Steve White remembers telling his parents several years ago his plan to leave a successful business law career to launch a medical marijuana company, which was —and remains — illegal under federal law.

The 1995 Arizona State University graduate who swam and played basketball at Corona Del Sol High School in Tempe was in his late 30s at the time. Arizona voters had approved medical use. He sat down with his parents for a meal at Abuelo's Mexican Restaurant in Chandler to break the news.

"It landed well," White said earlier this month. "They were supportive. But I think that's partially because they thought that legal cannabis in Arizona wasn't going to go anywhere. In fact, they did say that — there is no way that Arizona will let this get off the ground. I said, 'Well, we'll see.'"

Harvest Health and Recreation Inc. did get off the ground.

On March 11, White announced the biggest legal deal ever in the U.S. cannabis industry: Harvest would spend $850 million to acquire Illinois-based cannabis company Verano Holdings.

The combined company will have more licenses to operate in more states than any other U.S. cannabis company, according to the presentation given to analysts after the announcement.

White, the founder and CEO, appeared on CNBC to talk about the blockbuster deal the day it was announced.

"What we plan on doing is developing the largest retail footprint, the largest retail platform in the United States, and with this acquisition I think we’ve done that," White told the reporters on "Fast Money."

The national television interview was a watershed moment for White, 45, who has grown Harvest into a multi-state behemoth that was bringing in more than $1 million in revenue every 10 days as of September. It has expanded since then.

Harvest is also the biggest player in the Arizona market with 16 dispensary licenses here, supplied mostly by a farm in Camp Verde, according to the company. Harvest has lucrative retail locations in big markets like California and Florida. And that's just the beginning.

If the all-stock deal with Verano closes this year as planned, Harvest will hold licenses allowing it to operate 123 retail sites in 16 states and territories, as well as production facilities to keep them stocked.

White met with The Arizona Republic recently to talk about how he got started in the cannabis business and growth in the industry.

He's also working on a ballot measure to legalize the drug beyond medical use in Arizona. And he discussed the opposition that effort will see from anti-marijuana stalwarts like Yavapai County Attorney Sheila Polk.

"Everybody realizes the parade of horribles that Sheila and other people like her promised us would happen," he said of medical marijuana. "None of them happened."

Taking a big risk

White majored in political science at ASU and went on to law school at Washington and Lee University in Virginia.

His law firm, White Berberian, PLC, was asked to take on clients who wanted to open a dispensary under Arizona's Medical Marijuana Act, which passed by a razor-thin majority of voters in 2010. Instead, White stopped taking clients and launched the cannabis business with friends.

"It was very risky," he said. "Everybody saw the potential. That's never been an issue with legal cannabis. The issue was the associated risk. Did the potential outweigh the risk?"

In 2012, then-Arizona Attorney General Tom Horne asked a state court to declare dispensaries illegal and prevent them from opening. That didn't happen.

Arizona today has 116 operating dispensaries, and most were awarded their state licenses in either 2012 or the follow-up drawing for licenses in 2016.

"Our goal at the onset of this was to win a license in Arizona," White said. "Then we ended up winning two in that initial allocation."

Harvest won licenses in south Tempe and Springerville, a town of about 2,000 near the New Mexico border. The company opened a south Tempe location in 2013 and after three years without opening in Springerville, moved the other license to Scottsdale, where Harvest made a splash with a $1 million store that the company billed as the largest retailer in the state at the time.

Harvest has continued to grow and become profitable since then. When the company went public in November, it had to file financial documents with the Canadian Securities Exchange. They showed Harvest had about $3.6 million in profit during first nine months of 2018. It is now trading under the ticker symbol HARV.

The booming growth of Harvest helped White's parents get over their initial doubts about the industry.

"They're shareholders," he said.

100-hour weeks: 'Work now, life later'

Sitting in his second-story office along Tempe Town Lake, White presents a solemn demeanor and chooses his words carefully. But he also answers nearly every question directly.

Besides a few fake houseplants, the Harvest office-park headquarters and its workers' cubicles are almost devoid of decoration, and give no indication that the company deals in cannabis.

Boxes are piled against the walls and filled with office supplies, making it appear employees moved in overnight. They've been in the building since January.

White describes his personal life like this: "I work a lot."

He says his regular 90- to 100-hour workweeks leave little time for any hobbies.

He belongs to a cross-fit gym in Chandler, but doesn't get there as much as he'd like these days.

"My attendance there has gone from pretty good to terrible," he said.

Besides being a high school athlete, a search of Arizona Republic archives found White listed in the "Holes in One" feature in 2000, indicating he hit an ace at the Ken McDonald course in Tempe. His publicist confirmed the 161-yard shot, but added that the ball took a fortunate bounce.

White has a golf putting cup in his small office, and almost no other decor.

He said he's not worried about maintaining a so-called work-life balance.

"There's a saying that the way you achieve a work-life balance is you work now and you'll life later," he said.

White has done several media interviews over the years as he built his cannabis empire. On occasion, he has said that helping patients access cannabis is a fulfilling part of his job, especially because he knows about chronic pain from three back surgeries he has had starting at age 13.

The surgeries were needed to treat a congenital condition called a hemivertebrae, he said.

"The doctor said, 'You're tall enough. This surgery is going to stunt your growth,'" White said.

He had another surgery about six years later and another in his early 30s to treat the condition.

But while the surgeries made him all too familiar with pain, and while he runs a major cannabis company, White demurred recently when asked by a marijuana trade publication about his favorite cannabis product.

"I have to plead the fifth," he told AZMarijuana.com.

'Size is going to matter'

There's a reason White and the Harvest team are workaholics. They see themselves in a race against the clock.

The game plan for Harvest and other fast-growing cannabis companies in the U.S. goes something like this: Grow fast now, while the drug remains illegal at the federal level and big corporations are on the sidelines.

Eventually, when either enough states legalize medical and/or recreational use, or the federal prohibition is lifted, the big corporations will jump in. The multinational companies will be forced to buy their way into the market by acquiring the biggest and best cannabis companies that got in early, like Harvest.

Like many in the industry, White barely acknowledges the possibility that legalization efforts won't see continued success across the country.

While most people focus on the number of states that have authorized medical and recreational cannabis, White and his peers look at the reverse. They see opportunity in the 17 states yet to allow medical use and the 40 where recreational or "adult-use" still is prohibited.

Is it inevitable that Harvest will one day sell to a large corporation?

"I think that's the most likely scenario," White said, though if the federal prohibition lasts long enough, he says it's possible his company grows so large that it could actually compete with the multinationals.

"Either way, size is going to matter," White said. "No matter the outcome, it is important to be large."

Who might eventually get into the U.S. cannabis business is a source of continuous speculation in the business press. The companies behind Corona beer, Marlboro cigarettes, Circle K gas stations, in addition to pharmaceutical companies, all are reported to be looking at the industry if not directly investing in the legalized Canadian market.

"I think a lot of people from all of those various industries are going to, at some point, make an effort to own assets in U.S. cannabis," White said.

So what's the strangest call White has received from an interested corporation? He chuckles.

"Oh, that I can't tell you!" White laughs. "There have been surprising calls. Great calls. Shocking, even."

Harvest's rapid growth

Harvest isn't the only company with plans to be the biggest, best acquisition target for a buyout.

MedMen Enterprises of Los Angeles, which boasts of 1,000 employees and operations in multiple states, including Arizona, announced a $682 million merger in October with Chicago-based PharmaCann.

Curaleaf Holdings Inc. of Massachusetts also operates in multiple states, including Arizona, and boasted in a February investor presentation of having the largest retail footprint in the U.S. A publicist says the company should have 71 operating stores before 2020.

Harvest's deal with Verano will allow it to leapfrog Curaleaf in that regard, though more acquisitions are likely in the works for all competitors, which could keep the leaderboard for the largest companies in flux.

White quotes a former high-school basketball coach regarding the work ethic to stay ahead of the competition.

"When you are not practicing, somebody out there is, and when you meet, he will win," White says. "That does apply directly to cannabis. The opportunities arise so quickly and if you are not engaged, you can easily miss them."

So Harvest stays busy.

In November, the same month the company went public, it acquired a Colorado-based company that specializes in manufacturing cannabis products.

Harvest has been on a tear since then.

Dec. 10, announced a new real-estate investment deal that can fund $100 million in property deals.

Dec. 19, announced it has won more licenses, 21, than any other company in Pennsylvania, a medical-only market like Arizona.

a medical-only market like Arizona. Dec. 21, won one of two coveted licenses issued to operate medical dispensaries in Santa Monica, Calif. Recreational use is allowed in that state but cities have discretion over dispensaries.

Jan. 14, won provisional processing license in Ohio, where it has three licenses for medical marijuana.

Feb. 12, acquired six additional Arizona licenses, giving it 16 total, though not all are open.

Feb. 12, opened its first Florida dispensary after acquiring San Felasco Nurseries Inc. for $66 million and the potential to open 30 medical dispensaries.

medical dispensaries. Feb. 14, announced a deal to acquire California-based Falcon International Corp. and its 16 licenses.

March 11, announced the $850 million all-stock deal to acquire Verano.

Another Arizona ballot measure

White has been helping write a initiative that Arizona cannabis dispensary owners hope to place on the 2020 ballot that will further legalize the drug in the state.

A similar effort narrowly failed in 2016.

White said the dispensaries are taking their time to get the measure right and address some of the primary concerns of opponents, "knowing there are certain people in Arizona who are going to be ideologically opposed to adult-use cannabis no matter how it is done," he said.

And he's right.

Yavapai County Attorney Sheila Polk, the state's leading opponent of marijuana decriminalization, said during a recent interview with The Arizona Republic that she does intend for her group, Arizonans for Responsible Drug Policy, to fight and ultimately defeat any ballot measure that increases access to cannabis.

"If voters understand marijuana is harmful, that its costs far outweigh the revenue, then they will vote it down," Polk said.

She said the harms of marijuana are frequently downplayed in the mainstream media, which is harmful to voters.

"If we were to get rid of drugs, we could almost get rid of crime, in my opinion," Polk said.

She acknowledged, though, that her side of the ballot measure will have to raise substantial funds to fight the increasingly deep pockets of the marijuana industry.

"We have no money," Polk said, "but that doesn't mean we are giving up."

Her group raised and spent more than $6 million to defeat a recreational marijuana ballot measure in 2016, and she expects the same groups that gave her money then will return.

"I would hope the folks who were opposed in 2016 would be as committed to keep Arizona a healthy state," she said.

Polk criticized businesses that "make millions of dollars off a product that is addictive and harmful."

Polk spoke the day after the Harvest merger was announced, but did not reference the company or White. She did say that it's possible to reduce criminal penalties for the drug without authorizing multi-million dollar businesses.

"You can decriminalize marijuana without taking the steps that the industry wants you to take," Polk said, adding that while she doesn't support it, it is preferable to "commercial marijuana."

MORE:Majority of Arizonans support legalizing marijuana, poll finds

White said he previously held opinions similar to Polk regarding drugs. He's never met Polk, and sees little use in reaching out.

"I always say there are certain people we can't change what they think," he said. "When facts can't change somebody's opinion, it's probably a good idea to stop supplying them with facts."

So which state has the best model for Arizona to follow for an adult-use ballot measure?

"I don't know yet," White said, adding that Arizona's medical program was well designed.

He said the perception from voters of the Colorado model is that it's too liberal because of the number of retail stores in that state.

"I think the opposition ... did a very good job of convincing people that is a bad thing," he said. "Arizona will be a little more controlled from the onset."

Sealing the $850 million megadeal

The blockbuster deal with Verano is expected to close later this year, pending approval from shareholders and review by the Canadian Securities Exchange.

The deal is funded entirely by stock, with Harvest offering to issue shares of its company for all of the privately held shares of Verano. The companies agreed to a $20 million fee if one of them fails to uphold their end and the deal falls through.

White will remain CEO of the company. But he said Harvest intends to keep all of Verano's employees, including the top executives, because the company needs them to keep up its expansion, and because they are as ambitious as Harvest's team.

Like Harvest, Verano is a multi-state cannabis company that has been successful at winning state-issued licenses to run dispensaries, as well as the farms and processing facilities to make a variety of cannabis products.

Verano has 37 retail licenses in 10 states and Puerto Rico, including an ownership interest in nine Zen Leaf branded dispensaries.

The Verano founders applied for their first license in Chicago in 2014 but launched a privately financed holding company just last year, subsequently raising $120 million in October to fund its expansions.

Greg Miller, the executive director of the National Institute of Cannabis Investors in Baltimore, said mergers like the Harvest-Verano deal are based on the revenue the companies are expected to see in the future.

His organization uses a variety of models to estimate such values, including a database of the average price to acquire a license in different states, the prevalence of illicit use in such states, and the political likelihood of increasing access to the drug.

"You add those up as best you can," Miller said. "If you get a license in Utah, that's not worth as much."

He said if anything, Verano may have sold itself a little cheap, a common strategy to help the ongoing company.

"In a stock-for-stock merger, everyone who just sold Verano has a powerful incentive for Harvest stock to go up," he said.

If that was the strategy, it worked. Harvest stock closed at $8.59 a share in Canadian currency the Friday before the announcement, and has been higher than $12 a share this week.

White said the companies are a good fit.

"We have to make sure the people we are acquiring have a certain mindset," he said. "You have to have people who are competitive, who are self-starters, who are hard workers, and who are willing to work in an area that isn't quite as structured yet as normal corporate America."

George Archos, Verano's co-founder and CEO, runs a chain of restaurants called Wildberry Cafe and the Westwood Tavern, known for beer taps on the tables. White said he visited one of the restaurants to get a feel for Verano's business sensibilities.

"I realized these were guys who, they are taking advantage of opportunities," White said. "These are guys who don't care much about status. Only industry insiders had really heard of them. They didn't care."

Importantly, they also are profitable, like Harvest, he said.

"This one is going to be easy," White said. "These guys want to win. And they define winning the same way we do. Build a business. Not a stock. Not a hype machine. But a business that is good for the core fundamentals."

Reach reporter Ryan Randazzo at ryan.randazzo@arizonarepublic.com or 602-444-4331. Follow him on Twitter @UtilityReporter.

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