iAnthus Capital Holdings, Inc (CNSX:IAN) (OTCMKTS:ITHUF) (FRA:2IA) CEO Hadley Ford discusses the company’s 2018 acquisitions and criteria for entering into new USA states. iAnthus are looking to dominate all addressable markets in the United States with large populations, solid programs which allow for cannabis ingestion methods of all varieties, or full recreational markets. The CEO outlines their facility construction in New York and the timeline for recreational sales in the Empire State.

Transcript:

James West: Hey, welcome back to Midas Letter Live. My guest this segment is the one and only Hadley Ford, CEO of iAnthus Capital Holdings, trading on the CSE under the symbol IAN. One of the best-performing cannabis stocks in the history of cannabis stocks. Hadley, how are you doing?

Hadley Ford: I am doing just wonderfully.

James West: That’s quite an intro for somebody who doesn’t even own the stock.

Hadley Ford: That’s pretty good. You need to go out and buy some.

James West: I know, I’m thinking, what am I…

Hadley Ford: I notice on your opening montage it had our name, and then it had, like, negative stock price next to it. I don’t know, you guys need to change that.

James West: What?

Hadley Ford: I know, I saw it.

James West: Well, we’re going to fix that, whatever that is. Technical department, can we get on that, please? So Hadley, how is it all going? I mean, you’ve got so many sort of tentacles out there going in every direction and throughout the United States. How many states are you in now?

Hadley Ford: We’re in six states now, and we continue to have discussions with players in a lot of other states. So we would expect later this year, we’ll be in many more tentacles going out across the US.

James West: Okay, well, I’m hoping to get more intimate with those tentacles over time. You announced on July 24th that you have begun construction on a new, 39,500 square foot medical cannabis facility in Mid-Orange State, New York?

Hadley Ford: Yes, yes, up in Warwick, New York. Actually, the local community was very welcoming. It was an old prison, so there’s some irony to that, that people might have been incarcerated there on the very spot where we are now building what hopefully will be a 250,000 square foot facility over time. It’s a good day for us, it was a good day for the company, it’s a good day for the community, and a very good day for the patients of New York.

James West: Wow, fantastic. So when does this, when do you think this facility will come online?

Hadley Ford: Probably about 14 months from now. You gotta level the land and put up the structure, then you’ve got to plant your crop and you have to harvest it. So I would say sometime, what are we in, August now? Geez, where’s the summer going? Probably sometime third, fourth quarter next year.

James West: Very cool. Is this, now, the state of New York, is it strictly medical in New York at this point?

Hadley Ford: Strictly medical today, although I don’t know if you were a big fan of Sex And The City, but Cynthia Nixon launched her hat into the ring for the gubernatorial campaign a few months ago, and one of the legs of the campaign platform that she had was to full legal cannabis. Cuomo, politician that he is, didn’t want to get outflanked to the left, and he embraced that as well. So they’re putting together commissions, they’re studying it, they’re looking at it, and then we’re also helped that in the state of New Jersey, Governor Murphy is all for a full rec program. And I’ll tell you right now, the first time someone gets on the PATH train, gets off in Secaucus, pays a bunch of tax dollars to Governor Murphy and gets back on the PATH train to Penn Station, before that train pulls in the station, New York will be full rec.

James West: Wow. That’s good news. So –

Hadley Ford: It should be good news.

James West: Yeah, you bet. So Hadley, from where you sit, what’s the timeline looking like until Federal de-prohibition in the United States?

Hadley Ford: You know, we got a little maverick in the White House, so it’s really hard to handicap. I mean, he could come out and decriminalize stuff before the mid-term elections, if he wants to give something to the Republican side of the equation and take some momentum away from the Democrats. But you know, I think in reality you’re probably talking about the second half of the next administration, whether that’s Republican or Democrat. I don’t think – you know, politics bubble up slowly. I don’t think anyone sort of in the White House is going to want to fall on their sword anytime soon, although we are seeing a lot of support both sides of the aisle in the House and in the Senate, a lot of bills put forth, some things have even made it out of Committee. It’s just a matter of time.

James West: Right, okay, great. So what’s the big, you know, what’s the big picture for iAnthus in 2018, 2019?

Hadley Ford: Global domination.

James West: [laughter] Excellent.

Hadley Ford: No, I think the big picture is to stick right to our knitting, which has been to acquire great operating partners in great states, build out what we euphemistically call a network of cash registers, that’s a licensed relationship with a patient or a customer, and then continue to sell high quality product at a reasonable price and ensure patients get the medicine they need and ensure customers get the products they desire.

James West: Wow, fantastic. So you’re in six states now; how many other states have you got your eyeball on?

Hadley Ford: 44.

James West: [laughter] Okay, I guess a dumb question gets a smart answer. That’s 44. Wow. So, no, but realistically, now, I know in the context of forward-looking statements, there’s currently, what, 30 states that you could plant a flag in the ground and acquire other operating companies?

Hadley Ford: Yeah.

James West: And I’m sure that –

Hadley Ford: Yeah, and you know, we think about things in terms of an addressable market. So we look at states that have large addressable markets, so good population, good programs, you know, large list of indications and ingestion methods, or in some instances, full recreational markets. So we like a large addressable market; we also like to have limited competition. So there’s probably a half a dozen states that would meet that, you know, in particular, California looks good if you can find the right brand operator/distributor, that would be very positive. We like Arizona, we like Nevada. On the East Coast, New Jersey, Maryland are good states. So we will be continually active, you know. To date this year, we’ve made two acquisitions; you know, my expectation would be, over the next 12 months, we would see a similar cadence to the type of acquisitions, you know, the size and whatnot that we’ve done today.

James West: Fantastic. And it seems like everybody is throwing money at you here.

Hadley Ford: I like that.

James West: Yeah!

Hadley Ford: No, the market has changed dramatically over the last several years, you know. We started the company up four years ago and, you know, we’d be down in the boiler rooms, and there’d be guys in t-shirts, you know, with toothpicks, saying ‘What do ya got? What do ya got?’ And now we actually have conversations with investors that have familiar names. I actually was in a meeting about two weeks ago, a portfolio manager came in and I recognized him, he recognized me. I actually had written his recommendation to business school 12 years ago. So you’re definitely seeing a change from the type of investor that we’re attracting. We’re getting up into some blue chip, household names from a fund management perspective. I think you’ll see a rotation out of some asset classes into cannabis, as people recognize, especially in the US markets, what the growth opportunities look like going forward.

James West: Sure. And in that context, are big capital pools starting to look at cannabis, or are they already in cannabis, or are the majority of them still sniffing around and deciding where they’re going to sort of dive in?

Hadley Ford: You know, the big guys are still dipping their toes into the water, right? I had a conversation yesterday with a trillion-dollar fund based here in the US, and, you know, it was the small cap analyst, and he was very, very interested in cannabis. It’s clear he’d done some work, it’s clear he needs to do some more work. But a year ago, we wouldn’t have those conversations; maybe it was some cocktail banter, but real work wasn’t getting done.

So I would say we’re probably 12 to 18 months away from a full rotation of comfort level from the big US investors into the cannabis sector, but it’s inevitable that it’s going to happen. You know, investors like to make money, and they’re going to go after the growth, and cannabis is one of the highest growth industries in the world right now.

James West: Fantastic. Hadley, we’re going to leave it there for now, but it’s almost time for us to come and make movies at some of your locations, don’t you think?

Hadley Ford: I think that would be an excellent idea, and you ought to wear that shirt.

James West: Yes, I will wear this shirt. Awesome! Okay, Hadley. Good luck, have a great weekend, and we’ll talk to you soon.

Hadley Ford: All right, thanks a lot. Always a pleasure.

James West: Thank you.

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