Big brand executives are rushing into the cannabis industry hoping to tap into a $194 billion industry
- Executives from big retail brands and consumer packaged goods companies are pouring into the rapidly maturing cannabis industry.
- The financial opportunity is massive: analysts say the cannabis industry could skyrocket to $194 billion if other countries follow Canada's lead and legalize the drug.
- Expect to see more high-profile executives taking positions in cannabis companies as more markets open up.
When veteran retail executive Ed Schmults received an out-of-the-blue phone call from a headhunter in July, he had no idea that in just a few short months he'd end up as the CEO of a cannabis company.
"She was working hard to put the hook in - about the size of the opportunity and the 'clean slate' if you will," Schmults told Business Insider. She didn't initially tell Schmults that she was recruiting for a cannabis company.
"I was like 'huh, cannabis?' I'll have to think about that," he said. "At the end of the day, I really liked the investors."
Schmults is now the new CEO of Massachusetts-based Calyx Peak Capital - a firm that invests in cannabis retail licenses in a number of states - and he's just one of a number of consumer veterans who have moved into the nascent industry.
Executives like Schmults see an opportunity to use their experience to help build brands, cut deals, and create the complex distribution and supply chain networks the cannabis industry needs in order to mature.
Getting in early may also be a windfall. According to the Bank of Montreal, the cannabis industry could become a $194 billion global market if more countries follow Canada's path in legalizing the drug.
From a 'radical notion', to 'how can I get in on the action?'
To Schmults, cannabis is a "rare opportunity" to take part in creating an industry from the ground up. After a stint at Goldman Sachs, Schmults served as the COO of Patagonia and the CEO of the storied toy retailer FAO Schwarz.
While some of his former colleagues ribbed him over his "sharp career turn," Schmults said when he described the size of the opportunity, their jokes turned to questions of how and when they could invest.
Other executives came into the cannabis industry through different paths.
Chris Burggraeve, the former chief marketing officer of Budweiser's parent company, AB InBev, found his way into the cannabis industry after MBA students at a class he was teaching at New York University submitted proposals for cannabis startups as their final projects.
Read more: A cannabis CEO who led turnarounds at FAO Schwarz and Patagonia explains why he's looking to poach 'nimble' people from small companies - rather than big-name execs
"It piqued my interest," Burggraeve said in a recent interview with Business Insider. In 2016, Burrgraeve took the plunge and founded Toast, a cannabis brand geared towards upscale consumers.
When Burggraeve first launched Toast, he said leaving the traditional consumer packaged goods world (he held positions at Procter and Gamble and Coca-Cola prior to AB InBev) for cannabis was a "radical notion."
Now Burggraeve says nearly all former colleagues he speaks with have one question: How do I get in on the action?
Peter Horvath, who led the shoe retailer DSW's initial public offering in 2005 as the company's president - along with serving in c-suite positions at American Eagle and Victoria's Secret - said jumping into the cannabis industry was a matter of "skating to where the puck is going."
Horvath said he expects cannabis products to pop up on the radars of boardrooms everywhere - from beauty startups like Glossier to retail behemoths like Amazon.
REUTERS/Lucy NicholsonA woman holds marijuana for sale at the MedMen store in West Hollywood, California U.S. January 2, 2018.
He's now the CEO of Green Growth Brands, an Ohio-based cannabis retailer backed by the billionaire Schottenstein family. The company went public on Tuesday via a reverse merger with Xanthic Biopharma on the Canadian Securities Exchange and plans to use its stock to buy dispensary licenses in new state markets like Massachusetts.
"We're going to apply what we know to a brand new business, and the upside is tremendous," Horvath said.
Read more: Coca-Cola is eyeing a deal in the marijuana industry, and insiders say it's a sign that other beverage giants may soon dive in
There are other high-profile execs in cannabis as well.
Beau Wrigley Jr., the heir to the Wrigley fortune and former CEO of the eponymous gum company, was just named the CEO of Surterra Wellness, a Florida-based medical cannabis company.
And Ben Kovler, the CEO of the publicly-traded cannabis company Green Thumb Industries (GTI), is one of the heirs to the Jim Beam whiskey fortune.
Kovler's firm, which on Wednesday closed a $290 million acquisition of three new dispensary licenses in Las Vegas, is backed by hedge fund billionaire Leon Cooperman.
MedMen, a chain of retail cannabis dispensaries, hired Ben Cook, a former VP at Sam's Club, as its new chief operating officer in October.
And Jakob Ripshtein, who spent ten years at the alcohol giant Diageo, is now the president of Aphria, a publicly-traded Canadian cannabis cultivator.
In August, reports surfaced that Diageo was looking at pursuing a deal with a Canadian cannabis company - and Aphria was at top of the list.
"We are seeing high profile companies, in addition to institutional investors, waking up to opportunities in the space," Kovler, the CEO of GTI said.
Read more:
- A former Coca-Cola executive and cannabis startup founder reveals the moment he knew cannabis would be 'the next big thing'
- The top 12 venture-capital firms making deals in the booming cannabis industry that's set to skyrocket to $75 billion
- Hedge fund legend Leon Cooperman is investing in the marijuana industry