Theory Wellness first opened as a medical marijuana dispensary in 2015 with a location in Bridgewater, Massachusetts. In 2018, it opened Berkshire County’s first such facility, in Great Barrington. A year later, that dispensary became the first store in the Berkshires to legally sell recreational cannabis — kicking off an explosion of similar dispensaries throughout the region and raking in millions in profit. Now, Theory says it’s once again making history by becoming the first cannabis company in Massachusetts to adopt an employee-owned model. CEO and co-founder Brandon Pollock tells WAMC that the move will also make Theory the largest business in the industry to do so.
POLLOCK: So, the Employee Stock Ownership [Program] transition – known as an ESOP – is a structure that allows the shareholders of a company to essentially sell the business to a trust which will be for the sole benefit of the employees. So, this is a fairly common way for private companies to sort of do the right thing as they look to exit the business and give the business over to their employees. But for us at Theory, it's even more exciting, because this is the largest, by far, ESOP transaction in cannabis, and certainly one of the first as well. So, moving forward, our team will directly benefit from all the hard work they're putting in every day, which for Nick [Friedman] and I, my business partner is a really rewarding legacy for us to put in motion.
WAMC: What prompted this move? Why did you decide to make this substantial adjustment to the business model?
First and foremost, it really fits our values. We've always done our best to take care of our team through profit sharing, paying good wages, we put in place one of the first 401k plans in the cannabis industry- But we really wanted to look to do something more meaningful. And as we sort of went through the concept of an ESOP, it sounded like a just a perfect fit for Theory and our culture. So, it's been something we've been exploring for about a year or so, and really got serious about it over the summer and started putting all the different pieces in motion with the Cannabis Control Commission, with our shareholders- And a bunch of paperwork, as you might imagine, to do a deal like this.
Break it down for us in material terms. What will this mean for the employees once this actually goes through? How is this going to change their compensation and the benefits they receive from the company under this new model? And when?
It's interesting- Some things don't change at all, and then there's also some really meaningful value for our team and their families. So, what doesn't change is the company. We are still Theory Wellness, still the same management, still Nick and I running the company. However, what does change is, over the next few years, all of our employees have an opportunity to vest into an ownership position in the company, so they'll be able to get a report every year that talks about how many shares they have, what the shares are worth, and it's really designed to be a retirement plan. So, as folks transition out of the business, they keep their shares, and over time, we think that value can be meaningful for supporting retirement.
And how does this play into the longer-term strategy for Theory?
From all that we've heard and all the folks we've talked to that are involved in ESOP world, it's a really great benefit for an organization. As everyone knows, the heart and soul of the company is its team. So, with having the employees own the company itself, it should make our team more engaged, certainly will help with recruiting new team members, and we also hope and suspect that it'll make people want to stay with us for a lot longer than they might otherwise have worked. I mean, cannabis generally has a very high turnover. We are already doing better than most, but we think this should really cement ourself as one of the premier cannabis companies to be a part of.
