When a pair of leading institutional investors set out to win a state license to open New York City’s first medical marijuana dispensary, they turned to an FTI Consultant with a unique background as a journalist covering the illegal drug trade. His advice? Differentiate your brand.
he market for medical marijuana is on the verge of shooting through the roof. Estimated to be worth roughly $4.5 billion as of 2014, sales are expected to more than double to $10 billion in 2020. That kind of potential attracted two former Goldman Sachs executives, Nicholas Vita and Michael Abbott, to establish Columbia Care, a fast-growing medical marijuana healthcare company that now has operations in five states and the District of Columbia.
In 2015, when Vita and Abbott applied for a license to operate in New York State, they engaged a team of consultants in FTI’s Strategic Communications segment, including Peter Kerr, a Managing Director, to help them publicize their mission and raise their profile. Kerr’s background fit the bill in more ways than one. He is a former New York Times journalist who covered marijuana and other illegal drugs and later served as a chief communications officer for several health care companies. Kerr helped Columbia Care develop a public narrative and image and lay out its mission, values and goals in this new and controversial industry. Columbia Care opened New York City’s first medical marijuana dispensary in January 2016 and operates three other specialty pharmacies in the state along with its manufacturing facility in Rochester.
FTIJ: Peter, you began working with Columbia Care in February 2015. What were some of the initial challenges you faced in getting the company positioned for licensing in New York?
KERR: At first it was limited to answering questions from the media and simply articulating what the company stood for. The leaders, Nicholas Vita—he’s the CEO—and Michael Abbott, his Executive Chairman, realized that in addition to creating an organization and a business model, they had to create a brand and articulate a set of values and a mission. They had already figured that out among themselves, but it was important to articulate their vision in a way that would resonate with all audiences and stakeholders.
FTIJ: This is a very specialized—and controversial—industry. What did articulating the company’s vision entail?
KERR: It ranged from helping create a website and written materials to collaborating on drafting op-eds and arranging discussions with media, thought leaders, and academics. But before that we had to write a narrative that explained their story, their values, and their mission. I think we got across what they wanted, including their commitment to scientific research, their commitment to the highest standards of healthcare and giving back to local communities.
We also were able to introduce these very serious business people—two former Goldman Sachs guys—who also have extensive experience in the world of finance and healthcare. They had created a highly professional organization, dedicated to delivering a medicine to sick people with severe symptoms who were not getting the relief they needed from standard medications.
FTIJ: It seems branding Columbia Care as a healthcare company was essential given the confusion and misinformation about legal marijuana in the United States.
KERR: That’s right. Many other companies are involved in both medical and recreational marijuana. Not this one. Columbia Care is dedicated to its medical mission so, it was important to get across that this was not an outgrowth of a drug culture, a counterculture, or an illegal culture. This is a healthcare company providing a very important medical product. Period.
FTIJ: Your unique background served this particular FTI project well, didn’t it?
KERR: I was a journalist for The New York Times for 15 years. I covered a number of things—politics, healthcare. But for about four years I covered illegal drugs during the rise of crack cocaine in the 1980s. During that time, I wrote extensively about marijuana regulation. I got to know a lot of the academics, policy makers, and law enforcement officials involved, as well as dealers and consumers. Coincidentally, I later served as a Vice President of Communications for Blue Cross/Blue Shield. So it was easy to plug into Columbia Care’s needs.
But it wasn’t just me. We put together a top-flight FTI team that brought a variety of specialized skills into play. My colleague Lou Colasuonno, a Senior Managing Director and former Editor-in-Chief of The New York Daily News, is a communications strategist with a keen sense for the dynamics of the New York media market. He played a crucial role.
FTIJ: How did you help differentiate Columbia Care from the other organizations that position themselves as medical marijuana companies?
KERR: One thing that is very important to the company is contributing to the public good. In each location they make a huge commitment to community, including veterans organizations and educational institutions. Job creation is a part of that mission. Reinvesting about 15% of profits back into the community is what Nick and Mike believe in, but it's also a very good message for their business, especially when regulators were asking themselves, “Is this organization bringing something good, bad, or indifferent to the community?”
FTIJ: Columbia Care also stood out for its commitment to improving scientific research on the efficacy of medical marijuana as part of the process. That’s seems remarkably important given the dearth of studies otherwise.
KERR: It is. At the very outset, Nick and Mike insisted that data of all sorts be collected from patients. They have collected information on consumption habits, strain of product used and demographics for more than 100,000 interactions, creating a database that doesn't exist anywhere else on medical marijuana patients that I know of. Over time this data may help academic medical centers and other scientific institutions produce more peer-reviewed literature on the scientific efficacy of medical marijuana, It can also help inform clinicians on issues like dosing and best practices.
FTIJ: How does Columbia Care obtain its product?
KERR: The company grows, manufactures, processes, packages and dispenses everything they sell. They already had extensive knowledge about the agriculture of the product, but they supplemented that by establishing relationships with faculty at several leading universities, such as the University of Illinois, and put that knowledge to use in cultivation centers established in each state. By the way, they have to have a cultivation center in each state because federal law prohibits transporting marijuana across state lines. For New York, they chose a site within the Eastman Kodak Business Park in Rochester and repurposed a dormant manufacturing space.
FTIJ: Does Columbia Care deal only in cash? After all, the U.S. government still classifies marijuana as a Schedule 1 drug under the Controlled Substances Act and banks can’t handle electronic payments like they do with other companies.
KERR: The biggest concern for banks is that this industry isn't equipped on a compliance level, on a regulatory level, on a business level, to be a trusted partner. Part of this is cultural, but part of it is the extraordinary compliance demands on these companies. However, I think it’s important to say that Nick and Mike come from the banking and investment industry and they were able to sit down with individual banks and work through each of these issues in each of their jurisdictions. Their dispensaries increasingly do accept debit cards and electronic transactions.
FTIJ: What do you see ahead for the industry?
KERR: Right now it’s like the oil rush in Pennsylvania in the 1860s. Before the big boys came in, there were all these independent rig operators taking the stuff out of the ground and selling it to other small business. I don’t think the marijuana industry is going to go through as much of a transition as oil, but it would be naïve for any investor not to think that someday Big Pharma or Big Agriculture or even the liquor industry might get into the marijuana business.
So for the smaller investors now, the question is, how do you differentiate yourself or do something unique so you won’t just be wiped out if bigger players come in? Do you have a brand that’s so outstanding that people will pay more? Do you have a large enough operation that you can sustain intense competition? These are some of the questions that businesses are facing. It's like a lot of people are building arks, waiting for the flood.