Is Company Culture the Key to Success?

Company culture success - GCI Content Hub - Global Cannabis Intelligence

Jon Sandelman reveals his unconventional journey into the cannabis industry and the secrets behind the success of his multi-state company.

Jon Sandelman is the CEO of Ayr Wellness and a first-mover in cannabis. He spoke with the Professionally Cannabis podcast about how turning down his first invitation into the industry led him to become the head of a 3000-strong cannabis operator, and why he thinks company culture is the most precious asset on the balance sheet.

“…He goes, ‘cannabis,’ and I say, ‘not my core competency.’ ”

As an investor, Sandelman has learned to take calculated risks within his areas of expertise. “When I stray from that core competency, I tend to lose,” he says. In 2017, Sandelman received a phone call giving him the opportunity to invest in a certain highly fragmented industry that was growing exponentially and with limited access to capital: “…he goes, ‘cannabis,’ and I say, ‘not my core competency.’ ” Although this was an enticing opportunity, Sandelman admits he didn’t know “the first thing about cannabis.”

Nevertheless, this fated phone call left a lasting impression with Sandelman, who couldn’t quite kick the idea of cannabis from his mind. His curiosity drove meticulous research into cannabis and he quickly became a convert: “This is a once in a lifetime opportunity,” he exclaims. “There seemed to be a paradigm shift… from alcohol to cannabis.” Sandelman justified his entry into cannabis by applying his understanding of relative value traits to what he saw as changes in tobacco and alcohol consumer choices.

The cannabis landscape in 2017 was treacherous. US Attorney General Jeff Sessions was threatening to sue any exchange listing plant-touching companies and people were fearful of doing business in cannabis. Despite this, within a few months and after jumping through a number of challenging hoops — not least the federal illegality of cannabis — Sandelman created the very first special purpose acquisition company (SPAC) in Canada that would list plant-touching US businesses.

 

Company Culture: Sandelman’s Secret to Success?

Fast forward a few years and Sandelman is the CEO of Ayr Wellness, home to an “excellent” roster of companies with almost 3000 employees. But how did he do it?

Sandelman is a self-professed “culture guy.” He believes the most successful companies are those which have a genuine positive impact on their employees as well as consumer communities. “I’ve always had businesses where it’s a culture of excellence. Right? It’s a culture of mutual respect, honesty, integrity, transparency.” A common vision is also non-negotiable: “You have to have the vision and the ethos and the culture to attract the best… and if we can have 3000 people, all passionately working towards the same vision…we win the most precious asset on our balance sheet. It’s that culture.”

So culture is crucial and should never be underestimated. But it’s certainly not the only weapon in Sandelman’s arsenal. Ayr Wellness is built on the solid foundation of Sandelman’s other core competencies: investment and professionalisation. “While I was less familiar with cannabis, I was very familiar with investing in companies,” he explains. When acquiring cannabis companies, Sandelman ensured that his picks were EBIT (earning before interest and taxes) and cash flow positive. They also had to be the best in their class “because we want to have a significant share in each market… we want our brand to be very relevant in the consumer’s mind.”

Sandelman’s high standards meant that he “ended up buying an initial portfolio that was excellent.” Next, he turns his attention to a pertinent issue: the lack of legitimacy pervasive in the cannabis industry. “If I use my skills and experience just to professionalise it, I bring a major edge, right?” By becoming “the most transparent company in the industry”, investors would see the assets as worthy of their capital.

Workable company culture is foundational for any business hoping for longevity. But, needless to say, Sandelman’s success in cannabis is also attributable to the surgical precision with which he navigated the turbulent seas of the emerging cannabis industry. The real secret to Sandelman’s success seems to lie in his ability to realize a cohesive, nurturing and supporting culture of excellence within his portfolio of acquisitions. “Create a company whose atmosphere allows for people to find their genius, to be whoever they want to be,” he beams. That is the key.

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