Q&A talks with Jason Nickerson, president of Middletown-based Greenbelt Management, on his company’s efforts to become a licensed medical marijuana producer in Connecticut.
Q: Greenbelt Management has submitted its application to the state Department of Consumer Protection to become a licensed producer of medical marijuana. What is the company’s background in producing medical marijuana and why did it want to enter this field in Connecticut?
A: Greenbelt Management is a startup, formed in late 2012 specifically in response to the evolution of Connecticut’s palliative marijuana regulations. My brother Matthew and I founded the company and are also principals of C.H. Nickerson and Company, a general contracting firm headquartered in Torrington. Our backgrounds are in construction, development, and real estate, but we have spent much of the past year working with Denver Relief Consulting, one of the most well-established and medical marijuana consultants in the industry, to assemble a team of professionals and advisors with extensive industry experience. The decision to launch Greenbelt began simply with our being intrigued by the entrepreneurial challenge and opportunity posed by the regulations, and was cemented after we’d done our diligence by the impression that we had all the right resources and know-how to build a very strong application and a great business.
Q: What type of investment is required to start a medical marijuana facility? How long, if you get the license, will it take you to recoup your investment?
A: In terms of dollars, we have invested several hundred thousand since inception. If granted a license we expect to spend seven figures to develop our facility, and assuming no substantive regulatory shifts, we foresee that capital being recouped or available for reinvestment inside of five years. There are still a lot of variables however, so we’ve modeled a bunch of different cases. We will also need to post $2 million with the state Department of Consumer Protection (DCP) to satisfy the escrow requirement. In terms of time, since January 2013 we have put in literally thousands of hours. Getting to this point took hundreds of meetings, calls, emails, and significant traveling around the state to locate and obtain zoning approval for our potential facility. Simultaneously we were working to assemble our advisory board and develop our application, which ran to approximately 600 pages.
Q: How does a background in general contracting prepare you for work in a highly regulated field like medical marijuana?
A: Our family company, C.H. Nickerson, specializes in water and wastewater treatment plant construction and has built a long record of success on the ability to execute highly-regulated and nuanced contracts under strict deadlines. It’s an exacting industry that requires extensive pre-planning, team building, scheduling, budgeting, permitting and so on — all project management skills that will be critical to the development of medical marijuana businesses in a new state-regulated industry.
Q: One of the things noted on the application is “Greenbelt is entirely self-funded by its principals, and does not rely on any outside investors.” Why do you perceive this as important in the medical marijuana field? Wouldn’t this be perceived as a potential weakness in raising capital?
A: Never invest with anyone who isn’t willing to put his or her own capital at risk ahead of yours. That’s an adage from my father’s repertoire and it’s the first thing we consider when making an investment. The decision to self-finance was made mostly as a reflection of our willingness to bear the brunt of the upfront risks, which are significant. We could have brought in outside funds — there’s a lot of liquidity out there and many experienced investors we’ve spoken to seem to find the dawning cannabis industry exciting and worthy of investment. However, we weren’t comfortable with the prospect of taking that kind of a wager with other people’s money. Rather than a weakness, we see this as a big advantage of our application for a number of reasons. First, it demonstrates that we have the wherewithal to fund the company ourselves.
Second, it makes it clear that we are putting our own skin in the game and that failure to live up to our promises will be acutely painful. Third, it means that if we are not awarded a license or anything interferes with the successful launch of the program there will not be a group of irate investors looking for answers. Lastly, it demonstrates the kind of responsibility and accountability, which any potential investors in the future should find edifying.
Q: How confident are you that medical marijuana laws won’t be turned over by future legislatures? Or do you see the opposite happening and marijuana becoming fully legalized?
A: We think the trend towards the legitimization of well-regulated medical marijuana programs has gathered a lot of momentum and would be very difficult to reverse at this point. That said, it’s certainly possible that a regime or social attitude change could curb or reverse the program, which speaks to the “significant risks” mentioned in the previous question. As to broad legalization, if it happens at some point in the future we will be ready to adapt.
Q: What are your five-year projections for medical marijuana in Connecticut?
A: In other states with similar regulatory frameworks, growth in medical marijuana programs has typically reached maturity and leveled off within three to five years of implementation. We expect that there will ultimately be 25,000 to 30,000 patients in the program.