Behind Jushi's Major Retail Expansion in the Red-Hot Marijuana Market

In just a few years, Jushi Holdings (JUSHF 0.99%) has gone from a fledgling marijuana company to a high-growth multi-state operator (MSO) with a retail footprint that spreads from coast to coast. In this Motley Fool Live segment, aired on Oct. 21, Fool.com contributor Rachel Warren interviews Jim Cacioppo, the CEO and founder of Jushi, about the company's strategy behind its retail build-out. 

Rachel Warren: I'm going to delve back into your growth strategy that you were discussing just a little bit ago. As you were explaining, Jushi has rapidly expanded into emerging markets, applying for new licenses, opening new dispensaries, and acquiring existing ones. Can you just give us a look into your decision-making process as you continue to build upon Jushi's rapidly expanding retail presence nationwide?

Jim Cacioppo: In terms of the M&A [mergers and acquisitions] and building out. Rachel is that the question?

Warren: Yes.

Cacioppo: In the retail side in terms of the M&A, we go where the deals are. It's like I love the Jerry Maguire movie. There's a couple of great lines, one's very romantic, "You had me at hello" or something like that. [laughs] And the other one by Cuba Gooding Jr. was "Show me the money." Basically show me the money means, "Where is the best deal for Jushi shareholders?" We're very good at that.

Like I told you, we acquired 18 dispensary licenses for $80 million. The big companies are paying $80 million to $120 million, in that range, for just three. That's a huge thing. We feel tremendously proud of these accomplishments of buying these licenses, including retail. In terms of opening the stores and operating the stores, we have our retail store outlets are called Beyond Hello.

It was a primarily woman-run business in Pennsylvania who had really nice vibe in the store because research shows that it's not that hard to get like a 25-year-old male into a store to buy some weed. It just comes natural to them. The older generation, maybe the boomers or some Gen Xers and women, will come in slower. It's got this stigma, the head shops are just not attractive places. This management team we had built these really cool dispensaries and hired a really diverse workforce. We've taken that and moved that around the country. I would say that's what we're doing, and then we optimize it.

In Pennsylvania, the average store is between 3,500 and 5,000 square feet. And in Virginia because we have the exclusive right -- I mean, we're the only provider in Northern Virginia with 2.5 million people -- we're doing 7,500 to 10,000 [square feet] and freestanding stores, which are very unusual in the cannabis market. Think about gas stations, freestanding, you come in and out. We're doing those -- restaurants would be a lot of freestanding -- they have 50 to 75 parking spots. People want to go in and out. That's what they want, that's what they value the most.

Some people who wanted to buy, so we have these express lanes and we have, I think one of the industry-,if not the industry-leading online presence. We do 70% of our transactions are touched online. Of course, we have that data because we're going online. In most of those are purchases, but not all. They just come in and pick it up and they go to express lane or maybe they don't go the express lane. They go in and add to it because they had an inspiration in the store, but that's 70% of the transactions. Going back to this Virginia setup where they were optimizing the quick in and out. Having 50 to 75 parking spots.

We're about $200 million revenue company in Q2. Now we're putting stores that are capable of producing $50 million a pop in Virginia, and we'll have six of them. We're super excited about what we're doing there on the retail front. Of course on the M&A side, just touching on that, in the future. We're going to be buying like I mentioned, there's two states where we have operations and not vertically integrated that we want to vertically integrate. One is Illinois and two is Ohio. Ohio is great because it's a very early medical market. We'll go adult-use because, believe me, it will all be adult-use basically. Unless you have some really crazy conservative states that just don't do anything in a slightly moderate way, that could happen, but it's going adult-use around the country.

In Ohio, there's a five cap, meaning you can only own five dispensaries. Most of the well-funded MSOs are at the cap. And now they're issuing 73 more licenses. There's going to be a great seller-buyer imbalance; too many sellers for the buyers, in my view. I think we'll pick up a great deal on those. That's the next focus. In Illinois, there's a 10-cap on the dispensaries.

Again, most of the well-funded top MSOs are capped. They're issuing even more licenses, it's in the 100s of what they're issuing. We have four. We know the state super well. We won one in that lottery system. We have now five, that fifth isn't open yet, and then we'll buy five more. We think at great value because they'll have that imbalance between sellers and buyers. Again, the "Show me the money" philosophy, where's the value, that's our next moves. I can actually sit there and just tell everybody what we're doing because there's a seller-buyer imbalance.

Great. Go see what you can get. Jushi is here, we have great stock. We have some cash we can give you if you're a seller. If you want to join this family and I think being the best stock in the industry, come sell to us. That's a pitch and we explain it to them.