By Rob Meagher
CBE recently had the opportunity to meet with Jason Vedadi, Chairman of Harvest Health & Recreation (CSE: HARV) and Steve White, CEO. This is a story about two driven men, with complimentary skill sets and a shared vision, who have a strategic plan to become the dominant player in the Cannabis Industry while running a lean machine that has been profitable from the get-go. They also have laser beam focus on consolidating cultures from companies that they have acquired in order to achieve scale and diversity of the portfolio of Harvest operating entities without missing a beat. Make no mistake, these are two highly capable leaders that are building a company by example and good old hard work as they acclimate assets & employees through acquisitions and expansion by empowering these employees as they move aggressively to solidify their position as an industry player to be reckoned with into the future.
White and Vedadi met back in Arizona as they both pursued medical licenses during the rush to be part of the state’s regulated MMJ program back in 2010-11. Both men shared a work ethic and professional experience that would meld into one of the companies to be contended with in accessing consumer dollars in the rapidly expanding US cannabis market. Vedadi made his mark in real estate development and oil and gas while White was a lawyer before entering the industry with his first license win in Arizona with his original partners back in 2011.
After graduating from Arizona State’s Honors College summa cum laude with two minors (while also winning an athletic national championship in body building), White attended and graduated from Washington and Lee’s School of Law in 1999.
When he entered into private practice, he focused on business, business litigation and regulatory law for two national firms. In 2005, he founded his own boutique law firm representing clients ranging from very large to start-ups across a variety of industries. Bored with his law practice, White started thinking about what he wanted to do with his life, and he began considering taking on clients pursuing AZ’s MMJ opportunity after his firm’s phone blew up with prospective cannabis clients when the state’s third attempt at legalization took shape.
He considered the ethical challenges that representing cannabis clients presented. After all, how does one advise people on breaking federal laws as the state turned a blind eye on that issue and how many clients could you represent without having conflicts of interest. After consulting with an ethics attorney friend, he was advised that his firm could assist multiple cannabis clients but only if other attorneys also took on no more than one client each.
White took on an applicant group that consisted of a couple of guys from the construction/buildout industry. He enjoyed working with them so much that he joined the two after they asked him to become a partner. The team won 2 licenses in AZ dramatically changing his life.
White founded Harvest Health and Recreation Inc. in 2011. After opening Harvest’s first dispensary in 2013, he got his hands dirty for several months learning the business fulfilling orders, performing reception duties, and consulting with patients. These early experiences convinced him that he had the ability to help shape a company that gave people control over an aspect of their life where they previously had very little – their health and wellness. This led White to instill a culture of education and empowerment at Harvest to provide patients much needed products, resources, and support.
He also began thinking about opening other markets with Nevada at the top of the list.
Jason Vedadi is a real estate developer by trade which he has pursued since graduating from University of Montana with a degree in business in 2001. Vedadi is currently building in Coeur D’Alene Idaho; Scottsdale, Arizona and in exclusive golf communities in Flagstaff, Arizona.
He and White met early in the AZ licensing process when White had targeted properties in high population areas and Vedadi owned one that met his needs. Even though he didn’t sell the property to White, he did assist him with the application process and a bond was formed before Vedadi moved back to North Dakota to pursue oil opportunities.
After oil prices dropped, Vedadi came back to AZ to refocus his efforts on the cannabis opportunity. He and White reconnected at the November of 2015 Marijuana Business Daily second Las Vegas conference at the Rio Hotel and Casino. Jason was looking to partner with his friend White and pitched him on the fact that he should grab him while he was still affordable.
Over the next 7 months, Vedadi went about the business of acquiring AZ licenses under the Modern Flower nameplate (he put together 6 vertically integrated licenses and 6 stores). White, who had invested heavily in cultivation in the state, was convinced that the wholesale market would collapse as it had in WA and OR and that having a retail footprint was imperative so they decided that it was time to work together. They began implementing the strategy to expand their business to other legally regulated states that day and worked together until officially merging forces July 1, 2017. Their business marriage has developed into the multi-state, vertically integrated, publicly traded company Harvest Health and Recreation has become today.
Until officially merging forces, the two had won licenses through the application process or through acquisition. They both were also lean operators. White told me “it isn’t in our DNA to waste money”. But to continue their expansion, they would need capital and with operating experience in running profitable cultivation, processing and retail facilities, they executed their first raise in the summer of 2017 about the time that they merged companies under the Harvest moniker; $50 Million US through debt and equity.
As Harvest’s CEO, White is responsible for license acquisition, start-up, operations, and organizational direction and strategy. He has led Harvest’s efforts to navigate rigorous state- and county-level regulatory audits, Americans for Safe Access Patient
Focused Certifications, and many other certified financial audits. And together with President Steve Gutterman, they manage the challenge of absorbing of acquisitions and melding staff into the company’s culture and mindset, one of the largest challenges any serious cannabis company, north of the border or in the US faces.
Vedadi, who White says is the only guy that he has met that can actually out-work him (he also says Vedadi can survive on minimal sleep!), is constantly on the road looking for acquisitions that will build the companies multi-state footprint and capabilities to deliver what their consumer base is looking for. The inside-outside leadership team has been busy.
Just after going public in November, Harvest acquired CBx Enterprises (“CBx”), whose technology is utilized by Evolab, CBx Sciences and CBx Essentials. Harvest now holds exclusive national rights to CBx’s intellectual property, including all technology, methodologies, trademarks and formulations. According to Harvest’s press release,
“CBx has established itself as the dominant leader in cannabis product development, research and innovation, and our partnership is a game-changer for expansion,” said Harvest Chairman Jason Vedadi. “Working with the CBx team will allow us to radically slash the lengthy and costly product development cycles in each new market that we enter and can now immediately offer some of the most trusted products in the cannabis industry. Bringing CBx’s team and products to Harvest’s robust and aggressive portfolio of retail operations combines two of the most effective names in cannabis.” The acquisition also added industry pioneer and the talented CBx CEO Nicole Smith to the team and according to Vedadi, “Working with the CBx team will allow us to radically slash the lengthy and costly product development cycles in each new market that we enter and can now immediately offer some of the most trusted products in the cannabis industry. Bringing CBx’s team and products to Harvest’s robust and aggressive portfolio of retail operations combines two of the most effective names in cannabis.”
Vedadi also led efforts to merge forces with Aina We Would, LLC, to create a national cannabis real estate investment vehicle with up to $100 Million in committed capital for approved projects just last week.
Harvest’s flurry of expansion moves has required as many hours as the two leaders and their team have to become operational. It is a best practice to get to know people before consummating financial relationships, much like the way the two got to know one another before formally marrying their businesses. They like to be sure that they have the same core values with any target.
Because of their rapid expansion, Harvest has moved quickly and built a strong capital markets team led by CFO Leo Laschke. Human Capital acquisition is headed up by VP of HR Siobahn Carragher and an operational management team, led by Gutterman, that they feel is second to none. They target folks that have done their jobs before either in cannabis or in like positions.
For instance, SVP Head of Retail, Michele Trzukowski spent years with Sunglass Hut as they expanded nationally. Paul Nowak, and Jason Morris, Sr. VPs of design and construction and manufacturing respectively have to be in lock step with their operational counterparts to execute. With plans to add another 50 retail locations in 2019 (their newly acquired Florida license allows for up to 25 retail locations in the state alone), the entire management team is looking to add to the talent to get the footprint built out to generate revenues from lucrative and high population markets like CA, MA, MD, OH, and PA, to maximize return on investment.
Gutterman and Chief of Staff Joe Sai manage daily hand-offs between the expansion and operational teams so that they are all focused on integration to bring the needed talent and resources to the table at light speed in efforts towards revenue generation, yesterday! The acquisition of CBx Enterprises provided an opportunity to rapidly introduce new products into 4 additional markets immediately (CA, CO, FL and MD), all with large revenue upside.
The management team is also armed with the tools needed to attract top talent, stock options and bonus programs to name a couple; all geared towards energizing a team around the purpose of becoming a dominant force in the US market. They believe that professional growth opportunities, financial rewards and being part of the opportunity to be the most valuable cannabis company in the world are great motivators for acquiring the talent needed to pull off such a lofty goal. Like they communicate what they are up to the investor community, they have put in place an internal communication platform to do the same with employees.
The management team is focused on three key goals:
- Rapid expansion of the retail footprint with an eye on revenue explosion in several states,
- Creating the infrastructure for brand development on a national scale (they will acquire key brands),
- and executing from top to bottom infusing a winning, focused and lean and mean culture geared towards winning the brass ring.
They will push state regulatory allowances to maximize market presence (they plan on pushing their CA footprint aggressively but will not add markets at price points that don’t make financial sense). Plans include being a part of the NJ recreational market to serve the greater NY commuter market place but again, only when they are confident that the supply chain that their vertically integrated operations will allow.
The current Harvest footprint is transparently laid out on their website and highlights both a medical health revenue play as well as an adult-use revenue upside. The company is now actively operational or in the process of building out access to consumer pocketbooks in 11 states with tremendous upside in revenues if they can scale with the speed previously mentioned to begin competing for market share. As the dominant player in Arizona’s lucrative medical market, Harvest is poised to see dramatic revenue expansion in 2019 replicating what they have done there, as long as the team executes in each market. And White and Vedadi and their lean, mean, green fighting machine aren’t going to sleep until they do. CBE can’t wait to follow these folks iand see how they execute in the upcoming year!
Cannabis Business Executive Background Information
Company Name: Harvest Health and Recreation Inc.
Year Founded: 2011
Ownership structure/operating entities: Public Company Trading on Canadian Stock Exchange:
Harvest Health and Recreation Inc. is a consistently profitable, vertically integrated cannabis company with one of the largest footprints in the world. Harvest’s industry-leading cultivation, manufacturing, retail facilities, construction, real estate and technologies are backed by experienced, in-house finance, compliance, operations, real estate, human resources, marketing and legal teams, who have a proven and trusted track record in the cannabis industry. Harvest’s 400+ employees and established best practices are leveraged daily to consistently drive innovation and growth. Harvest continues to broaden its operations in the most productive and strategic markets while servicing patients, consumers and the cannabis industry at large.
Subsidiaries Include: Harvest FINCO, Inc., Harvest of California LLC, Svaccha, LLC
Executive Chairman Jason Vedadi
CEO Steve White
President Steve Gutterman
CFO Leo Jaschke
SVP, Design and Construction, Paul Nowak
SVP, Head of Manufacturing, Jason Morris
SVP, Head of Retail, Michele Trzuskowski
General Counsel Sean Berberian
Chief of Staff, Joe Sai
VP, HR Siobahn Carragher
Director of Public Affairs Ben Kimbro
Headquarters: Tempe, Arizona
Industry Segment/Category: Producer, Processor, Retailer
Fully vertically integrated company with cultivation, manufacturing, retail facilities, construction, real estate and technologies
Current Markets/States Served:
Number of Locations:
11 states and licenses for more than 80 facilities
Number of Licenses by State: https://www.harvestinc.com/industry-experience/
Current Number of employees: 400+
Our goal in retail is to service the cannabis consumer in both the recreational and medicinal markets. We support the retail environment through its people, product, and presentation. Our goal is to educate and inform the patients, and community about the benefits of cannabis while reducing the stigma around purchasing the product. It is our intent to offer the highest quality of products, that are clean, tested, and approved while offering a safe and welcoming environment.
2015 Revenues: $10MM
2016 Revenues: $13MM
2017 Revenues: $23MM
2018 Projected Revenue: $45MM
Company Revenue Mix: Wholesale and retail revenue through vertical integration (cultivation, processing, and retail) Operating in 11 states.
Targeting top opportunity markets with a preference towards limited license opportunities. Growth will be achieved and through strategic acquisitions and continuing to win licenses in newly regulating states. Harvest will also begin to the lay the foundation for national brand development.
Harvest recently started trading on the Canadian Stock Exchange. The Company completed one raise during the summer and another associated with the reverse take-over. The Company does not need additional financing to complete its present expansion plans.