Multi-state operator Vireo Health Inc.
Chelsea Grayson, the first female chief executive at jeans manufacturer True Religion, will lend her commercial expertise to the Vireo boardroom. Entrepreneur Amy Langer, co-founder of Salo LLC and a former KMPG auditor, brings experience within finance, human resources, and accounting.
ACOVA Integrated Health chief executive Chad Martinson, another former KPMG auditor, also joins the board, as does Judd Norquist, a partner at regional accounting firm Abdo, Eick & Meyers. This foursome will sit alongside Vireo founder and chief executive Kyle Kingsley, chief financial officer Amber Shimpa and chief operating officer Ari Hoffnung on the new-look board.
It will also allow Vireo to create three new internal committees to provide oversight and guidance on audit, compensation, and general corporate governance.
The Cannabis Company of the Future
“Vireo Health is pleased to have added several highly-regarded industry leaders with deep retail, manufacturing and financial expertise to help guide the company as we continue to execute upon our ambitious growth plans,” said Kingsley. He feels it can now become “the cannabis company of the future”.
Los Angeles native Grayson took the top job at True Religion in Nov. 2018 after a spell as chief executive at American Apparel. She also sits on the board of Delta Dental of California and Marca Global.
She said she is pleased to join two other talented women on the board in Langer and Shimpa. The U.S. cannabis industry has recognized the need to promote better diversity and equality and it has just launched a taskforce to spearhead this drive.
An Undervalued Stock?
Vireo already has licenses to operate in New York, Pennsylvania, Ohio, Maryland, Massachusetts, Rhode Island, Minnesota, New Mexico, Arizona, and Nevada. It has processing licenses in all of them, and cultivation licenses in each one apart from Ohio. They all cover medicinal cannabis, while New Mexico and Arizona provide for adult-use marijuana too.
The firm has 22 retail outlets spread across the country, with six in New Mexico, four in New York, four in Minnesota, three in Pennsylvania, three in Massachusetts, and one apiece in Rhode Island and Arizona. It wholesales in each state it is present in and boasts numerous processing facilities.
It also has a license pending in California, while it has a binding purchase and sale agreement in place that will give it six dispensaries, a 32,000 sq. ft. warehouse and cultivation and processing licenses in Puerto Rico. This is expected to close within the next month or two.
The plan is to roll out further dispensaries in Pennsylvania and New Mexico in 2019. It will also build new facilities in Massachusetts, Rhode Island, Nevada and Puerto Rico, and it is increasing production capacity across the U.S.
It has proven its ability to win licenses by seamlessly navigating complex regulatory procedures in a number of jurisdictions. Vireo has a solid financial runway, with more than two years of remaining cash, and a lot of untapped potential as new licenses are still to be integrated, so we should expect strong sequential revenue growth.
The firm recently reported revenue of $5.6 million for Q4 2018, an increase of 72% from the corresponding period in 2017. Revenue growth for the year was also up 70% to $18.5 million. Gross profit is also increasing faster than revenue, which is positive.
It posted net losses of $1.2 million for Q4, attributable to the licensing and legal fees required to enter new states. This expense should come down in the future as it is now present in several key markets.
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