The sale of Harvest Health & Recreation to Florida's Trulieve in a deal said to be worth $2.1 billion has created the largest marijuana company in the U.S., with a combined 126 dispensaries and operations in 11 states.
Harvest has 39 operating shops in five states, including one in Tucson at 2734 E. Grant Road, and was the first operator to sell adult-use marijuana when the Arizona Department of Health Services surprised everyone by suddenly announcing the opening of legal sales in the state on Jan. 22.
"We are thrilled to be joining Trulieve, a company that has achieved unrivaled success and scale in its home state of Florida," Harvest co-founder and CEO Steve White said in a May 10 press release announcing the sale. "As one of the oldest multi-state operators, we believe our track record of identifying and developing attractive market opportunities combined with our recent successful launch of adult-use sales in Arizona will add tremendous value to the combined organization as it continues to expand and grow in the coming years."
Due to the legal status of marijuana in the U.S., the sale has been consummated according to Canadian law "pursuant to the Business Corporations Act," and still must be approved through the courts of British Columbia's and two-thirds of votes cast by Harvest shareholders, but for all intents and purposes, it is a done deal.
Home Grown
White, 47, was born at Desert Samaritan Hospital (now Banner Desert Medical Center) in Mesa and grew up in Tempe. He attended Roosevelt Elementary in Mesa, Kyrene del Cielo in Chandler and Pueblo Middle School the first year it opened. After graduation from Corona del Sol high school, he went on to Arizona State University and eventually earned a law degree at Washington and Lee School of Law in Virginia.
After setting up a successful practice back at his home in Arizona, White and his partners were able to parlay their luck in the lottery to get one of the original licenses. He says his law career is over, as he has built his cannabis empire into a nationwide player that will now be part of the largest pot-related business in the country.
Thanks to the profitability of a pot juggernaut that allowed him to contribute nearly $2 million in support of the initiative, 2020's Prop 207 passed by a 60-40 margin and the fruits of his labor have paid off exponentially.
White sat down for an interview with Tucson Weedly last week to talk about the deal and where he thinks the future of legal cannabis might go. The transcript is below, edited for length and clarity.
How did you end up getting into the business? Did you ever imagine becoming this big of a player?
I got into it after a conversation with a couple of buddies, who were clients of mine as a lawyer. It was really a way to save money on legal expenses to start, because they wanted to hire me. They didn't want to spend the money on it so one of them threw out partnership as an alternative. Our goal was to get a license in Arizona, to open up a store and have a nice little business and run it for as long as it made sense to run it.
We didn't fully appreciate how difficult it is to operate in cannabis: We didn't realize how difficult the types of regulatory problems we would have and how difficult it is to actually make a business profitable because of taxes that are too high, and everybody is hitting you for fees, and then you've got to overpay for every service, from renting space to having somebody do your books and your income taxes.
We went in the first lottery in Arizona and got two licenses, which was obviously double what we were hoping for. So we were ecstatic. But I'm really competitive. When Nevada opened up its doors and kind of copied Arizona's program, we saw that as an opportunity. I went in and made partnerships there and won a number of interests in businesses in Nevada.
That's kind of where it started. Then it was Illinois next and then Maryland. And then before you knew what we were, we're a monster.
Why did you sell?
I don't look at it quite as selling. I think what we've learned over the course of 10 years doing this is that scale is a very powerful thing: Scale allows you to provide better products at cheaper prices to customers. When you take care of customers, they take care of the business.
This is, for us, simply attaching ourselves to a larger platform so that we can develop more scale, more products, more innovation at better prices than we ever have.
I remember in 2017 when we did an acquisition and picked up some additional licenses, [Ray Stern, Phoenix New Times] questioned whether or not it was a capitalist play. I was saying to him, "I promise you prices will go down as a result of this and other activities." And they did. The medical prices came down and promotional activity was high, leading into the addition of recreational sales.
I just think that there is room for all kinds of businesses and particularly in Arizona, from small to large. There are advantages that a large business has. And for us, it was an opportunity to take advantage of some of those things and build better relationships with customers.
So you're not actually bought out? You're a partner?
We will continue and our employees will remain in place. They will operate the assets that we currently have. We will just have a larger network from which to borrow best practices and understand more about our consumers and what it is that they want. Everybody in all of our stores, they're showing up today. They'll be there in a year, they'll be there in two years, so it's just a different platform. But it is an acquisition, so technically speaking, they're the larger company, so it was a sale.
In cannabis, everybody needs more talent and our team brings a lot of that to the table.
You're going to continue for the foreseeable future to be involved in day-to-day operations?
Yes.
Do you think having this expanded presence will help have an effect on a federal level? I noticed you had to go through a Canadian firm for the legalities involved with this. Do you think this might help break down the walls a little bit?
The hope is that a more sophisticated cannabis industry (and we're speaking specifically about the industry) will do a better job at creating better reforms at the federal level. To the extent that this furthers that, we think that it will have a positive impact.
Have you seen the social equity rules? What is your opinion? How do you think they can be made better?
We're still working through that latter question about how they can be made better and we hope as an organization to provide some comments.
I do think when you think about social equity and you think about inclusion in cannabis, I think that breadth is really important. I'm glad a draft was put out so early. So it is clear that this is something very important for the Department of Health Services to get underway. They take all of their mandates very seriously. But it is a draft and I think that draft can be fine-tuned. In my mind, it is really about inclusion, so that's kind of the lens with which we'll be looking at that and then ultimately submitting comments.
Testing is another sticking point in the process. You've seen the testing issues that we've had up to this point. Do you think it's caused tension between testers and dispensaries?
I think it is false to say that tension exists. There appear to be a couple of labs who are struggling to meet, one, the demand initially that was placed in front of them and, two, now they're struggling to meet expectations.
I'm heartened by the fact that the lab industry as a whole is maturing. We saw this as dispensaries. We saw, early on, some very immature businesses who struggled to understand what our mandates were, and how we were going to best accomplish them. I think if you look at the testing industry, it's just early phase. I think some have adapted much better than others. And I think there will be new entrants into the market.
Like everything else, there's a period of adjustment. But once we get through that period of adjustment, everything's going to be much better.
Do you think the small mom-and-pop dispensaries are still going to have a seat at the table?
I think they always will, particularly in Arizona, the way Arizona works and the way they allocate licenses by way of a lottery. I do think that this provides an opportunity for other types of businesses other than just large ones. And I think that's what's always been great about Arizona. You have very large, sophisticated companies side by side with people who are running one store. It makes for a really unique environment. And it does make it a lot more fun.
Will you continue to do advocacy in Arizona?
Some people come to the business as an advocate. Others come to advocacy as a business. But either way, you can't be involved in the cannabis ecosystem in Arizona without being an activist. Some part of you has to. You have to have an activist streak in you. It is still extremely important for us and for the combined company that Arizona continues to be a model marketplace like it is today. So we're going to continue to be at the forefront of making sure that's true.
It's amazing how fast things have happened. Did you imagine it would go that fast once Prop 207 passed?
I didn't think it would. I imagined it was possible, but I didn't think that it could be accomplished that quickly. If our sales started today, it would still be the fastest in the history of the country. When you look at that, and you think about it and say, "Wow, we are almost four months into this process, we have a whole 'nother (social equity) program, the parameters of which you're starting to see, this has moved at an incredible rate. It really has.
What do you say to people that are worried that big cannabis might turn into big tobacco?
Never gonna happen. Yeah, it is just never gonna happen. Because cannabis is a better product than tobacco. I start there. That is really the issue at its core: Tobacco is harmful to people. The industry knew it was harmful to people and didn't care.
Cannabis, we all believe, is good for people. So you won't see the evils that you've seen with big tobacco. The other thing that you see is because you don't see interstate commerce—shipping things from country to country—it's not gonna happen the same way. [There are] restrictions on how big people can get. Can you imagine if cigarette companies would have to have cultivation, manufacturing and stores within each and every state? That's never going to happen.
Do you think you think the merger is going to shed a more positive light on the cannabis industry? Legitimize it on a national scale?
There was a time in 2012 when I would walk into offices to go talk to regulators and somebody at the front desk would ask me why I was there and I couldn't spit it out.
Think about where we are today relative to that. Where we have conversations with elected officials on both sides of the aisle who acknowledge that cannabis is here, it's here to stay and widespread distribution is inevitable.
I think that there are two things that happened. The legitimization of the industry and the industry being able to demonstrate that it can behave responsibly, in conjunction with changing social norms have legitimized cannabis and in the industry that surrounds it.
Do you think people like Speaker of the House Rusty Bowers are ever gonna come around?
Nope. I don't. And I don't think it's important that he does. He will always think that cannabis is bad, and that if you make something that's bad illegal, people won't do it. There's so many things wrong with that logic, but you're never going to change that mindset of people who are that entrenched.
If you think back 20 years ago, and you think about issues like gay marriage and how crazy it would have been to think that issue was going to be something that nobody would think is a bad thing—or many, many fewer people would think is a bad thing. To me cannabis kind of follows the same line: You will have certain people who will never change their mind and will die and their grandchildren will have a very different belief.
