Former cannabis executives share tips for successful exits

The green rush of the early cannabis industry created a wave of entrepreneurs who rode the tide of legalization to significant success.

Now, as the industry matures, a growing number of those pioneers are leveraging their hard-earned capital to explore new horizons.

MJBizDaily spoke with five founders of cannabis businesses about their decisions to exit their operations.

From new companies to foundations, these five are demonstrating that their entrepreneurial spirit extends beyond the realm of cannabis.

One thing they all have in common is exiting their companies at the right time, a luxury many founders don’t have today.

After entering a $297.5 million deal in 2021 that positioned Colorado-based Wana Brands for a sale to Canada’s Canopy Growth Corp., Nancy Whiteman remained with the company she founded in 2010 until last May, when she left to focus more on philanthropic endeavors.

Since establishing the Wana Brands Foundation with $50 million in 2021, Whiteman has donated more than $6 million to more than 150 nonprofits.

Causes the foundation is dedicated to include mental health and substance abuse, food security and social justice issues.

“We look for people who are doing things that are innovative and taking different or more wholistic approaches to solving problems,” Whiteman said of the Wana Brands Foundation.

Whiteman determined it was time for an exit from the cannabis industry after watching large players consolidate and multistate operators launch their own brands.

“I felt that it was going to be increasingly difficult for a small independent brand to continue to grow and thrive,” Whiteman said.

“It was a good time to align Wana with a larger player in the industry with more resources.”

Whiteman landed on Canopy for several reasons. She especially liked the Canadian operator’s relationship with Constellation Brands, a producer and marketer of beer, wine and spirits.

But the cannabis industry today is vastly different from what it was when Whiteman left Wana, and she suggests waiting to exit until the market is healthier.

“It’s a really hard time,” she said. “What I’m seeing now is there are not that many players who have the capital to do acquisitions at this point.

“People are bargain hunting, and there are brands in tough situations. If you’re a buyer, it’s good, but it’s a very hard time if you’re a seller.”

Whiteman advises cannabis business founders to be selective about which company a brand sells to and think carefully about what they want to do after an acquisition.

“Are they looking to completely exit? Are they going to stay on and continue to grow the brand? The relationship with the buyer is important, and (so is) making sure your visions are aligned,” she said.

Pete Kadens exited Chicago-based Green Thumb Industries in 2018 to spend more time with family and friends and focus on his philanthropic endeavors.

Kadens chalks up his successful exit to good timing – stocks were up before the COVID-19 pandemic rocked the world.

“It was a rocket ship, and I was along for the ride,” he said. “But I felt bank account rich and relationship poor.”

Kadens has been busy since leaving Green Thumb.

He owns funeral homes, construction and engineering firms and coaches high school basketball.

He sits on nine corporate and nonprofit boards and, later this year, will be an understudy of a homicide detective.

Kadens also is chair of the Kadens Family Foundation, a charitable organization dedicated to closing wealth and education gaps in the United States.

Kadens said he’s proud of the work he’s done in the scholarship arena, putting 5,000 students through college and creating opportunities for people who otherwise wouldn’t have them.

“I do things that really intrigue me and add value to the world,” he said.

“I thought about the beach life as an option – that would be fun for a month.

“I also have to set a good example for my children. I want them to see their parents busy and adding value to the world.”

Joe Caltabiano left Chicago-headquartered Cresco Labs in March 2020 just before the pandemic gripped the world.

“My partner and I disagreed on the future of the company, so it was a natural breaking point for me to exit,” Caltabiano said.

“I was fully vested. I had accomplished a lot in the space, but it’s always hard leaving something you founded.”

He launched a special purpose acquisition company (SPAC), Choice Consolidation Corp., in the cannabis space in 2021, but when the markets tanked, he wound down the business in 2022.

He then started Healing Realty Trust, a Florida-based health care real estate investment trust (REIT) that buys outpatient medical facilities around the country.

“A lot of medicine has been pushed out of hospitals,” Caltabiano said.

“People are less inclined to go to the hospital and would rather go to an outpatient facility.”

A survivor of childhood leukemia, Caltabiano initially went to college to become a pediatric oncologist but decided he could make more of a difference in the field by becoming an entrepreneur.

“Everyone who beats cancer wants to cure cancer,” he said.

“I wanted to get rich before I was 40 years old and donate money to cancer.”

Gail Rand co-founded ForwardGro, Maryland’s first licensed medical cannabis cultivator, to help her son cope with seizures.

When she exited the company in 2019 – before it was sold to PharmaCann – the payout provided enough of a cushion that her son, who has significant special needs, will be cared for for the rest of his life.

Rand, who now is a strategic business adviser to the cannabis industry, serves on the finance committee of the YWCA of Annapolis and Arundel County and is in the process of joining the board. The organization focuses on domestic violence and sex trafficking.

“They have Maryland’s only sex trafficking center,” Rand said. “When people get rescued, they have nowhere to go.

“This gives them a place where they can get back on their feet. They also have a domestic abuse safehouse.”

For founders who want to exit their companies, Rand advises having a reasonable expectation of the business value.

“I often see predictions that are overly rosy,” she said. “That could be harmful when you’re trying to make an exit decision.

“If you’re choosing not to exit because you see a huge upswing in capital and cash flow in the future, you may not have as accurate representation of your current valuation.”

Rand said it’s also critical to make sure you’re comfortable with the people at the company you’re merging with or being acquired by.

Trust is key, she said.

“People perceive their exit as a true exit, but it’s really a partnership,” Rand said. “It’s rare that you get the money and run.”

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Marc Beginin invested $45,000 to start his first company, Precision Extraction Solutions, in 2014.

By 2019, the Michigan-based company was doing $40 million in revenue annually.

He left in 2021, after Precision Extraction Solutions was acquired along with Cascade Sciences by Agrify Corp. for $50 million.

Three months later, he used the funds to launch another extraction business, Miami-headquartered Prodigy Processing Solutions.

“I was cash rich and job poor overnight,” Beginin said.

“That’s a tough thing to deal with – it’s a sense of loss. You don’t know what to do.”

So Beginin attempted a hostile takeover of Agrify, purchasing 9.9% of its stock.

Within the 10 days of filing his stock purchase with the U.S. Securities and Exchange Commission, Agrify did a 20-for-1 stock split, diluting Beginin’s ownership stake in the company, so he abandoned the attempt.

Founders should focus on building their business rather than planning for their exit, although it’s important to know who within the organization has the expertise to keep it running after they’re gone, according to Beginin.

“Too many people start a business and are already looking for an exit. Don’t do that,” he said. “Build the business, be good to customers and scale the business.

“You have to be able to delegate. Nobody’s going to want your business if there’s no succession plan.”

Margaret Jackson can be reached at margaret.jackson@mjbizdaily.com.