In this edition of "Rising High," The Fly conducted an exclusive interview with Kyle Kingsley, chief executive officer of Vireo Health (VREOF), a science-focused multi-state cannabis company. Here are some of the highlights:
SCIENCE-FOCUSED: Vireo Health is a multi-state physician-led cannabis company that cultivates cannabis, manufactures pharmaceutical-grade extracts and sells products at company-owned and third-party dispensaries. “We’re one of the largest producers and distributors of cannabis in legal state-based programs in the United States,” Kingsley said, adding the company has five-full time physicians and a wide array of scientists on the team. The company has developed the Vireo Spectrum for consumers to determine the best medical marijuana products for them. The Vireo Spectrum includes five colors that represent distinct product lines allowing patients to select a THC/CBD balance for their needs. “It’s really a reflection our scientific and medical underpinnings,” Kingsley said. “We wanted something that was very methodical and something that made sense to healthcare providers and consumers.” The CEO added there is a broad array of ways people respond to cannabis medication so Vireo tried to build a system that accommodates all patients. “You can do vaporized distillates, capsules, oral solutions, or topicals," he said. "People know when they’re buying a Vireo product that they’re getting the exact same thing every time and that’s been very well-received.”
COMPETITIVE EDGE: When asked about the company’s key differentiators, Kingsley said Vireo’s focus on science and intellectual property sets its apart from other competitors. “Science drives evidence and evidence will drive superior outcomes for consumers,” he said. “If we say these are our five sleep formulations that can stimulate relaxation, we’re going to have an evidence basis.” The CEO said while there is currently a lot of smoke and mirrors in the industry, consumers are going to eventually need to see differentiated products that perform the way they claim to. “We have a least a half a dozen active, ongoing research partnerships with academic institutions and other research organizations,” he said. Kingsley added that Vireo had been doing post-market surveillance on vapes with SafetyCall International prior to all the discussion about vaporizer safety. “We’re confident that our products are safe based on evidence and the fact that we’ve been monitoring them for four years," he said. "That’s an expensive process but we’re very thankful that we took that approach way back when.”
NEW APPOINTMENTS: On November 7, Vireo announced it had appointed Bruce Linton, former CEO of Canopy Growth (CGC), as executive chairman. The company said Linton will be actively involved in business, work closely with Kingsley and spearhead strategic decision-making, capital markets activity and future partnerships. “Philosophically we are very aligned with Bruce,” Kingsley said. “He takes the long view, he values science and intellectual property and he understands that selling a commodity is not a winning long-term business strategy.” The CEO added that Vireo was previously facing issues of visibility and access to capital, but those hurdles have been resolved since Linton has joined. The company also appointed Amber Shimpa, previously chief financial officer, as chief administrative officer on November 13 and Shaun Nugent as CFO on November 14.
LEGALIZATION: When asked about what country could be next to legalize on a federal level, Kingsley said he was not sure. “I would say Mexico is closest and there are some other South American countries that are right on the cusp,” he said. The CEO added that he is bullish on the United States, saying, “I think U.S. is on the cusp of a States Act and formally codifying this as a states’ rights issue. I could see that happening before the elections in 2020 potentially.”
EXPANSION: Vireo currently operates in ten states and Puerto Rico and Kingsley said the company will focus on cost effectiveness when looking to grow. “There are a lot of distressed assets out there right now and that’s only going to accelerate,” he said. “We’re going to see more and more companies that are in a tough spot so we’re always opportunistic and open to fusions.” The CEO said the company is “We’re not excited about an unbridled land grab but we are interested in assets with cash flow, new licenses and then also science and intellectual property assets are interesting to us."
CHALLENGES: When asked about the challenges facing the company, the CEO again noted visibility in a crowded market and access to capital but said those issues had been handled with the addition of Linton. “We feel that those were our two major limitations and they’re resolved,” he said. “Banking is an issue for many companies, but we have a slew of banking relationships." Kingsley added that the company is very lean and in well-regulated markets that are liberalizing over time, so he doesn’t see any substantial headwinds for Vireo. When looking at the industry as a whole, the CEO said headwinds include ambiguity on a federal level and access to capital for U.S. operators versus peers in Canada. “That’s the biggest headwind that I can see so we’re looking forward to that resolving over the coming 12 to 24 months here,” he said.
OPPORTUNITIES: As the space develops, Kingsley said Vireo has been “very excited” about post-pulmonary proprietary products. “These are non-vaporized products that bring people very specific results, whether it’s an orally-disintegrating tablet or softgel or topical that gives people the precise kind of relief that they need,” he said. “We’re just looking to match up the expected outcomes with the evidence and the formulations that we build.” The CEO added that the company is very interested in replacing opioids, alcohol and tobacco with cannabis-based products.
FLOWER VS. DERIVATIVES: When asked about how he expects cannabis use to shift over time, the CEO said he believes it will vary person to person. “I think people are going to shift away from flower over time,” he said. “They’ll be a little less flower use but flower is always going to be a very important aspect of cannabis. That’s a big part of the experience for many, a big part of current cannabis culture.” Kingsley noted that vaporizers are always going to be part of the space due to how quickly they act in both medical and recreational settings. “I think it’s always going to be a kind of hodgepodge of things but I think people are going to look for more and more sophisticated and specific products over time,” he said.
OTHER CANNABIS STOCKS: Other publicly-traded companies in the space include Aleafia Health (ALEAF), Aphria (APHA), Aurora Cannabis (ACB), Biome Grow (BIOIF), CannTrust (CTST), Canopy Rivers (CNPOF), Cronos Group (CRON), Cresco Labs (CRLBF), CV Sciences (CVSI), Delta 9 (VRNDF), DionyMed Brands (DYMEF), Elixinol Global (ELLXF), Greenlane (GNLN), General Cannabis (CANN), GrowGeneration (GRWG), Harborside (HSDEF), Harvest Health & Recreation (HRVSF), Hemp Inc. (HEMP), HEXO (HEXO), ICC International Cannabis (KNHBF), India Globalization Capital (IGC), Indiva (NDVAF), Innovative Industrial Properties (IIPR), Khiron Life Sciences (KHRNF), Liberty Health Sciences (LHSIF), MediPharm Labs (MEDIF), MedMen Enterprises (MMNFF), Origin House (ORHOF), Organigram (OGI), Planet 13 Holdings (PLNHF), Real Brands (RLBD), Sproutly (SRUTF), Sunniva (SNNVF), Tilray (TLRY),Tetra Bio Pharma (TBPMF), Trulieve Cannabis (TCNNF), Vireo Health (VREOF), Wayland Group (MRRCF), Westleaf (WSLFF) and Zynerba (ZYNE).
Name, ticker changed to GDNSF
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Canopy Growth
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APHA
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Aurora Cannabis
-0.37 (-10.45%)
CV Sciences
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CannTrust
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Cronos Group
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Trees Corporation
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IGC Pharma
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Tilray
-1.41 (-6.73%)
Trulieve Cannabis
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Zynerba
-0.35 (-5.46%)