Glass House Brands Makes Progress On Ambitious California Cultivation Footprint – New Cannabis Ventures


Exclusive Interview with Glass House Brands Co-Founder, President and CEO, Kyle Kazan

Glass House Brands (NEO: GLAS.AU) (OTCQX: GLASF) pursues the ambitious goal of deploying the largest cannabis cultivation footprint. The California-centric company may be a one-state operator, but its enterprise value is over half a billion dollars, according to co-founder, president and CEO Kyle Kazan. . He last spoke with New Cannabis Ventures in August 2021. He reconnected to talk about the company’s acquisitions and its competitive position in the cannabis industry. Audio of the entire conversation is available at the end of this written summary.

C-Suite Changes

Derrek Higgins served as Glass House‘s chief financial officer, helping to bring together a group of private equity funds and form the company. He previously helped publicize Harborside. He left his role at Glass House and Mark Vendetti joined the company as chief financial officer in fall 2021. He has extensive experience working with public companies, according to Kazan.

Glass House has also tapped Erik Thoreson as head of business development for its C suite to help the company continue its expansion.

Acquisitions

In late 2021, Glass House announced plans to acquire edibles company Plus Products. The company was in the market to expand into segments other than flowers, and PLUS was in the market to sell. Companies provide value to each other, according to Kazan. Glass House was considering launching its own candy brand, but now has the opportunity to compete with an established brand. Kazan expects the deal to be completed within the next 30 days.

PLUS will add edibles to the Glass House platform.

Kazan mentioned the acquisition of Wana Brands for around 300 million dollars. Although Wana is bigger than PLUS, he is happy with the price of the PLUS offer. Glass House acquires PLUS for $25.6 million in an all-stock transaction.

The pending acquisition of Element 7 by Glass House is currently the subject of litigation. The deal would bring retail licenses to the company. While the company works through this process, retail expansion remains significant, but the company currently has no plans to announce, according to Kazan.

In the fall of 2021, Glass House completed the acquisition of a 5.5 million square foot greenhouse. The company is currently constructing 1.7 million square feet of the facility and is working with the state on licensing. The goal is to get a full license by the end of February and harvest by July, according to Kazan.

Bringing this culture online will triple the company’s current growth. The company will monitor the market to determine how it is developing. Glass House has a partner growing tomatoes on three million square feet, and it has the ability to convert that space for cannabis cultivation if and when the need arises.

Glass House greatly expands its cultivation capacity.

The California market

Glass House has one of California’s finest flower brands; it oscillates between first, second and third position. At the end of the third quarter, the company’s flower brand held the top spot, according to Kazan.

Glass House, along with many other cannabis companies in California, have lost revenue and margins due to the commoditization of the wholesale market. The company is pushing for more CPGs, and MORE will give it an outlet for its topping.

Kazan expects mergers and acquisitions to continue in California, with big players getting bigger. Glass House intends to continue to seek accretive agreements.

The company’s California orientation continues to be a strategic advantage, according to Kazan. While large MSOs are major players in the industry, potential federal legalization and interstate commerce will be a challenge for companies with vertically integrated operations in multiple states. As a single-state operator, Glass House will be poised to take advantage of interstate commerce without overhauling its operations.

Borrowing facility

In December 2021, Glass House announced a $100 million credit facility, which will help it grow its culture footprint. The company raised $50 million to finance the first phase of its construction. A significant focus of the investment will be on features that reduce the cost of goods sold (COGS). For example, the company has ebb and flow floors, which facilitates the number of people touching per person per plant, which translates into savings.

Glass house brand investors

Glass House still has a number of family friends and investors. Mercer Park is also a major investor. Over time, Kazan expects to see more institutional and retail investors enter the cannabis space.

The Glass House team wants to tell the story of the company. Professional athletes, celebrities and influencers frequent its California operations. The company is building its name as a California cannabis brand. Kazan likens California and cannabis to how consumers associate tequila with Mexico and wine with Napa or France. As legalization moves forward, this California focus will remain important to the company.

Outlook 2022

Glass House withdrew its guidance for 2022 when announcing its third quarter results. The company’s earlier projections were aggressive and it made sense to change those expectations, according to Kazan. The company’s growth in 2022 will be driven by factors such as bringing 1.7 million square feet of greenhouse PLUS gummies online and opening new stores. The company plans to open two to four stores. There is also the potential for further acquisitions. The company aims to bring its COGS down to $128 per pound, a major goal for Glass House this year.

While the company is focused on being good stewards of capital for its investors, it also prioritizes social justice and environmentalism. Glass House has donated money to Mission Green and Kazan sits on the board of The Weldon Project. The company is also investing in the production of clean energy at its new site. Glass House wants to drive shareholder value and do the right thing, according to Kazan.

Glass House uses solar panels on its new site.

To learn more, visit the Glass House Brands website. Listen to the full interview:

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Carrie Pallardy, a Chicago-based writer and editor, began her career covering the healthcare industry and now writes, edits and interviews subject matter experts across multiple industries. As a published writer, Carrie continues to tell compelling and untold stories to her network of readers. For more information, contact us.

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