“The Apple Store of Weed.”
That is the catchphrase associated with MedMen Enterprises (CSE: MMEN, OTCQX:MMNFF, Forum) as it launched its business in the United States last year, but for the Company, it is more than a nickname, it is an inspiration.
In December 2018; MedMen appointed its new Chief Financial Officer to the management team, a veteran finance executive whose track record boasts impressive tenures with retailers such as Apple Inc., Abercrombie & Fitch and Forever 21.
Michael Kramer’s experience spans three decades and his specialty is exactly what the Company was looking for - successful retail strategies to build revenues, quarter-over-quarter and year-over-year. As CFO of Apple Retail, he developed successful brick and mortar retail strategies. He also oversaw 12 quarters of increased year-over-year earnings for Abercrombie & Fitch.
Stockhouse Editorial recently had the chance to sit down with Mr. Kramer and learn about what really drives his business acumen.
He began by stating that he made a career by getting involved in what he calls “unique nuances” that “make a dent in the universe,” which is terminology from the playbook of his former boss, Steve Jobs.
“It’s not about joining a company and opening the next batch of stores, creating the next cool hip sweater, or new type of pizza, it’s really trying to reform and reimagine how the consumer does things that really motivates me.”
He would know, having been involved in all of those elements, from Pizza Hut to JC Penny, he has done just about everything there is to do. What new challenge could interest him?
Cannabis.
When the opening at MedMen came across his desk, it caught his attention. From the sidelines, he has been watching the cannabis industry emerge over the last 18 months. It is a new, unique industry that has evolved from an illicit market in the shadows to a mainstream consumer base in the United States. Abundant educational materials on cannabis and cannabis-derived products highlight its medicinal efficacy. Mr. Kramer constantly found himself addressing headlines and fielding questions around the benefits of medicinal cannabis and CBD.
“There are so many benefits that I think resonate with mainstream America. For example, my own mother in law suffers from osteoporosis, so being part of this has really been exciting for me, because clearly you have consumer retail interaction, that’s my forte, I’ve been there, done that. I can add a tremendous amount of value as we enter into this and grow this thing. I couldn’t be more excited.”
Mr. Kramer has made a career out of working with creative geniuses that have been hailed as visionaries. From Les Wexner and Victoria’s Secret’s game-changing “fast fashion” to Steve Jobs and Ron Johnson at Apple.
“There were so many naysayers at first. We were doing everything differently, going into malls, ambushing the consumer, not paying commission structures for $2,500 computers. We wanted the experience to be an educational one – we didn’t care where you bought that Apple product, whether it was online, Best Buy, or the Apple Store. Our challenge was educating the consumer. Therein lies another parallel of this visionary product in terms of consumer education. Working for guys like Mike Jefferies at Abercrombie and Fitch, these are all founders that were entering territories that no one had done successfully. I made it a skillset of mine to work with these creative visionaries. When I met [MedMen co-founders] Adam and Andrew, I knew that skillset could add value here.”
This closely parallels the MedMen approach: educating the consumer as a strategy for enhanced marketing. Since the beginning of its operations, MMEN has made its one-on-one with the public a focus that starts as soon as the consumer walk into one of its stores. Michael Kramer felt it once he walked into their shop on Abbot Kinney Blvd. in Venice Beach, California for his interview.
“It wasn’t just the look and feel of the store, clearly there are parallels there. But it was also the store associates and how they embraced me, welcomed me: there was no push to buy a product, there was a push to educate you and get you to understand what MedMen is for and what the product offers. This solidified my decision to enter the cannabis industry. I wanted to make sure that I was partnering with the right creative and visionary talent that really wanted to make inroads with the consumer.”
The connection? Mr. Kramer felt the echo dating back to the genesis of Apple’s Genius Bar. Before Apple opened its first store, he said Steve Jobs and Ron Johnson came up with the idea to take the back third of each store and dedicate it to this bar, which would become the I.T. department for the every-day person. It was very unconventional at a time when “getting help” with a product meant dialing a 1-800 number and waiting on hold. Having questions answered face-to-face and exploring products in person gave Apple a competitive advantage that has also worked for MedMen and its cannabis products. To be such a cutting-edge retailer, MedMen needs to be the “curator of cool,” just what Apple is to its industry. To know what is trending in cannabis, the consumer must consult MedMen.
“It’s exciting to get into an industry like this from the ground up. I was a little nervous. I’m pretty conservative by nature, but every month that goes by, the regulations, the states, even mainstream America are embracing it more and more. Mainstream America is learning what cannabis can do for them to better their lives.”
The benefits of cannabis are winning people over. Two-thirds of Americans support legal cannabis, according to the latest polling from Gallup analytics. This is the highest percentage ever for full cannabis regulation and far exceeds figures from 2005, when barely a third of Americans accepted it.
MedMen has been seizing this growing acceptance while establishing itself in the cannabis market, all the while implementing an ambitious, yet tight strategy. The Company recently reported its systemwide revenue ending December 2018 at $39.7 million (CAD) across the three most important U.S. markets; California, Nevada and New York. This represents a 40% quarter-over-quarter increase from the previous quarter. The plan involves executing a strong up-front investment. Mr. Kramer explained that in many cases, the first company to dominate a market will win, long-term.
“Our strategy is to build out key markets first, then look to support markets. We need to own and dominate key markets. Return on that investment won’t be as quick as apparel or restaurant industries, but it will pay off long-term probably more significantly than those other industries. You’re investing in the future more than you ever have been.”
As MedMen enters this new phase focusing on fully operationalizing its footprint, it is also setting its sights on activating its operations in new markets:
Including pending acquisitions, the Company’s footprint will include a license network of 100 facilities across 12 states.
MedMen is also anticipating less revenue being dedicated to tax laws, such as 280E, which prevents collecting normal tax deductions or credits. There are already efforts in Congress to reform 280E, and states have been talking about easing excise tax burden on the industry.
This is a unique time for investors and a unique industry budding from the soil. The market leaders have likely already emerged and are beginning to grow. Michael Kramer sees this.
“That’s why I’m here. It’s exciting, you layer on my experience and I think I’ll be able to add some tremendous value to this organization.”
FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.