Ask A CEO: What Are The Biggest Challenges Facing this Top Pot Stock?

Every company has its mountains to climb, and the cannabis industry is known to be a particularly challenging environment for businesses to operate and thrive in. In this Motley Fool Live segment, aired on Oct. 21, Fool.com contributor Rachel Warren interviews Jim Cacioppo, the CEO and founder of Jushi Holdings (JUSHF 3.98%) about the hurdles that the company has faced over the years. 

Rachel Warren: Cannabis investors have seen marijuana retailers struggle to attract customers from the black market. There's really been no shortage of cannabis companies operating in this space that have overextended themselves too soon and that's backfired. What could you say has been the biggest challenge so far that Jushi has faced in its growth story today?

Jim Cacioppo: First of all, if you look at the vast amount of our footprint, we pick great states. That's important. The big challenge, and as you pick the great states, you close these deals. We bought mostly licenses. What does that mean? We had built business, we had the license. The biggest challenge I think has been in doing that, raising the money in the tougher times in the capital market, which we've done. Again, which is the credibility of the management team and the pedigree, and all this stuff, our track record, we've raised over $400 million.That really helped us.

We announced, documented, and closed the only deal that was done in the height of COVID in the summer of 2020. We bought a grower processer for Pennsylvania. Obviously we got a great price. But the reason why we are able to do that was our creditability in the capital markets. We did this great deal, our stock went way up after we did the deal, and then a few months later other people started to do deals. It was incredible deal for our shareholders, and because the company was out of money who we bought from. Literally, they were running on fumes, we'd like to say at Wall Street meaning your gas tank is empty and you're running on fumes. Raising the money at the opportune times was always a challenge, and can be in that volatile time, we've been ahead of the curve. I think that the other equal challenge is just executing on the operations, and we've gotten very good at that. 

Retail wise, we've built this great team. That was our lead asset, was retail, and we keep adding to the team. We hired a fellow named Brendon Lynch, who spent 17 years at Anthropologie. He was there when they had two stores. He sort of ran it when they had 175 stores and 6,000 employees, and he is a fantastic gentlemen and people are just super excited that we brought in that kind of level there. In the grower processor side we have a Chief Operating Officer named Leo Garcia-Berg, out of AB InBEV, which is Anheuser-Busch. Which is the largest beer company in the world, and known to be super acquisitive, super-focused costs, and efficiencies, and just running a top-notch, industrial products that by the way is beer. Very similar to cannabis, and was highly regulated in the beer you have the Brewmaster special potions that make it tastes good. We have our long-standing cannabis people. We have Leo, we paired him with a group of people we have out of Colorado, which we acquired an IP and management team. That has been doing cannabis since 2010 because that was the first legal market. We have a great team led by a guy named Ryan Cook.

That group is executing on these licenses, and we learned a lot, we keep doing it and getting better, and that's been the second biggest challenge for us. I would say if I was investing in cannabis, I'd watch those two things. I'd watch companies, are they able to raise the capital at the right time? Because you want to keep growing. We're going to be as big as anybody, sooner or later, which if you look at Jushi and the investment opportunity.

Hitting these challenges are key to us, getting our investors. They traded at about a 50% discount to the bigger folks. I think it's primarily because they're just bigger and more even stocks seems safer. But also, they have this diversity and they also have a much better liquidity in their stocks. Ours is pretty liquid for a billion-dollar market cap company.

But us being able to execute upon this and getting big, and doing all these M&A in very accretive prices, and being one of the cheaper companies that's fastest-growing, the fastest-growing. That's just a really good formula to generate a lot of alpha, to make a lot of money in the stock of Jushi. Managing those challenges to me are the key to investing in cannabis for your investors.