Glass House Brands Seeks to Drive Growth and Efficiency in California After Public Debut – New Cannabis Ventures


Exclusive Interview with Glass House Brands Co-Founder, President and CEO Kyle Kazan

Glass House Brands (NEO: GLAS.AU) (OTCQX: GLASF) is a vertically integrated public company focused solely on the California market. Co-Founder, President and CEO Kyle Kazan spoke to New Cannabis Ventures about the company’s recent de-SPAC transaction, competing in the California market and growth prospects. Audio of the entire conversation is available at the end of this written summary.

The brands of the C-Suite glass house

Kazan has a solid investment background. He started during the savings and credit crisis of the late 1980s and early 1990s. Since then he has always sought out opportunities for capital dislocation, an approach that initially drew his attention to the cannabis industry.

While cannabis is attractive to Kazan from an investment standpoint, there is also a personal reason for working in the industry. He is a retired police officer and a staunch opponent of the war on drugs. He hopes to see this initiative succeed.

In addition to Kazan, the Glass House C suite includes Graham Farrar, another co-founder. Farrar is also President and CEO of Cannabis, leading the culture of the company. Daryl Kato, who brings extensive CPG background to the team, is COO. Derrek Higgins is the company’s chief financial officer. He helped bring Harborside to the public and did the same with Glass House. Erik Thoresen is the director of business development for the company.

Glass House team members outside one of the company’s facilities

The De-SPAC process

The company went public through a de-SPAC transaction. Glass House Group has partnered with Mercer Park Brand Acquisition Corp. to form Glass House Brands.

Before making this decision, the company was at a crossroads. It could continue to operate as is, eventually reaching a point where it would cap all the biomass it would be able to produce. Second, he could continue to raise funds from private investors, which is not an easy task. In addition, many private investors are interested in debt, which the company has largely been able to avoid, according to Kazan. An IPO was also a potential path ahead for the company, and one the team considered.

Ultimately, the company decided to partner with Jonathan Sandelman and his team, who previously led the de-SPAC process for Ayr Wellness. The process was complex, but Kazan is happy to be on the other side and to run a state-owned company.

California operations

Glass House owns two farms in Santa Barbara, covering half a million square feet. It also has a manufacturing facility in Santa Barbara County. The company has four retail stores in the state, three in Southern California and one in Northern California. The company’s flower brand is among the top five in the state, according to Kazan.

The company’s Berkeley dispensary

Glass House is in the process of purchasing 5.5 million square feet of grow space and has entered into an agreement with Element 7 to purchase 17 licenses and develop more, according to Kazan. The company’s acquisition of the SoCal greenhouse still has a hurdle to overcome, and the deal is expected to close in the third quarter. The company buys the greenhouse with cash in hand.

The Glass House team has a good relationship in the industry and is currently in discussions with other companies, according to Kazan. When it comes to future mergers and acquisitions, the team will look for deals that make sense for growth and serve as a cultural complement.

Kazan and his co-founder Farrar are lifelong Californians. They have experience in setting up businesses in the state, which means they are used to the ultra-competitive environment. Kazan considers California the Cannabis World Cup, and he expects over 50% of brands to truly find success in the industry from there. The company is focused on excellence in a space where it has yet to compete with a major illicit market for the attention of sophisticated cannabis consumers.

Branding and expansion

Glass House takes a quality-price approach to branding. Currently, the company is focused on sustainable greenhouse cultivation. As the business grows, Kazan expects some of its brands to do well in markets beyond California, while others will remain California specific. He also expects indoor-grown cannabis to become more of a niche in the industry.

Glass House Farms is one of the brands of the company.

While federal legalization could potentially herald cross-border transactions and eliminate the need for vertical integration within specific states, Kazan does not anticipate that legalization will occur in the next few years.

Funding approach

Funding cannabis is a tricky business, and Kazan has never considered Glass House to be cash rich. Instead, the team is focused on being smart with the money they have. At present, Kazan is comfortable with the cash flow situation of the company. He is still getting used to running a public company. He has been raising private funds since the 1990s and plans to keep an open mind on fundraising options before Glass House.

Stimulate growth and efficiency

The company went public with the intention of becoming bigger and more efficient. Glass House will bring new facilities, such as the SoCal greenhouse. Kazan expects to see income from its acquisitions probably in 2022. Until then, Glass House will continue to be a good cash manager, according to Kazan.

The Glass House team examines many traditional metrics used by vertically integrated businesses, such as store growth and customer experience. As a vertically integrated cannabis company, it all starts with the plant, according to Kazan, and Glass House carefully monitors product quality and cost.

The wholesale flower market is under great pressure and Kazan believes this could be the start of commodification now or in the near future. When that happens, he expects there will be an upheaval in the industry. Glass House is positioned in a good area for agriculture and focuses on driving strong agricultural policies.

Only the strongest companies will survive, according to Kazan. He sees cannabis as a major opportunity for investors during a time of capital dislocation when most people are not investing in the industry. Once legalization advances, money and companies interested in investing will likely flow into the U.S. cannabis industry.

To learn more, visit the Glass House Brands website. Listen to the entire interview:

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Carrie Pallardy, a Chicago-based writer and editor, started her career in the healthcare industry and now writes, reviews, and interviews subject matter experts in several industries. As a published writer, Carrie continues to tell fascinating and unknown stories to her network of readers. For more information, contact us.

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