Marijuana Business Magazine November December 2018

W hen Robert Fireman and Tim Shaw opened Rhode Island’s first dispensary, the Thomas C. Slater Center, in 2013, they had no ambitions to expand into other states. But when they looked at the final facility and saw new states legalizing medical marijuana, they revised their game plan. Today, Fireman and Shaw are two of the three principals of MariMed, a pub- licly traded company that partially owns and operates cultivation, processing and retail facilities in six states. More recently they have acquired infused product brands and developed their own edibles, which they expect will pave the way into new markets. So far, it’s been a successful model. In 2017, MariMed’s revenues increased 70% to $6.1 million, operating income increased 56% to $1.2 million and total assets increased 276% to $32.2 million. Fireman and Shaw have managed to expand their reach from tiny Rhode Island by finding strong local partners and diversifying their product offerings. MariMed plans to continue relying on those tactics, even though grow- ing social acceptance and a perceived declining threat of federal interference have persuaded the company to revise its business model. “That’s my strategy. I want partners in every cannabis-legal state in the country, and partners will be manu- facturing (and) distribution,” Fireman said. “I want to be in the 5,000-plus dispensaries in California, Washing- ton, Oregon, Colorado – so that if we have a great product that resonates, we can put it everywhere.” Non-Plant-Touching Model MariMed’s model has been predicated on staying out of the plant-touching side of the business – even if that means forgoing the revenue that license holders were reaping – at least until Fireman and Shaw felt there was no longer a signifi- cant threat of federal interference. Under its model, MariMed creates private, limited-liability companies to fund and develop cultivation, process- ing and dispensing facilities.These single-facility LLCs are sometimes jointly owned by MariMed and inves- tors, with the share of ownership and the allocation of return negotiated on a deal- specific basis. Fireman and Shaw would, for example, buy and own assets like the equipment, property and building.The business license, meanwhile, is tied to the building but actually held by one of MariMed’s partners.This structure was used in projects in Delaware, Illinois, Maryland, Massachusetts and Nevada. “We’re not plant touchers,” Fireman said. “Our initial strategy was to be consultants, application writers, manag- ers, landlords, lenders. We separated ourselves from our clients.” Because Fireman and his colleagues starting in cannabis were focused on eastern states, which primarily allowed for only nonprofit cannabis businesses, ONTHEIRMARIWAY MariMed HEADQUARTERS Newton, Massachusetts YEAR FOUNDED 2011 ABOUT A publicly traded company that partners with local groups in various states to own and operate marijuana businesses. The company creates and brands its own products and makes acquisitions. STATES Delaware, Illinois, Maryland, Massachusetts, Nevada and Rhode Island. EMPLOYEES 25, plus it oversees 350 employees who work in its partners' facilities in six states. 2017 REVENUE $6.1 million TICKER SYMBOL MRMD Amedical marijuana business leverages partnerships and licensing deals to enter newmarkets By Omar Sacirbey RECIPE FOR SUCCESS The business partners behind MariMed expanded their reach beyond Rhode Island by relying on a few strategies: • Finding strong local partners. • Diversifying their product offerings through acquisitions and developing their own products in-house. • Going public to have the capital to fund expansion. 66 • Marijuana Business Magazine • November/December 2018

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