you kind of look at people and say, who's doing that already? How do they operate? How do they think? How do they act? How do they behave? And in sports, if you want to go be a runner or you want to go be a good athlete, well, you better spend time in the weight room. You better spend time looking at the playbook and following film. And business is no different. So I think I'm a huge, huge believer in just empowerment of teams. And I think I really enforce, not just encourage, enforce all directors to have one-on-one times with their direct teams, weekly team meetings, quarterly off sites, where you're spending time talking, you're spending time brainstorming, you're spending time problem solving, having hard conversations, addressing issues, right? I think oftentimes, like in society, we're kind of taught, hold it in, don't share, right? I'm kind of the opposite. Let's sit down, let's talk, let's share, let's talk about kind of what's on our minds and hearts. And then let's get into the tactical issues, because if we can solve things that are internal, then the ability to solve for things that are more tactical in nature, solving for a widget or solving for an improvement of efficiency or working through a problem employee, or making a decision on hiring or firing somebody, those things become easier, right? And I think that's kind of what we do and how we run here proper. So, you know, I think it starts with kind of core leadership. I think it starts with like, you know, you always need to have a foundation. And then I think it requires the team and the people being brought in to how do you think, how do you talk, how do you act?
John Pennington: I think your point around the spending, the time is so important. And so we have some remote employees and. Some of them are here this week. I'm sitting at our office in Denver. And like just now, before we got on this call, we had, you know, 14 minutes and we ran and got coffees together being three or four people and just talked about. Random things about their life and my life and whatever. And it's like that connection I find is like as important as. Okay, what business goals did you get done today? Like, just spending the time with people as people, I get so much more out of my team when I know about their kids, I know about their husband or their wife, I have a little bit of skin in the game on trying to make their life a little bit better. I think in turn, you get way more out of people because like, you're on the same team and you want to help each other. And it sounds like You and I are somewhat on the same page about that. One of the cool things about you that we spent time talking about on our first call was the intentional culture that you've built at Proper. So can you describe to folks that maybe might want to join the team at Proper or just want to build a great team and culture in general? You have some of the lowest turnover in the cannabis industry. Culture building, we could have 50 episodes on or hundreds of episodes on, but in your mind, What have you done to scale such a good culture?
Karson Humiston: Oh man. Um, well, you know, I think starting to pop as, you know, the founder and essentially the leader of the company, I've always tried to showcase that I'm not any more important than anybody else. Um, and you know, whether you're a trimmer, you're a bud tender, you're the director of HR, you're a janitor. you're the director of this or you're me, we work for the same company. It's interesting on your last comment, I was just thinking like this morning, I went on a walk at 6.40 with my sales director, he doesn't even report to me. He texted me last night and was just like, hey, can I get some advice from you? Can we go on a walk? He knows I walk in the morning and we spent an hour just walking and talking. He reports to somebody else, sales doesn't really go through me. But I think it's an example of at least being visible and present. And like earlier after that, we had a, uh, there was a call on unionization and my director of security compliance and HR kind of gave a talk to all of the managers and directors of the company. And I just joined, I didn't participate. I just joined. And I think, um, it's reminding the team that, that we all have to play, we all have to We all have to behave a certain way at the very, very, very, very core. And, and I'm, I'm a huge, huge believer in this. You know, you've got to have a mission. What's the goal? What are you trying to achieve? And everybody's got to be bought in. So I always say like your mission is your what, what are you doing? What's the, what's the goal? And then the, the, the vision is the why, like the ethos, why do you do what you do? You know, why do you like this podcast? Why do you like to lead people? Why do you want to work in cannabis? Like if you don't have something like internally, and sometimes it's just practical, like I need a paycheck. That's totally cool too. But from a company standpoint, there's gotta be an ethos. And then I think the values are fucking big. You know, and I mean that like every room we have our values and, you know, we do stay the unions, you know, three to four times a year. And I charged the entire company. I said, pick a value and write it down of what you want to work on a wine, share it with somebody. And I say that the values are your behaviors. It's it's over. It's how do you talk? How do you treat? How do you interact? How are you leading the meeting? How are you trying to follow a way of acting? And I think if you can do those things and constantly be working on them, I think that's where culture begins and starts. And that's how we lead. That's how we talk. That's how we behave. And we share it. authenticity or community or connectivity or excellence means to you, it may vary day to day, quarter to quarter, week to week. But when you can share it, and you can be authentic about what it means to you, and that you really want to work on it, then you're more apt to like, go do it. And when you have everybody doing that together, I think it's infectious.
John Pennington: could not agree more. I don't know if I answered the question. No, you completely answered the question. I think living the values in a way, like a lot of people talk about core values and they think, oh, we got to do core values. So they go look at some other companies' websites and they say, oh, be genuine. That sounds cool. Let's throw this one in, whatever. But I think when you actually have a place where people know the values, they live and breathe the values. I mean, at Vangst, we only have three, super simple. Obsess over our customers and candidates, outwork everybody and have fun. And it's like, if I show up, like I have them written right here. If I show up every day and I obsess about making sure my customers love Vangst and our candidates love Vangst, I work harder than anybody else and I have fun. I'm going to be happy because that makes me happy. And if the founder's not, the values have to reflect the founder, right? Because if you're miserable in your own place of work, how is anyone else going to be happy and then find a ton of other people that that makes them really happy. And then suddenly we, you know, you lift your head up one day and you have. a place where I feel like everyone around, like the, the, the outwork everyone was a really important piece because it's like, that's just something that's important to me. It's like, I was never, I'm dyslexic. I was never super smart. So I always had to really work harder. Yeah. And so it's like, some people just don't have to work that hard because they're like geniuses in school, you know, like, I don't want to hire that person. I want to hire the person that has to fight to get the a on the paper because they're, you know, kind of dumb like me.
Karson Humiston: I'm more like you, too. We are running a business. We talked about this before. We're running a for-profit business. We have shareholders. Those people that put targets on our backs, they want what we have, and you've got to go out there and compete. And that's a lot of fun.
John Pennington: And then the last part is have fun. It's like, you know, tonight the team's going to an amusement park. I'm like, that's a great idea. Who came up with that? I'd love to go ride some roller coasters with you guys. Sweet. You know, like if you can't have fun, we're going to be dead soon anyway. So, um, for, I want to, I love talking about this, but people listening are interested in the Missouri market. What's going on in the Missouri market. Can you just give us like a bird's eye view, Missouri market, what's happening in the market. You know, we'll get a little more granular as we go.
Karson Humiston: Yeah. So, you know, the 2018, we passed the law, you know, 19 and the 20, uh, the rules came out, a license were awarded. Uh, we rolled out and 20, um, our first dollar revenue was spring of 21. Um, and 22, um, we voted the voters overwhelmingly supported the comprehensive or adult use, which we were a big part of here at proper. And then that took an effect in a pretty short turnaround three months later in February of 23. You know, so we went from about a $35 million market, you know, to about $120, $130 million a month market. So we're trading at about $1.4 billion on an annual basis. You know, it's a limited license state. You know, you see a lot of consolidation happening. I think people are working hard to kind of protect their turf. I think the consumer and the patient is starting to understand kind of the difference between products and quality and value. And I think, you know, brands are trying to, you know, coordinate and really figure out kind of where do I, where do I fall into this category? You know, it's a, it's a Midwestern state, you know, that abuts a number of states. I think it competes well, we've got good rules. you know, maybe one, uh, maybe a too few, many license, but you know, for the most part, it's a good market. Um, and you know, I think we've just had, um, our nose is the grindstone. We've gone from two stores, you know, back when we were awarded license to now 11. Um, you know, we're leading in multiple categories. Um, you know, we're number one in pre-rolls. We're number one in concentrates, number one in chocolate. We're top five in edibles. Um, You know, we've been company of the year, brand of the year, cultivated a year, you know, we've gotten all these cool accolades. It goes kind of back to the people and, you know, but, you know, we have targets on our back too. So we, we keep finding ways to get better and, um, you know, try to win and try to build our team up. And I think last year we, we promoted 46 people at proper. Um, um, you know, we're now up to 450 plus employees.
John Pennington: So, you know, some of your competitors work with banks, so maybe you should consider.
Karson Humiston: Yeah. You know what?
John Pennington: Listen, Alice, if you're listening, I'll be following up with you.
Karson Humiston: That's why they're a little better than us. So we got to go catch them, right? No, you guys are awesome. No, you know what?
John Pennington: We're going to come out and spend the day with you and we'll get a deal done.
Karson Humiston: And I think the landscape is good. I mean, I think, you know, a lot of my guys who I call friends or competitors, We've helped build the industry together. We do business together. Missouri parochial. Where did you go to high school? People like to do work with people they know. That's gotten us to here, but I think now you see people separated a bit and trying to figure out how do you turn a fun business into a profitable business. That's not easy for everybody.
John Pennington: What an annoying thing. we had a call with one of our investors this morning too and I was like, yeah, like getting to profitability just sucks. Like, you know, it's less fun. He was like, the guy was like, um, okay.
Karson Humiston: Yeah. And it definitely helps when you are profitable. I mean, it makes it a little bit more fun.
John Pennington: Yeah. Well, um, as you think about, you know, um, the next 10 years of proper cannabis, if you could look forward 10 years and wave a wand and get everything that you want for the business, what's your vision for proper? I know you talk about vision being just such an important piece of how you get something from your brain to a piece of paper. So now when you're doing your late night high journaling, where's the business going?
Karson Humiston: I had a few personal goals, like, you know, one was to get licensed in 18. Um, you know, two was to get the profitability, which we did, you know, three was to, uh, get recreational pass in Missouri, which, which we did. And, and, um, a fourth, and it's a big, big mission of mine is to get laws changed in DC, which, which, you know, I've taken a more of an active position. And in the last kind of six eight months we helped kind of run the campaign here and you know i've joined some policy boards where we're doing that and Yeah, I think I told you I teach in the in the jail system.
John Pennington: I actually teach this afternoon and wait No, I want to hear about let's sorry to interrupt talk to me about teaching in the jail system.
Karson Humiston: This is really interesting to me well, um Let's see. It's 12 40 here. I teach when i'm in town on wednesday afternoons. I teach in the st louis county jail system, so I teach the highest level felons and I've been doing it for a couple of years and it's just me and a group of dudes. I'm on my fourth class and it's a, it's a, it's a class that I created kind of from scratch and um, it's called business purpose in the Bible. So it's, it's helping connect to some ethereal and spiritual elements and giving, you know, some guys who likely have made some bad decisions, a little bit of hope and reminding them that we're all kind of effed up and So yeah, it's become kind of a focal point of just some of my personal time. That's awesome, John. I still remind myself that you and I are here at the expense of millions who have been victimized or screwed or fucked or incarcerated, you name it, pardon my language. Yeah. It gets back to like, I care about these things.
John Pennington: That's so cool. We did a career fair in a jail one time, or a prison actually, and people were, you know, we've tried to help on the re-entry process. was talking to somebody and I was like, yep, because they were getting out within that 90-day period. That's why they were going to this career fair. And I was like, so we'll definitely help you get your LinkedIn profile set up. And the guy was like, what's LinkedIn? You go into jail, there's no LinkedIn. When he went to LinkedIn, he had a Blackberry. He's never used an iPhone. He doesn't know about LinkedIn. He doesn't know about banks or all these tools that are available to job seekers. And I I just think it's super cool what you're doing on the teaching front. And yeah, maybe there's a way Vangs can like partner up with you guys in Missouri on the reentry piece, because I feel, I just feel it's so unfair to have to try to, if you'd ever use LinkedIn, how do you, how are you supposed to find a job? You don't even know what the fucking iPhone is.
Karson Humiston: Well, I mean, look at your life and my life. I'm sure there's been moments like you hear about the fork in the road or like one, one or two slightly different outcomes, like the world shifts real quick. And, and I'm not here to say, Hey, like we should, you know, forget and forgive everything that people do. But like, there's an element of like, Hey, we're all messed up. You know, I like second chances. I, you know, you talk about kind of outworking, you know, and we're called to kind of serve, you know, I think as business leaders, like it's the same thing in business. Like how do you build and lead your team? And, um, you know, so I think it's just a, it's a special project, personal project for me. And I, um, I, I really enjoy it. And it's a, it's a really neat couple hours when I'm here on Wednesdays. And so, yeah, that's what I'll be doing in a couple hours. But, um, you know, getting into, you know, your question about a 10 year vision, you know, for the last few years, it's been hard to think like beyond six, 12 months. Right. And I think, um, you know, once, once the adult you shifted in February of last year, I think it was finally, um, gave me the ability to think beyond like a year or two. And, And I would say in the last 60 days, and I mean this, like I've been much more reflective in my ability to think down the road is very different than where it was a year ago, two years ago. And that's how my mind's always worked. So, you know, um, you know, I've been following some of the big guys, uh, you know, naturally, you know, we're at the size where you know, we're doing things pretty well here and we've got decisions to make, right? Do we expand beyond Missouri? What does that look like? And, you know, culture is important. I think there's a real opportunity to be an MSO or a public entity or a brand on a big scale that's doing things like with a full-fledged ethos. And that's just like creating an arbitrage on how you're trading on a stock exchange, which I get. So how do you blend the financial capability with like the real desire to like be a company that's got legs in multiple markets? We just invested in a new tech business with some buddies of mine that have a vertical license in Utah. We created a tech business that we think we can bring into multiple states. We're now having conversations that I think are going to allow us to tip our toes into a few other markets. Sweet. Multi-state. Yeah. It's not like I'm not trying to hold things back. I think it's more like you plant your seeds, we planted those, we continue building here. And, you know, I think some people in our team are excited about trying to, you know, test what we do in some other markets. So we're exploring that. And I think it gets back to kind of like competing and building your brands. And, you know, can we do that on a larger scale and with intent and also financial pootence? I mean, it's It's hard to make a living in the space. We finally are like, they're doing it in one state. So we don't want to like get over leveraged and just kind of get crazy. So we're, I think we're going to be around and I think, um, you know, we'll be strategic in how we do it and we'll make sure that we do it with, with the right people.
John Pennington: Yeah. I mean, we have a lot of people come on to this podcast and I know a lot of people on, if I was going to make a bet on an entrepreneur, I would make my bet on you and the proper team. Like I think you're going to be here in a big way in a lot of States and just so impressed by you. I, I, you seem like such a genuine, great entrepreneur. So I'm so happy that you're in this space.
Karson Humiston: Oh, well, I, uh, thank you for the compliment. And I, you know, I've, I've, uh, read about you too. And I, I, um, I love just seeing people. not just do well, but use their gifts. When you're doing cool things and using your gifts and then bringing other people to do the same things, good things happen. For the people you've placed in the space and the companies you work for, knowing that there's options, I say the same back to you.
John Pennington: Well, thank you. Well, we're already up on the 30 minutes and actually this is nuts. All of our listeners literally stopped dropping off like exactly at 30 minutes. So I don't know if it's cannabis people, attention span, who knows. But John, it's been so great digging into your story, the culture piece. I think there's super tactical things people can take away from this. We can't wait to watch the 10-year vision unfold. Multi-state, here we come, baby. And we'll chat afterwards, see if there's a way that banks can get involved on some of their jail and re-entry work you're doing, because that's just so cool to hear from you. So thank you so much for your time. It was so great.
Karson Humiston: Yeah. Thank you. Great job. Keep up the good work. Appreciate it.