Josh Genderson is the founder and CEO of Holistic Industries which operates as a medical cannabis company. The company has raised over $60 million at a $500 million valuation.
In this episode you will learn:
- How Holistic juggles professionalism, branding and being frugal
- The core principles of their culture and workplaces
- Josh’s two top pieces of advice for other founders
- Operating a business in a highly regulated space
For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here). Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
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About Josh Genderson:
Josh Genderson has become one of the luminaries in the medical marijuana industry, having grown Holistic into a national medical and consumer goods company and retail dispensary chain. Josh Genderson directly oversees our operations in Maryland, Massachusetts, Pennsylvania, Washington, D.C., and California.
Josh’s facilities in Washington, D.C. breed the high-CBD strains that parents have come to rely upon to treat their children’s seizure disorders.
Josh Genderson launched Holistic based on the expertise he gained serving as President of Schneider’s of Capitol Hill, the Gendersons’ third-generation, family-owned liquor store that is a staple of Washington, D.C.
Josh Genderson has worked alongside his father, Richard Genderson, and played an instrumental role in the company’s growth. Similarly, Josh Genderson is a civic leader and generous contributor to charitable causes.
Josh Genderson belongs to the Young Presidents Organization, and he serves as a Board Member of Hearts Delight, a subsidiary of the American Heart Association and American Stroke Association.
Connect with Josh Genderson:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we’re going to have a very exciting interview. We’re going to be talking to the founder of a company in the cannabis space. I think that we’re going to learning quite a bit on the process of starting, building, scaling, raising money, and you name it. So without further ado, I’d like to welcome our guest today so that we can learn much more. Josh Genderson, welcome to the show.
Josh Genderson: Thank you. Thank you for having me. I’m excited to be here. I’m a big fan of your podcast.
Alejandro: Originally born in Washington, D.C. A very interesting place with a ton of diplomats. You didn’t turn out to be so much in that public type of environment, but how was life growing up there, Josh?
Josh Genderson: First and foremost, it’s rare to be a Washingtonian, let alone a fourth-generation Washingtonian. It puts me in a unique group, and it’s a very small community of us. It’s a fascinating place to live and grow up. I think politics have always been fascinating. The Federal Government has always been fascinating. I don’t think anything prepared us for what the last four or five years have been like, but nonetheless, it was interesting. My great grandfather founded a wine and spirits store on Capitol Hill. My mantra into politics was watching people come and taste wine in my dad’s office and talk about life as a Supreme Court Justice or as the President of the Senate or delivering booze to the White House. It’s a fascinating place. I love it here. D.C. has become a great city. I’m proud to be a Washingtonian.
Alejandro: Then you went to the University of Maryland. After that, you decided to go to LA. Why to LA?
Josh Genderson: I thought that I wanted to be a talent agent. I was very fascinated by that world. I think a lot of people are. I spent all my life on the East Coast. You go visit LA and the sunshine and the water and the beautiful people. The whole Hollywood scene was very different than D.C. A lot of grey and politics. I thought I had the right skill set. I went and worked in the mailroom at Endeavor, which is now called Endeavor William Morris. If anybody has seen the show Entourage, I was like Lloyd.
Alejandro: I remember that character.
Josh Genderson: I was an assistant to an agent after working in the mailroom. Let’s just say I didn’t grow up accustomed to somebody’s assistant. There’s a very special culture in that industry. Basically, you eat a bunch of junk for ten years, and if you can survive, you have a chance to become an agent. I worked for a gentleman who represented a lot of famous and ultra-famous Hollywood celebrities. He called me Mr. Incredible. In a very condescending way, he would say, “Incredible.” The way those offices are, the agents have their office against the window. Then in front of their office is where their assistants sit. If their door is open, you’re looking directly at them. Sometimes, the door would be open, and he would throw a hanger at me. That would mean he wanted me to get his dry cleaning.
Alejandro: Oh, my gosh.
Josh Genderson: Or he would say, “Incredible.” Then he would point to his water and say, “H2O,” and I’d go get him water. Sunday mornings, you’re in there. One of the great stories is that I went out there with my best childhood friend, who also was in the mailroom with me and then was an assistant. He was the assistant to a very famous literary agent. It couldn’t have been more night and day. Our desks were near each other, and the agent he worked for was all about the quality of life and thoughtfulness. Saturday would come around, and my family would be all excited to go spend the day on the beach. We were living in Venice. I would have to be in the office early in the morning doing errands. I think we had the polar opposite experiences, but you get to meet a lot of interesting people and a lot of celebrities and read a lot of screenplays. I definitely learned a lot. First and foremost, I learned that wasn’t for me.
Alejandro: At what point did you get tired of having hangers thrown at you, Incredible.
Josh Genderson: I got tired pretty quickly, but after a year, I decided it was enough. So I moved to New York, and I worked for a music promotion and management company. They were a company that owned venues all over New York City. I ran ticketing there. That was a super-cool job. It’s a job that’s built for someone that wants to be up till 4:00 in the morning and partying. I loved it for about a year-and-a-half, but it wears on you. As I mentioned, my family has been in the wine and spirits business for many years. I used New York as an opportunity to study wine and spirits at the International Wine school and get a degree in wine management and the business side. Then I ended up starting a company importing wines and spirits, mostly wines from Spain, Portugal, and Argentina.
Alejandro: What happened there?
Josh Genderson: Like a lot of things in life, I got lucky. I was bringing in wines from Spain, Portugal, and places that have low price-point wines. This was right around when the recession was starting to loom. I think people were looking for a $10 bottle of wine as opposed to a $50. We became successful, and the brands that I had in my book were taken off. It was a wonderful experience, and to have success at a young age is confidence-building and inducing. I knew it was preparing me to come and take over my family business, which, in the back of my mind, was a goal for a long time.
Alejandro: At what point did you decide, “I’ve done pretty well with this business. It’s time to explore selling, my purpose and participation here, and go at it with a family business”?
Josh Genderson: I guess it was about three years in. My dad, who is my mentor, and my friend, and just an amazing guy, called me one day and said, “Now, it’s time to you-know-what or get off the pot.” The general manager was leaving and said, “If you want to take over this business, now’s the time.” I thought a lot about it, and I thought, “How am I ever going to leave New York?” Then, I made the decision to give it a go, and I wanted to carry my family’s legacy. At that time, nobody else in my family was interested. I saw a lot of potential. D.C. has a unique set of rules around liquor and wine. In most states, you can be one of three things. You can either be an importer, so you can buy wines or spirits from the producer and bring them into the U.S. or bring them to the East Coast. You can be a distributor. An importer sells to a distributor. The distributor then sells to retail stores or restaurants. Or you can be a B2C class, a restaurant or liquor store that’s selling to the end-user. But in D.C., you can cross all three tiers. I saw a unique opportunity to take the skills I had learned importing wines and tie them in and go from importing direct to consumer. I started the distribution company around that. My initial goal, which was not to screw it up, turned into my growing it up about seven times in size and scale. It was an amazing accomplishment. I’m very proud of that. I think I made my family proud too.
Alejandro: Part of that also was like exploring the online model. So, taking something that is sublime and then figuring out how to transform it. What does that process look like?
Josh Genderson: I started cellar.com, which is our e-commerce platform. This all prepared me for my new role, which is being the CEO and founder of Holistic Industries because there are a lot of rules and regulations. They’re different in each state. When you’re distributing to each state or when you’re an e-commerce platform, and you’re selling bottles of wine to people in Michigan from D.C. there, there are different rules than when you’re selling to somebody in New Jersey, for example. I learned regulation and oversight, and I learned how to navigate regulation and oversight. It’s the most important thing, especially when you’re in the cannabis business, which we’ll talk about. The way I explain it to people is if I had a furniture store, that store is mine by right. Unless you’re the IRS, you have to come pry that store from me. But in the cannabis space and liquor space, it’s a privilege. Unless you do what you’re supposed to do, and what you said you’re going to do, and what the rules dictate you do, that store, that license, that facility can be taken away. It taught me just how serious compliance was and how important it was. You can be creative, but you always have to stay within the bounds of compliance and regulations.
Alejandro: Of course. At what point, like during this time with the family, did you decide, “You know what? I’m going to take a look at the cannabis space,” and what was that point where you came across that idea of maybe doing something around it, and what was that point where you said, “I’m going to take action. Perhaps it’s time to tell my family that maybe I’m not going to be spending so much time helping them”?
Josh Genderson: Like I said, I have such a supportive family and father. My dad started to take it easy as I was growing the business. It was in 2009 or 2010 that I started paying attention to cannabis as a business. One of the reasons I was paying attention was because D.C. has one of the first medical cannabis ordinances on the East Coast. That was written in 2002, 2003. But D.C. is subject to something called home rule. Home rule means that Congress has oversight over our budget. For many years, there was a blanket writer in Congress that said, “No” to anything cannabis-related. In 2010, the second half of Obama’s first term, Congress was getting ready to flip to blue. I knew the Mayor’s Chief of Staff pretty well at the time. I was talking to him one day, and I saw the opportunity to revamp the bill and get it passed in Congress and create a program for people that were suffering in D.C. That was the impetus for me to get involved.
Alejandro: Got it. Tell us about that day where you finally go into it, and how were those early days of really pushing holistic industries?
Josh Genderson: At the time, there were hundreds and hundreds of applicants buying for seven licenses. I put two companies together with different family members and put everything I had into it and ended up winning two of the seven licenses for growing and processing. I owned two separate warehouses in the properly-zoned district. I won, and after celebrating for a night, it was like and “Oh, my gosh” moment, and “It’s time to get to work.” Like anything else I’ve ever done, I just wanted to be the best at it. I’ve got to say, I learned so much from running a family business that is steep in community and in culture, and in treating people well, and being the best place to work. That was always something I wanted to do. Being in a family business, you really learn to take care of your people. I started traveling and looking for the right people to help me run this empire. You meet a lot of people along the way. Cannabis, back in 2010 and 2011 was a lot different than it is today, and certainly a lot less professionalized. I would go to Colorado, California, Canada, and I went to Holland, and I met people. I met the person who really wanted to be my guide and help me get everything set up. He told me that he would fly me out to Colorado because he had a strain that he was growing out there that he was going to enter into the Cannabis Cup. I accepted his invitation, and I flew out to Colorado in a sport coat and landed around 10:30 a.m. He sent me a text that said, “You’ll know when we’re there.” So I’m waiting outside, and about five minutes later, a 1970 stretch-limo with a Denver Bronco decal stretched out on it pulls up. The window rolls down and smoke billows out. They say, “Hop in.” They’re getting prepared to enter their strains into the Cannabis Cup. We go. You get a contact high just from being the car. We get there, and we get to the Cup, and they take me to the VIP room to show me that they are very connected. In the VIP room, people were dabbing. I’m not sure everybody knows what dabbing is.
Alejandro: What is dabbing?
Josh Genderson: Dabbing is a way to essentially smoke concentrated cannabis extract. It involves a process that just looks sinister. You need a blowtorch. For anybody listening, Google it if you don’t know what it is. I was taken to the dab tent. This is all legal in Colorado. A woman comes over, and she’s representing the company that made these dab devices and scantily clad. She asks if I want a dab. I certainly don’t want to seem like I don’t fit in, so I took a dab and a very big one. Let’s just say that ten minutes later, I was in the bathroom staring into the mirror. About 30 minutes later, I was on my way to the hotel, where I stayed the rest of the day. I woke up in the morning and flew back to D.C. That was my introduction into this space. But I ended up meeting the right people and building out a facility. Along the way, a really special story is that I met a woman who had a child named Jackson, and Jackson had incurable epilepsy. He was suffering from 50 to 60 seizures a day, and there was no relief. It was called incurable because he has bumped through three clinical trials and found no relief. I learned that Jackson was not only an example of somebody that could be helped by cannabis as medicine, but he was part of a group of about 50 other children whose parents coalesced around this issue. We lived in the D.C. area, and they were desperate about their children. I was not a parent at the time. I am now, and I really understand a parent whose child you saved becomes your biggest advocate. I learned that these moms—most of the moms were traveling to Colorado and California and literally smuggling back a non-psychoactive medicine to help their children at the risk and peril of their careers and their lives. I was taken back by it. That day, a Ph.D. chemist, a brilliant, young Ph.D. chemist, came on board, and we started making the medicine ourselves. At that point, we were up and running and making a bunch of products. We made the medicine. We called it Jackson’s Courage, and we subsidized it. We gave it away through our retail channel to all 50 children in this group. I’d like to call it the least clinical trial of all time. There weren’t very many controls. It wasn’t blind. There were placebos. It was a skewed group that already benefited from medicine, but it was very, very patient-facing. We subsidized the medicine like I said, and we gave it away. We tracked the outcome. We had a 97% success rate. Success, in this case, means 70% or greater reduction in seizures. This was around the time that Sanjay Gupta and the mainstream media started talking about cannabis medicine for children with epilepsy. The reason I tell that story is because, as I said, a parent whose child you’ve saved really becomes your biggest advocate, and we watched these children go from not being able to talk to being in school and being fully conversational and playing soccer. Still, to this day, whenever I see one of those moms, they tear up, and I tear up. It’s a very emotional thing. They’re all big advocates. The reason I tell this story is because it was the aha moment for me. What was going to be a side project turned into me seeing the light and understanding how powerful it was and what it could do and what cannabis could be for so many people.
Alejandro: When you got started eight years ago, probably many of the people listening would think, I’m sure that it was a slam-dunk and that it was smooth sailing from the beginning. You got quite a bit of egg on your face, and that was quite a learning experience for you, too. Can you tell us a little bit about that?
Josh Genderson: Certainly. Basically, I watched these moms as they marched up and down the East Coast picketing statehouses and demanding medicine for kids. I would go and identify the states that they were making headway in. I would use my background in knowing politics and in being friends with politicians and just understanding in the political process. I would try to help them get these laws created. We went into Maryland and Pennsylvania and Massachusetts through these RFP and RFA processes. We won one of three verticals in Maryland. We won one in four in Pennsylvania, and one of the first few in Massachusetts. Once you win, then you have to build out a production facility, which costs between 10 and 20 million dollars. Then you have to build out your retail stores. I would go and raise capital in each state individually. I would find a high-net-worth individual, and they would be my partner. They usually knew how to navigate the state and politics. Then once we won, we would generally raise capital into that license. When you put a pro forma together eight years ago, it looks like sunshine and roses. It’s all profit. There’s no downside. It’s selling cannabis. It’s legal weed. I think it was a very humbling thing to actually learn—there are no cakewalks in this life. Legal cannabis and medicinal cannabis are very, very capital-intensive. It has a terrible archaic tax code called 280E, which effectively doesn’t let you take any write-offs, no business deductions except for the cost of goods sold, and it’s tied up in tons of bureaucracy. It’s very parochial. A lot of states let the towns decide for themselves what the rules are going to be for each town. So you go and end up meeting with every town official and something that in the liquor business would take six months, takes 18 months in cannabis. My first few projections and pro forma’s were way, way off base. That humbling when you’re using other people’s money.
Alejandro: In your case, what you guys have done is remarkable. You guys also did a strategy that is quite interesting, which is you raised money to do a roll up. But before we talk about that, for the people that are listening, what does the operation of Holistic Industries look like? What is the actual business model?
Josh Genderson: We are a vertically, multi-state operator. We have operations in D.C., Maryland, Massachusetts, Pennsylvania, California, Michigan, Missouri. Then we have pending licenses in New Jersey, Illinois, and Ohio. We are cultivators first and foremost; we grow our own cannabis, the flower, the trim, and all the biomass. We’re manufacturers, so we take that product, and we harvest it, dry it, cure it, trim it, and we package it in jars for the end-user, or we package it in large bags for wholesale network.
Alejandro: Got it.
Josh Genderson: We are distributors, so we sell to most every store in all the states that we’re in. And we’re retailers. We have the Liberty brand. So all our retails stores are called Liberty. We have stores all over the country.
Alejandro: Tell us about this roll up because you guys have raised quite a bit of money. How much money have you guys raised to date?
Josh Genderson: Between the roll up and the Series A into the rolled-up company, and then each state individually before that, we’ve definitely raised over 150 million dollars—maybe closer to 200 if you include real estate. So a good amount of capital for a new industry.
Alejandro: For sure. Tell us about the roll up. Why did you guys do a roll up and what is the roll up for the people that are listening that perhaps are not familiar with that strategy?
Josh Genderson: At that point, we were individual companies in each state, with the same name, the same corporate structure, but individual companies nonetheless, with individual ownership structures in each state. As a bit of an aside, I really tried to create something unique in each state. I mentioned being the best place to work, but I always had this mantra that I want to be the best place to work, shop, and invest in that order. Being the best place to work, and getting the best talent, and giving a voice to all of our employees, and giving them room to grow, and room to learn, and room to be promoted from within, it created an environment and a culture where our employees cared so much about what they were making and selling, and that translated into being the best place to shop. Just the experience between the quality and the experience when you work in, and the hugs over haggling, and the dedication to every patient or customer that came in, that translated into the best place to shop. Also, the revenue that was coming in made us the best place to invest or at least one of them. We started to get offers from public cannabis companies. I’ve always said that we’re operators, not aggregators. There are a lot of our competitors who are called MSOs are more like MSAs. They’re bankers who saw widget and a ground floor opportunity to get into the space. So they would buy licenses as opposed to winning them in merit-based application projects or programs. We started getting offers from a lot of these public companies to be rolled up into their company. One of the things that was very apparent to me was that no matter what happened, if we got purchased or acquired, or if we merged with somebody if we went public. Any of those scenarios would require this roll up. So we would require all of the entities joining together and becoming one holistic entity that was wholly-owned by a parent company. I brought on a CFO who was a public market CFO for many years. He took a republic, a real estate company. One of the things they specialized in was rolling up companies. He helped me. We were continuing to build a first-in-class upper management team and VP Suite and C Suite. Essentially, you use a third-party evaluation firm, and they value each license on its own, and then they give that license a value as part of the parent company. It was a compelling story. I worked really hard, and I met with every investor. I think they could see just what was happening and how well we were being perceived and how well our brands were being perceived. We were able to get 100% commitment. Every single investor ended up rolling into the parent company, and we became one holistic parent that wholly owned each individual state’s license.
Alejandro: It’s funny because here you are. I even believe that we could disclose this, but you raised this money and at an interesting valuation. What was the valuation there?
Josh Genderson: It was around a 500-million-dollar pre-money valuation.
Alejandro: So, 500 million, and with this raise, we’re probably looking at a 550+ money valuation, but in your case, it’s interesting that it’s going to be appearing as a flashy operation. Everything is happening. The office is in the back of a nail salon. Come on. You’ve got to tell us about this. What’s going on?
Josh Genderson: I’m very proud of it, in fact. Yes, if you visit our stores are our manufacturing facilities, they’re very shiny. The grows, and labs look more like a Merck or a Pfizer pharmaceutical facility than what some people would think of as a cannabis cultivation facility. We really consider ourselves good stewards of capital. We were never a public company. We never had funding money. We never went for broke. We watch every dollar. Here I am the CEO of a 550-million-dollar company, and my office is next door to the wine and spirits office, and we’ve had a nail salon client forever. We moved them upstairs and put my office at the back of the nail salon. So, I sit in back of a nail salon—
Alejandro: I love it.
Josh Genderson: –with a couple of administrative staff and our C-Suite is spread throughout Boston, New York, Philadelphia, and D.C.
Alejandro: Very cool. How many employees do you guys have to date?
Josh Genderson: We have around 400 employees, and that, for better or worse, is going to double by the end of the summer. We have about two assets opening a month this year. We won a lot of licenses and bought a lot of licenses. Those are all under construction right now. On top of the many licenses that we have open now that are generating revenue, we’re going to open a lot more assets this year, so we’ll see our employee count almost double. It was really important to me to have a lot of structure in place. Some people poo-poo the whole concept of culture, but it’s just the most important thing. In cannabis, not a lot of people realize, it’s such a fast-growing sector that if somebody comes to work for me, and they spend six months working for me, you put that on your resume, and you can get hired or approached in a day. Keeping these employees, and having great retention, and watching them rise as we expand from maybe a local role in a store to a regional role to a national role has been one of the most rewarding things.
Alejandro: You’re talking about culture, Josh. How do you define culture? What’s culture to you?
Josh Genderson: I think culture is the feel, and it’s the mantra, and the almost indescribable work. It’s how people treat each other. It’s how they’re treated. It’s how they treat our customers, and it’s how I treat them. It’s access. It’s transparency. It’s so many things. It’s allowing people to be their best without being worried about what their direct boss is going to say. I really spent a lot of time making sure that’s the case at Holistic.
Alejandro: Very cool. Where do you see the cannabis industry heading as a whole?
Josh Genderson: That’s a great question. If I had a crystal ball, I wouldn’t be in the back of a nail salon. Look, I can tell you a couple of things. Demand has never been as high as it is now. I think education and outreach is such an important component. A lot of what people think about cannabis is just because of a lack of education. We have a national director of outreach. He’s a rabbi, and he goes to hospitals, senior facilities, churches, synagogues, and you name it. He destigmatizes cannabis. He teaches people that it’s okay. His story is an amazing one too. He was a rabbi for a social services agency, and he would sit on people’s deathbed, and his aha moment was when he was visiting a patient, an elderly man who was dying, and he couldn’t eat. James recommended that he try cannabis. He was in a state that would allow for him to get a card. His wife said, “We’re not that kind of people.” About a minute after they said that, they hit their morphine button about five times, and James watched the guy’s eyes roll in his head. James just knew that there was a lack of information and education to say you’re not that kind of person but to be comfortable using a pharmaceutical drug that five years later we all find out is killing people and creating an epidemic. I think cannabis is—the toothpaste is out of the tube. Legislators and citizens, no matter left to right, Republican, Democrat, independent, they’re all starting to see what a successful cannabis program in their state can do. The crime rate doesn’t go up. You add a lot of good-paying jobs. Like I said, it’s a competitive environment. There are about five times more tax-paying jobs in the cannabis sector than there is in the coal sector. As people see that having a cannabis program in their state means better roads, and more schools, and more police cars, and people suffering from whether it’s muscle spasticity disorders like MS or brain tumors or epilepsy, these things can be treated with cannabis therapy. This is a natural plant. We’re held to high standards. This product is third-party tested and done right, and with the right experience, we’ve seen many people come around and have watched their lives being changed.
Alejandro: Very cool. One of the questions that I typically ask the guests that come on the show is—you’ve been at it for a while. You’ve grown, scaled, started businesses, raised money, and everything that you can think of. If you had the opportunity to go back in time and perhaps have a discussion or conversation with that younger Josh in which you had the opportunity of giving that younger Josh one piece of advice before launching a business, what would that be, and why knowing what you know now, Josh?
Josh Genderson: That’s a good question. I think I would tell my younger, dumber self that you can’t do everything. Focus is so important, and talent is so important, and bringing leaders in that are smarter than you and better looking than you that understand business. Our chief marketing officer was the CEO of the biggest pharma marketing company in the world. I mentioned our CFO, our chief human resources officer, and HR for Hard Rock Casino—bring people in that have breadth and depth of experience and giving them the tools to succeed and the encouragement, and watching them do their thing. You can’t do that by yourself. I think I spent a lot of years doing everything and trying to be everything, and that is not the right approach. I’m glad I learned it when I did.
Alejandro: Got it. For the folks that are listening, Josh, what is the best way for them to reach out and say hi?
Josh Genderson: If you go to holisticindustries.com, you can drop us a note and say hello. We’ll get back to you that day. We love meeting new people, and we love to give them the opportunity to see what we’re up to and learn about the industry.
Alejandro: Amazing. Well, Josh, thank you so much for being on the DealMakers show today.
Josh Genderson: Thank you so much. It was an honor, and I really enjoyed our conversation.
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