Massachusetts-based Nova Farms is a very unique, if recognizable, breed of cannabis company, a throwback from the future, if you will, legacy at heart, sustainable by choice, modern in its thinking, wholesale but also retail, rooted to the soil but vertically inclined, with eyes firmly fixed on the future as it borrows and perfects time-honed models from the past. Launched seven-plus years ago, the company currently has operations in a small number of states mostly in the northeast, where its focus will remain, but it is also on the cusp of a considerable acceleration of growth in more states, thanks in large part to an infusion of capital by private markets alternative investments manager Chicago Atlantic that was announced in April.
“Chicago Atlantic has closed a $20 million facility in senior secured financing to Nova Farms, a fully integrated cannabis operator managing a Massachusetts cultivation farm, seven retail brands and five full-service dispensaries across Massachusetts, Maine and New Jersey,” read the announcement. The capital will help Nova achieve very specific goals. As Nova CEO Derek Ross explained during a recent call with Cannabis Business Executive, it will allow Nova to continue to exploit a model that is already a proven success, but it will also be used to help position the company to go public when the time is right, just like any shooting star that’s been waiting for its day to shine.
“I’ve been in cannabis for over 20 years now,” said Ross of Nova’s origin. “I’d been chasing [weed] around the country, and then I went into the hydroponics world, selling the equipment and designing the rooms, and then I spun that off into a consulting company to help build the sophisticated rooms for big MSOs and clients all over the country. One day, I just said, ‘You know what, I want to build my own company. I’ve been running with a team in cannabis for 20 years, they’re all my best friends, so why not get them to put it back together and build a company?
“We came up with the name Nova because it’s an exploding star that’s getting bigger and bigger and bigger and faster and faster and faster,” he explained. “And assembling the team, that’s what it seemed like – it was the team of experts all in a circle of synergy that just popped up, and everybody’s proving that in their own positions now. It’s really the team that we’ve created here and how it works. That’s what’s given us this good position, and I think on top of that, we’re all indoor growers, and we love indoors, but the future of the business is in outdoor sustainable cannabis cultivation for the cheapest price. That’s what consumers want, and we predicted that 10 years ago and started developing SOPs at that same time.”
Ross’s personal journey to cannabis was equally exceptional. “I had aged out of the foster care system and fell into the cannabis world and then fell in love with it and chased it all over the country,” he said. “I didn’t mind sleeping in the woods and growing plants and operating under medical licenses in California – from Northern to Central to Southern – and then bringing it back to the northeast part of the country – what I call home – and learning how to grow sustainably here, which was impossible, because outdoors was impossible.”
The years of experience helped develop the model they still use today. “Getting genetics, genetically drifting them, getting into hemp licenses to develop SOPs to scale cannabis, and growing cannabis for the manufacturing of cannabinoids,” added Ross. “You strip away the plant material and get the raw cannabinoids that you use to manufacture the products. That’s what we started developing, the model we’ve rolled out, and what has been very successful for us.”
I asked him what these control mechanisms are specifically. “It’s everything,” he replied. “Every day in this business is like ten days in another business, it moves so fast, and that makes people uncomfortable. We have to pivot, and we’re used to that in the cannabis industry. One day it’s medical and the next day it’s recreational. Everything changes every day. An ordinance comes out, and we get kicked off farms. We’ve been in that, so the control mechanisms are everything from the operating agreement to the day-to-day activities to who we see fit to hire to protect the cannabis business that has never been built by anybody else.
“We’re pioneers in it, and at first we weren’t sure if we could participate on that level,” he added, “but we’ve all been doing it our whole lives, and we know what to do. I just needed to make sure that my team and I had the same vision on what direction we’re going in, because we live in the future of this business, and it’s hard for people to keep up or see that vision. We’ve become very competent in that over the last few years so that nobody can bump into us, but we still needed to control operations, we needed to control operating agreement, we needed to have all the decision making.”
It turned out that level of control was needed when push came to shove. “Big companies were trying to buy us out two years ago, and our investors were pushing us to do it,” explained Ross. “They told us they were going to do it, but we kept the controls for that decision, and in fact we didn’t do it and those companies went belly up. If they had [sold], we would have been a yard-sale and wouldn’t be here now. So, those are the big decisions, and now, with Chicago Atlantic, we bought out those same investors that tried to put us into the corner but didn’t have the control to do it. We’ve essentially given them their money back and we’re going back out to look for new investors. That’s what that Chicago Atlantic loan did.”
House of Brands
Sporting several in-house brands that offer the full range of products, I asked Ross if Nova wants to be known as a retailer that also has brands, or as a house of brands? “It’s a house of brands.,” he said flatly. “It’s a portfolio and an umbrella for 10-15 companies that are all operational with directors running their own shows. There are CEOs for each one of these brands, pushing as fast as they can. That’s how we set Nova up, to be an umbrella to all of the brands.
“Retail is retail,” he continued. “It’s liquor stores and package stores and we treat it like retail. Most people that are vertically integrated stuff all their products in – it’s just Bud Light vodka, Bud Light beer – but we don’t. Some of our products and brands go in and the rest is for the consumer. We’re building a house of brands and a digitalized wholesale website to leverage into the market, so retailers can come to this massive digital platform and buy all of our products with a click of a button, with next day delivery. That’s going to get us in a position to go public and be able to partner and do acquisitions for the best brands that we see fit for the big portfolio of the Northeast.”
Each market is different. Nova has wholesale in Rhode Island, but no retail there yet. It’s insistence on control translates into more methodical rollouts. “A lot of people are spreading out and trusting other operators to manufacture their products,” said Ross. “We won’t do it. We’re not going further than the Northeast. We’re going to dig ourselves deep here, but we’re going to control every aspect of operations so that we keep the consistency and the convenience and the level of quality in every product. We don’t want to leave the Northeast, but we are only so big, and we don’t want to saturate the market and see quality goes down, so we control every product that we manufacture, and that’s our primary objective moving into new states.”
Maine is a good example of the model. “The maximum canopy size [in Maine] is 20,000 square feet, so we have 20,000 square feet on a 200-acre farm that has a product manufacturing building that is 10,000 square feet,” said Ross. “Then we have a retail in a more tourist area in the northern part of Maine, on Moosehead Lake in Greenville. We’re vertically integrated with sustainable outdoor cannabis cultivation, so we have wholesale farm-to-table and control every aspect of it in Maine.”
The company will also see new dispensaries come online soon. “We have three [stores] in Massachusetts, one in Maine, one in New Jersey, one is getting built out in Rhode Island right now, and two are being built out with our social equity partner in Connecticut.”
New cultivation is also coming online. “Rhode Island doesn’t allow outdoor [cultivation], so we’re indoor with 100 lights there. In New Jersey, which is fully vertically integrated, our license just had the final inspection yesterday for 150,000-square feet on a 90-acre horse farm. That’s going to be operational in the next two to three weeks, and our product/manufacturing in Jersey also has its final inspection next week, so by the end of the month that’ll be operational. So, Jersey’s full vertical will be live by the end of this month.”
Traditional Roots
“We’re the most sophisticated growers out there, but we went back to our traditional roots,” said Ross of Nova’s commitment to sustainable practices. “We talked to farmers [about] how they have been farming, and the soil we buy is the soil we plant in, the same way farmers have been doing it for tens of thousands of years. It’s something we had to develop, and we did that in the hemp world. We got into the hemp space to develop scalable cannabis cultivation without THC, but it’s the same plant.
“It took years of failing,” added Ross, “but when we figured it out, boom, Massachusetts opened up with a license and we were the first to have one on the East Coast. We started doing it, I and everybody said you couldn’t do it, but we knew differently. We had genetically drifted strains to grow here in the Northeast, and we knew we were going to come out swinging. We were selling our outdoors for the same price as indoors when we first started.
That said, growing outside comes with a big limitation. “We have one harvest, but it’s measured in the metric tons,” said Ross. “That was new to us. We’d always weighed in pounds and now we didn’t know where to put all this pot that was from one grow. We’ve been making pot since 2019, and it’s at a different level, so we’re getting back into the preroll/bud world now just to provide a good, low-cost product.
Have there been any significant challenges with mold or viruses? “We’ve battled it all but we’re completely organic, so we don’t do any sprays or anything,” said Ross. “Come fall, we also had snowstorms. We’ve taken our plants off two or three inches of snow, and we’ve had 22-degree frost move in and just cripple entire parts of the canopy that we didn’t get to in time, early freezes in September don’t get you to the end of October to finish, and we battled all of that, but again, it’s genetically drifting new strains. Cannabis has it in it; you just have to unlock the genetic potential and then you have to drift it into the climate environment that it is in. Just like us; we get put into an environment, we evolve into it, and we’ve done that with our genetics.”
Nova does its own genetics R&D, “but we also buy a lot of our genetics from all over the world and country just to continue to play with and build our library,” noted Ross. Raw flower is sold as eighths and prerolls. “We also trademarked the word mids, which is the low-quality bud,” said Ross. “We’ve been selling that as low-quality bud, and people said it would be suicide, but we come from an old school market and we knew mids sold, and we sold 50,000 eighths out of the gate.”
Nova is also in the process of reviewing some of its product brands. “In Rhode Island, we have an indoor brand – Southie Adams – and in Massachusetts, we’ve been under the Nova Farms brand, but we’re doing a new brand release at the end of this month called Highlands. We grow an old breed of cattle called Highland cattle, with the long hair and horns, and we have those on all our farms,” he explained, “so we’re coming out with a new flower brand called Highlands. It’s going to be a pack of prerolls similar to a convenient pack of 20 cigarettes, but it’ll be outdoor flower cannabis cigarettes for a low cost.”
It will be limited to prerolls because “we run out of flower come spring because we only get one harvest,” said Ross. “We move quick, and then we buy up everybody else’s, and we extract the cannabinoids, or we prepackage the flower and go wholesale with it as well.
I asked Ross if Nova has extensive placement on other retailer’s shelves. “Really good,” he said. “It was a market we got into a little bit late, but in Jersey, we’re going to get in much earlier, which will help us. On top of that, we’re figuring out this regulated industry with all the red tape. But after winning the High Times Cup the last three years in a row, it’s really helped position our brands on people shelves.
“And up until about four months ago, we had a small wholesale team, because we were building our business,” he added. “We were building the fire truck on the way to the fires, building the race car during the race, and we finally got it built. We finally got our model, we’ve backed into wholesale, and we’re probably going to go from 200 to 400 doors in the next six months in the state of Massachusetts, while blanketing the state of Jersey. We’ll have 100 percent market penetration there, because we have our model, we have our formulations, and we have our credibility, so we’re ready to go. This is a good time to get into Nova.”
Sustainable Models
I asked Ross if Nova was amenable to swapping shelf space with other brands. “We do it with every state we’ve gotten into,” he said. “Everybody likes working with us, and we like working with good operators. And like I said, retail is retail. We want to provide the best experience for consumers when they walk through our doors, and we don’t need to be exclusive to just our brands. We leverage our retail to develop relationships with other wholesalers and other retailers as well. “
Is the plan that Nova’s Sheffield, Mass. Farm will one day supply all of the Northeast and beyond? What happens when you can sell interstate commerce is finally allowed? “Our model is designed for that to happen and to be able to take advantage of it,” said Ross. “Each state caps the amount of square footage you’re allowed to grow, so our model is scalable. Right now, the biggest we can go to in Massachusetts is 100,000 square feet, and that’s what we have. In Jersey, it’s 150,000 square feet, and that’s what we have. But we’re capable of scaling in the millions of square feet in the event that we had to and keep up and participate across state lines, because we’ve done it in hemp. But it wasn’t easy planting 200,000 plants on 100 acres, and mind you, we’re on one acre with cannabis. We scaled this business, we automated it, and there’s nobody on the East Coast manufacturing cannabis for cheaper than us. There’s just no way.”
As far as whether Nova grows from seed or clone, “We move them all,” said Rossd. “We use a lot of clones, depending on if it’s for hash producers, or for freezing it for extraction, or we’re just growing it for flower. But our model has always been that cannabis has been here for tens of thousands of years, and it was always a crime against humanity when it got pulled away from human evolution. So, for us, isolating and making a separate compound isn’t the future of how we build our products. We participate right now in those verticals, but our big product brands are based on full-spectrum, sun-grown, organic cannabis from the landrace, the good genetics that are out there, and the elements that were just like the other 9,900 years of evolution with cannabis in humans. That’s what we’re matching, and when you match that with experience, the consumer gets a euphoria feeling, and they get a good feeling. There are no negative effects with that feeling because we’ve been doing it for 10,000 years.
“But when you start manipulating it to be overbearing and higher and lower in these different things,” he added. “there are negative effects with that, and we believe that full-spectrum solventless and organic grown, sun-grown cannabis is the thing of the future. And that’s going to come with that consistency that you and I look for now. When we find something we like, whether it’s fish and chips or a strain, we keep it there. That’s what we want for the experience, and with Highland, that’s why we’re going to use strain-specific prerolls. It’ll be consistent, and it’ll be the biggest bang for your buck.”
And did he have any hard truths about cannabis consumers? “Whether it’s a mature market or it’s a non-mature market, meaning it’s new, inevitably it all shakes out to the same thing, consumers want the biggest bang for their buck,” he stated without reservation. “Whether it’s IPA drinking or high-end indoor flower smoking, Bud Light drinking or Highland preroll smoking, everybody wants what they want, and they want to get the best quality for the expensive price or back shelf, or they want to get the 30-pack instead of the four beers for the $20. So, we’re trying to control each one of those shelves and provide a consistency inside of those products that doesn’t ever change, even down to the strain of the preroll.
The panoply of price points is in play. “We want to control all of those shelves that the consumer wants, and that’s with each of these brands,” said Ross. “One of our big exercises yesterday was seeing where each one of these resonates, which ones are we missing, where are we weak and where do we want to do joint partnership with shelves we’re not as interested in. Because you could be the IPA company, or you could be the Coors Light Company. We want to be the Coors Light, and we want to provide that product on a certain scale.”
Is that same conversation had with each of his brands? “That’s what we did yesterday,” he said. “We’re actually rebranding some of them. We’ve been in a warm-up, a preseason game. Opening up in Jersey, now it’s the first inning, and there’s another 50 million people just south of that state. “
Shopping Nova
Why as a cannabis patient or consumer would I travel to visit a Nova retail if there’s another one closer that selling basically the same products? “If it’s a mature market and you’re an experienced consumer, the answer is you shouldn’t have to travel,” said Ross flatly. “You should have those brands that you love in the local package [store] so you don’t have to go any farther, and it’s consistent every single time. And whether it’s my retail or not, it’s the product you love and it’s close to you and it’s convenient. And that convenient word is the important part.
But when you do come to our retail,” he added, “there is the culture, and here is a vibe there. It’s the underdog vibe, it’s the happy vibe, it’s the cannabis connoisseur people that are the hub for people that are less experienced. New people come in and meet people that we’ve hand-selected to walk them through the process so that they don’t end up taking too much or taking too little and they listen to them and help solve their problems. And we’ve been really specific about that. We’re not pushing people specifically on our brands. We’re bringing them to the right products in order to introduce them to cannabis the right way. That’s important for us. and that’s why people have gone out of their way to continue to come to us.
“It can be uncomfortable buying cannabis when it’s the first two or three years rolling out a new market,” he continued. “We understand that and want to make people comfortable when they come in, but more importantly, now they’re trusting us that their experiences with cannabis will be consistent so that, like in prohibition, they don’t go blind drinking moonshine! And we realize that we have to develop the best culture and the best people, and give the best people the best opportunities, because we’re responsible for people getting introduced to cannabis, and if they don’t have a good introduction, and they have a bad experience, they’re never coming back. It’s our job and responsibility to give people the experience the right way because people need an alternative to alcohol. That’s what they’re looking for, and that’s how we pick our budtenders.”
You’ll always have people who want the Bud Light or who always shop for the lowest price, but can’t a more discriminating shopper also be nurtured, similar to the wine lover? “It’s developing,” said a confident Ross. “Colorado just put something out where they’re taking away some of the massive amount of red tape in Colorado, and that right there helps humanize this business the way it should be.
“In Maine, they don’t make us have five people in the car, with logs and cameras, we’re the worst thing out there, and it’s a crime against humanity just because we’re transporting cannabis from wholesale to retail,” he added. “But just like you do with alcohol, you log it, track everything, and drop it off, so there was humanizing happening. I think to get to that place, it needs to be accepted more, because there are still operators out there in states where people are being discriminated against and looked down on. It’s our job to bring it to the public’s eye and humanize it so that everybody accepts it, and they can experience and realize that it isn’t the devil’s lettuce and the drug that everybody thought it was. It’s far from that, and different strokes for different folks, and that’s the beauty of it, but I think it’s going to take time for it to be fully humanized and accepted.”
Connecticut and Beyond
Nova Farms has ongoing plans for the Nutmeg state. “When we got into Connecticut, we were helping draft a sustainable recreational bill so we could practice our model, and on top of that, participate in the social equity program and provide opportunity to these entrepreneurs that needed the opportunity,” explained Ross. “We helped get it pushed through, and then we got lucky with the best person we could have ever found, Jason Taylor, who has been a massive advocate in the state and a qualified social equity applicant, but more importantly, a cannabis CEO. He’s the best in the business, it’s impressive to watch him go, and we partnered with him. He’s been building his business and lobbying for sustainable agriculture and the opportunity to grow in more farming communities so we can positively impact those communities, stimulating the local economy.
But things are different in the state. “When I first went to Connecticut, we were doing a tour with a company I was trying to buy at the time, and I was like, ‘What is that strain? It looks like GDP?’ And they’re like, ‘Well, we can’t call it by the strain name. It’s zero dash two six four…you can put that in the computer, and it’ll tell you what it is.’ So, that’s going to take time for advocates and people humanizing it to get it to the point where it should be, but when that happens, that’s when we can focus on really providing experiences to the consumer.”
Will Nova operate one of the newly allowed outdoor grows from the bill that just passed? “We’re actually farm shopping today, and we have been farm shopping,” said Ross. “We’re ready to build, and when we build, that’s when the industry is going to really start evolving, because right now there’s a massive supply issue.”
My belief is that any quality flower that comes into the state will sell out immediately. “That’s because they didn’t open it up,” retorted Ross. “They don’t want to oversaturate the market, but here’s the deal, people are going to get into this that have done it, and people are going to get into it that haven’t, and the market is going to weed out the weak. And you can’t just add ten, because out of the 10 only three are going to make it, and if other people have time to make it, they’re not going to provide a quality product. And that’s the problem in Connecticut. They gave it out like it was some lottery when they just have to give opportunities to cannabis operators.”
Most states are still dealing with alcohol decades after the end of prohibition, which only lasted a few years. “Same thing with cannabis, and if you study the prohibition of alcohol, you can paint the prohibition model for cannabis,” said Ross. “That’s what is happening, and that’s the beauty of what Nova is. It’s mimicking the same themes, the same prohibition with alcohol. You can look at those models, and they are literally rolling out the same way.”
Chicago Atlantic
About the Chicago Atlantic deal, I asked Ross if it was in the works for a long time, or did it come about recently and quickly? “It took a little over a year,” he said. “When we met with Chicago Atlantic, my team and I had been interviewing banks and investors for around 18 months, and we figured it would be just another meeting about who wants to eat Nova’s lunch and give us something that we can’t afford so that they can own us. We were figuring that out quick, and that’s why we were passing on everybody, because these guys know our numbers better than we did. But we wanted to draw down and take what we could afford and get it at a price that wasn’t going to break us, and we wanted a bank or a partner that was going to do that and put us in a position to succeed.
“And meeting with Chicago Atlantic, that was instantly there,” he added. “And not only was that there, but they agreed with us on all the stuff that we wanted and did, because they wanted to see us successful. But more importantly, when we started breaking down our model to the bank, and specifically Steve Earnest, as the visionary he is, he saw the model and believed in it. He was the first person in banking that I didn’t make go cross-eyed.
That implies that these people, who hear 10-20 pitches a day, were hearing something new from Nova. “They were there, and they weren’t going cross-eyed, and they weren’t telling me I was wrong, because everybody else told me, ‘You’re wrong,” said Ross. “And I’m looking at them, going, ‘You just don’t know, and I feel bad for your investments because nobody is growing tobacco indoors and rolling it up anymore.’
What about issues like price declines in a given market? How does one prepare for it? “Pricing is the issue that we’re in,” said Ross. “That’s it, and that’s the IPA world. I love indoors to death, and personally love smoking a high-end preroll that’s got the high terps, and that’s the IPA world. It exists in beer, the small, high-end niche craft beer company, just like it does here, but going really wide with it is kind of unsustainable. Out of the gate, it’s worth it. If you get in first, it’s worth it, but it is something that is dangerous as you get into mature markets.
“So, for Chicago Atlantic, it was all of the vision and all the models, but more importantly it was the financials,” he added. “When they looked at ours, they saw growth, and they had been looking at 20-30 a day, and all of them were going down. They said we’re one of 10 out of 10,000 out in 2023 at the Benzinga Conference. And then this year, they said we were one of six out of 10,000, because a lot of cannabis companies weren’t continuing to grow. In saturated markets, with more people coming in, they were good successful companies, but they weren’t continuing to grow, they were going down. Ours has been a trajectory up, with shovel-ready projects and additional projects to facilitate real growth, more growth over the next three or four years than we’ve ever seen in our company.
A Shooting Star
Nova is a private company, and does not have to give numbers, but what are the core metrics most important to the company? Is it revenue, number of tons, profitability? “It’s all of it,” said Ross. “It’s EBITDA, net profit, cost, it’s the monthly draw. A lot of people got bad deals with their leases with their farms, and now that’s draining and killing the business because of taking on too much debt out of the gate. We are debt free, and we’ve been a debt-free company. They were baffled that we put every dollar back in and didn’t touch one dollar of it, and we had no debt, and we were about to break $100 million in revenue, and we were just getting started because we’re only within 10 million and the 50 million [people] that are just south of us, and we had already proven that we could go from state to state in highly regulated markets.
“That’s what set us apart,” he insisted. “And because this was legacy for us – we are operators, we’ve been operators since day one – and that was different as well. All of us had a background, we’re best friends who have been selling cannabis for 20 years, and so it was a different story that they liked. But more importantly, while my weakness is the financial aspect of the world – and I’d rather be driving my tractor, growing weed – I think the reason why we get the seat at the table is because I’m good at the position I have, and I’m going to continue to do it to make sure everyone’s protected in this company, because I care about it.”
“That’s called competition, but it’s not just any competition,” noted Ross. “It’s the competition. It’s the people that are finally getting the licenses to participate in the business that they’ve been in their whole life, and that’s a great thing to see. But at the same time, there are a lot of assets that are distressed right now, some because they were structured wrong, but also because people that thought it was a get rich quick business, and it’s not. It is the hardest business in the world to run right now.”
Was he able to explain how Nova plans to deploy this infusion of capital? “Sure,” said Ross. “Half of it we used to take a position to buy our investors shares so that we could resell them for more strategic investors. Right now, we have access to half of our company that we’re selling to new investors, and we’re vetting people that bring a significant amount of strategic value, not just the cash. So, half of that [money] has opened up the opportunity for us to take on our current investors and bring in new ones, and for the next 90 days, we’re making that transition. The other half is going to Connecticut, New York, and Pennsylvania, and trickling down the rest of the east coast to New Jersey.”
In addition to cash, what other assets of interest would someone bring to the table? “The cash is great,” said Ross, “but a lot of people have it, and we wanted more – real estate development, legal, retail expansion, wholesale development, and it can be in any industry, connections in different states that bring us up to the next level of business, people with business experience that can help a bunch of operators that have gotten it to this point but need help getting it to the next level of banking to bring it public. That’s another piece that we’re looking for. We’re looking for strategic investors to help mentor us in the next level of business. After we break $100 million this year, we’re going to be participating in scalability, because we’ve got the operational stuff, we’ve got the formula, we’ve got the model, we’ve got the team, we’ve got everything.
“So, we want to bring in business experience money that believes in our vision and trusts us, to help us get to the next level, because it was super complicated navigating around investors that were telling us that we were wrong but come to find out we were one of 10 of 10,000 in the country,” he added. “When we found that out that we felt betrayed, and we wanted new investors that were going to align with us. That’s why we took on a little bit of debt for the first time ever, and that’s why we’re looking for new investors that can bring that business level experience to take us public when Safe Banking goes through. We want to be one of the biggest companies in the Northeast to be able to walk into Wall Street doing a public play.”
Our time about up, I ran some other states by Ross, like Pennsylvania, which he had mentioned in passing. “In Pennsylvania, we’re looking at a few different acquisitions,” he said. “It would be the first time we could do an acquisition and get into a market early before recreational. That’d be the best thing that ever happened to Nova.”
Would that entail acquiring cultivation/manufacturing or the entire vertical? “Maybe an entire vertical, but we don’t want to overpay for something that we can develop, and it would have to be a good price with partners that want to partner with us because they trust us as operators, and they will they see the value in us,” he said. “If not, we’ll set up our own when recreational comes, and we’ll jump in and participate. But we think we have the credibility for somebody that got into it and realizes that it’s a hard business. They can do it, because entrepreneurs can usually do it, but they realize that it takes seven days a week, 24/7, and this is a business that pivots so fast that it gets uncomfortable for investors. They like to have a plan and stick to it with it, but here a new piece of equipment could change the game of an entire industry overnight, or a new piece of legislation for taxes.”
Indeed, most plans go up in smoke. For that reason, does Nova prefers to go into a state with its wholesale model first, but if an opportunity comes that can’t be passed up, it will go in first with retail, and then follow up with wholesale? “That’s what we did with Jersey,” said Ross. “We opened up our retail, which got revenue generating and helped introduce us to the market, and we immediately doubled back to grab the farm and product manufacturing. Both of those are finalizing this month and will be operational by the end of the month.
“We can build out a retail in three or four months, and we can build out a farm in three or four months,” he added. “Product manufacturing takes a year, maybe more, depending on how big we go. People want to sell us preexisting stuff, but paying $150 million for a setup that’s not even built the way we want it, as opposed to coming in for under $10 million and having it be exactly the way we want it, only bigger and better, that’s the transition we got to figure out – what makes it worth it, and does it align with our models?”
And how imminent is Nova’s entrance into New York? “We’re waiting for the number of recreational dispensaries to reach the 150 mark, and then it’s just a quick move with what we called the tabletop model for product manufacturing and wholesale,” said Ross. “There is an opportunity for us to buy an existing hemp license that allows outdoor growing and product manufacturing, and we could do that, but it has to make sense. If not, come fall, when we think New York will start working itself out, we’re going to jump in and grab the product manufacturer and start deploying our big-name brands, the nationally recognized ones, into the state as soon as possible. So, we’ll be setting up in New York by the end of this year for sure.”
Ross had mentioned hemp several times during our conversation. I asked him what he thought about the situation we’re in right now with new rules for hemp being tossed about in Congress. “I think that it’s unsafe for kids and people consuming it if it’s not consistently dosed right and regulated, and that’s the only issue that I’d have with it,” he said. “I think each state will potentially regulate it back, because it does impair judgment, but some states are saying yes and some states are saying no, so I’m technically right down the middle of not really having an opinion on how it shakes out. I was in the hemp industry for years. I wish this had come along when I was still there, but at the same time, it’s the evolution of cannabis, and I love that. I just think it should be regulated a little better so that the consumer doesn’t get taken advantage of.”