Acreage Holdings, the marijuana company that recently added former House Speaker John Boehner to its advisory board, has big plans for South Jersey and for cannabis patients across the United States.
Acreage said last week that it intends to partner with the Compassionate Care Foundation (CCF), an existing grower in Atlantic County, and more than double CCF’s marijuana production.
In an interview, Acreage CEO Kevin Murphy also vowed to drive down the cost of medical marijuana, which is priced out of reach for many of the patients who need it most.
Acreage, founded in 2011 as High Street Capital Partners, has aggressively courted regional and national power brokers. In April, the company hired Boehner, a Republican, and former Massachusetts Gov. Bill Weld to provide “strategic leadership and guidance,” according to the company.
Boehner and Weld will work to have the drug rescheduled — federal law forbids the use of all forms of marijuana — and ease the onerous tax burden on cannabis businesses, which can approach 70 percent.
Closer to home, Acreage signed one of New Jersey’s top political consultants, Optimus Partners, to lobby state lawmakers. Optimus is run by Philip A. Norcross, brother to U.S. Rep. Donald Norcross (D., Camden) and New Jersey Democratic power broker George Norcross.
Acreage’s partnership with CCF marks the company’s first foray into the Garden State. Acreage already operates in 11 other states including Pennsylvania, New York, Connecticut, Massachusetts and Maryland.
Murphy said CCF’s cannabis production will swell to meet an expected increase in demand for marijuana medicines in New Jersey.
In March, Gov. Phil Murphy, who was elected on a platform calling for the full legalization of cannabis for recreational use, relaxed rules governing the state’s marijuana program by adding more qualifying conditions and making it less expensive for patients to sign up.
Kevin Murphy (no relation to the governor) said Acreage had secured a 135,000-square-foot greenhouse in Sewell, Gloucester County, to augment the 85,000-square-foot facility run by CCF in Egg Harbor Township.
“We will probably need all that capacity, and then some, given the size of the state and the fact that there are now only six licensed providers in the entire state,” Murphy said. “It’s not necessarily guaranteed to evolve into an adult use [recreational] market. Even if it remains medical, given the governor’s desire to broaden the scope of qualifying ailments, it would still be a huge success for us.”
CCF, which opened in 2013 in a former Trump Casino warehouse, was the second marijuana producer to launch in New Jersey. It has never been as successful as the others. Presently, CCF serves only 2,520 patients a year, and ranks fourth out of five open grower/retailers in sales and total number of patients. By contrast, market leader Compassionate Science in Bellmawr, Camden served 6,358 patients during the same period.
The company also plans to open three satellite dispensaries, in Atlantic City, Cherry Hill, and Moorestown.
The Inquirer and Daily News spoke with Kevin Murphy earlier this week. This interview has been edited for clarity and length.
Why is Acreage moving into New Jersey and why now?
New Jersey is a geographically important state for us. And now that Phil Murphy is governor and has a more compassionate view toward the cannabis industry, it was our desire to be involved with the state now more than ever. It’s a combination of how the political landscape has shifted and a way of linking all the states together.
Why is linking states important?
We have most of New England covered and New York. New Jersey fills the gap between Pennsylvania and the other mid-Atlantic states.
But because each state’s marijuana economy operates only within its borders, how does occupying an entire region benefit Acreage?
It bring us an economy of scale. We don’t have to replicate all the corporate work. We can have centralized accounting and legal services. We’re trying to be in every state that will have us, and there are 29 with medical marijuana laws on the books. We hope to be in most of them.
Medical marijuana can be very expensive. It’s not covered by insurance and can cost up to $140 a gram in a legal dispensary. What are you doing for patients?
It’s a crying shame. We’re trying to drive down the price of this medicine. The problem is that it doesn’t matter which state you’re in, you’re dealing with a part of the IRS tax code called 280E. You can’t write off the most of the cost of doing business. So you’re forced to charge a premium. The tax rate is something like 60 to 70 percent. Until it changes, unfortunately, prices will be somewhat inflated.
What did you do before heading Acreage, why did you enter the marijuana industry, and what do you hope to accomplish?
I started and ran a money management firm called Stanfield Capital and we were blessed to have great success — we grew it to over $30 billion. Some might say “what a wonderful career.” But the major difference is this: I never saved anybody’s life at Stanfield. And now we’re saving lives every day.
We’re going to find ways of getting the medicine to people at a reasonable price. We want to change the tax code, and we have some connection to [Treasury Secretary Steven] Mnuchin, who can have some influence. But that’s also where the lobbyists will be key, educating the assemblies and the people to make it easier for us to get it to the patients who need it.
Is Acreage invested in anything other than cannabis?
It’s our sole focus. It was historically known as High Street Capital Partners. Given the notoriety, we wanted to change it to a more corporate name. We were lucky to hire some of the most senior marketing executives from InBev. Harris Damashak has done a wonderful job in rethinking our corporate image and what we’re trying to portray.
How did the deal with Compassionate Care Foundation come to be?
Going in and vying for a new license would have taken time and energy and effort and we felt if we could align with someone already up and running in the state, it would be a better alternative.
They were a group who was looking to have a partner. Every player in New Jersey was underperforming, given the complexity of the state program. Our view was it was a great time to take what already existed and capitalize on it.
How big is the potential New Jersey market?
It’s probably anyone’s guess. The addition of anxiety and chronic pain [to the list of qualifying medical conditions] really broadens the scope of who can be treated.
Why did you pick Optimus to lobby for you?
It was highly recommended to us by a friend in Florida. Acreage has a deep commitment to do things right. The lobbyists convey the message of “Why Acreage, why now.” It’s their job to explain our ethics and business practices to assure the state that we can be as skilled an operator as any.
Did you know Optimus had such deep political and family connections?
I learned only after engaging them. It certainly doesn’t hurt to have a successful family around you.