The seeds Josh Genderson planted five years ago have sprouted. Big time.
His fast-growing D.C. cannabis company, Holistic Industries, is closing in on a $50 million raise, planning to double in revenue and headcount this year, eyeing bigger acquisition deals and thinking about its future — including a potential exit.
The funding
On the top of the to-do list for 2021: add capital to the more than $100 million Holistic has raised to date.
The company opened a $30 million funding round in March to “test the waters,” in a moment when most multistate cannabis operators across the U.S. have gone public or are taking steps to make it happen, Genderson said.
“And then we blew past it,” he said of the initial target. Holistic, which Genderson says is now "the undisputed largest private company in the space,” is now on track to reach up to $50 million in new funding.
The investment will fuel growth from a few angles:
- M&A: Holistic has scooped up a handful of smaller companies in recent years that Genderson describes as “tuck-in transactions.” Think: buying a store or production plant in a state where it already operates. “What we’re looking at now are more transformative M&A deals, bigger deals, bigger companies, lots more revenue,” he said, adding that one or two could happen within the next 60 days.
- Enter new markets: Armed with new licenses, Holistic is breaking into West Virginia and Missouri. And it has New Jersey, Virginia and Georgia potentially on deck.
- Advance its brands: The business comprises dispensary brand Liberty Cannabis and a flurry of products and concepts that Holistic is rolling out in different markets across the country. They include Do Drops, new lower-potency gummies; a Jerry Garcia-inspired product line; and Cannaceutica, a new medical cannabis brand, among others. The company is targeting customers from every end of the spectrum, from a patient who’s never heard of medical marijuana to someone who’s a cannabis enthusiast, or “cannoisseur.”
The growth
Genderson expects his company to double in size this year, and that doesn't include acquisitions.
The business, operational in eight states and the District, is opening at least one Liberty location per month, now with 15 stores operating and another 13 slated to go live this year. And it’s been growing revenue at an annual rate of about 146%. That should increase, Genderson said; after closing with “well over” $100 million in 2020 revenue, Holistic expects to exceed $200 million in 2021.
The company also “cannot hire fast enough,” he said. The 500-person staff will double within the next 10 months, now with openings at retail, production and management levels, he said. That’s after more than doubling its headcount during 2020, which involved the addition of about 170 higher-level positions, of which about 155 were internal promotions, he added.
As part of its growth strategy, the company is focused on partnerships with academia — private universities, state schools, Historically Black Colleges and Universities, trade schools, community colleges, adjunct teaching and internship programs — because previously, “there was no way for you to be experienced in the space unless you were running afoul of the law,” he said.
“Now that you can, there’s just a lot people don’t know about cannabis entrepreneurship or cultivation or the science that goes into compliance,” he said. “So to teach people and to give them the opportunity to get be experienced hopefully creates a pipeline to working with Holistic and then, hopefully, staying at Holistic and growing and going from local to regional to national.”
The future
Today’s Holistic is a stark contrast from the company’s 2016 launch, when it had about seven people and one of Maryland’s first medical marijuana cultivation and processing licenses.
Going forward, Genderson said, “there’s also two diverging paths that we could take.”
One scenario is the route to going public — whether that means an initial public offering, a blank-check merger or to enter the markets in Canada. The other would be to continue down the road it’s on now and sell to a consumer packaged goods, liquor or tobacco company, for instance.
“A lot of it has to do with the federal government, what we think we’re going to see there, how that’s shaping out. A lot of it has to do with timing and how quickly markets open up. And a lot of it has to do with who the suitors are,” Genderson said.
Holistic has had “tons” of suitors, he said. “We’re constantly looking and thinking about it — and it’s nice to have a great operating business that doesn’t put pressure on us.”
