Body and Mind works to find footholds in emerging cannabis markets through strategic partnerships while building its business in booming states.

Body and Mind has a history of putting roots down in relatively uncrowded cannabis markets.

When its original owners landed Las Vegas as Body and Mind’s (BaM) cultivation and production headquarters in 2016, Nevada had only 20,000 medical cards distributed throughout the entire state of more than 2.9 million residents at the time, says BaM CEO Michael Mills.

Nevada transitioned from medical to adult use in July of that year, and the company went public a few months later. Though BaM executives hadn’t anticipated Nevada’s changeover to adult use, getting in early put the company in every Nevada dispensary once the transition was official.

“When the state flipped to adult use, it put us in a fantastic spot,” Mills says. “The company was ready with great products, branding and shelf space.”

Locations: Cultivation and processing at headquarters in Las Vegas, with retail and processing licenses in Ohio. Additional retail in California, Michigan and Arkansas. BaM also recently received rights to two dispensary licenses in Chicago.

Canopy size: Cultivation within a 20,000-square-foot facility and processing at a nearby 8,000-square-foot facility in Las Vegas. In Arkansas, the company currently cultivates in 6,000 square feet of space.

Number of employees: More than 100

Products/services offered: Roughly 70 SKUs developed by company R&D. Products include flower, edibles, cartridges, and various oils and extracts.

Today, BaM is a multistate proprietor with operations in Nevada, California, Arkansas, Ohio and Michigan and is continuing its expansion efforts to explore markets where company leaders see opportunity.

In July, Illinois awarded 149 conditional dispensary licenses for the state, with BaM having rights to two dispensaries in Chicago, a market of more than 9 million people which company officials hope to reach. Now an adult-use state, Illinois still has a low number of licensed dispensaries at 110 compared to its population of more than 12.6 million, making it an attractive location for ongoing growth.

“Winning license applications is a better way to build value than buying or acquiring an operating license because of simple math,” Mills says. “When we’re looking at applications, we consider any new state or region opening up [new markets]. We have a group that’s done great work for us in writing applications, and that’s been successful for us in numerous states. There are ultra-competitive areas where you don’t want to spend time and money applying for a license. In other places, it’s clear there’s going to be a limited number of dispensaries in general. That’s the focus for us.”

Soon after BaM went public at the end of 2017, Mills arrived in 2018 with a career’s worth of senior management experience in manufacturing, media, technology and finance. After a short stint as company vice president, Mills was named interim CEO in 2019 before his full-time appointment the following year.

Chief Operating Officer Stephen “Trip” Hoffman’s journey to the C-suite is a bit more circuitous. A former hedge fund manager with a Ph.D. in physics, Hoffman worked in New York and Chicago before transitioning to cannabis. An unsuccessful capital raise for a cultivation project led to a $10-per-hour trimmer position at a cultivation facility where Hoffman could learn the market from the ground up.

“I was working …, then going home at night to take notes around processes and develop a plant management system,” Hoffman says. “My motivation was the operational skills I knew I had, plus social justice around cannabis and its medical value.”

Hoffman wrote software around cannabis grow systems and harvest yield, later taking on more aspects of the business. After working consulting gigs for various cannabis companies—including BaM—he joined his current employer as COO in 2018.

The two executives combining their talents has benefited BaM as it strives to outmaneuver a crowded and fast-paced marketplace, Mills says.

“We saw cannabis as a high-growth industry with lots of opportunity; having experience in other industries goes a long way to moving the company forward,” Mills says. “Much of business is identifying opportunities and solving problems. It could be capital market challenges or opportunities around cultivation. Our experience across management teams allows us to move faster and with more conviction.”

BaM has about 70 SKUs deriving from its 20,000-square-foot cultivation and 8,000-square-foot processing base in Nevada. The company produces flower, edibles, cartridges, and various oils and extracts sold at retail.

Mills points to badder, budder and shatter as the company’s more popular extract offerings, while infused Pretzel Bites, Krispy Bites and Chocolate Bites comprise its featured edibles.

Additionally, BaM has white label services in states where it has opened production and manufacturing facilities. The company has three dispensaries in California —Seaside, Long Beach and San Diego—and one in Muskegon, Mich., along with dispensary and production spaces in Cleveland, Ohio, and West Memphis, Ark.

BaM has always prioritized growth in multiple states, further gaining footholds in those areas by securing key relationships with cultivators and others in the supply chain. Agility and certainty are of the essence when seeking licensing partnerships as well, Mills says. The MSO has landed five licensing partnerships in recent years, among them an alliance with women-centric cannabis brand Her Highness. The partnership with BaM allows Her Highness to offer a series of indoor-grown prerolls and vape pens to the Nevada market.

Meanwhile, BaM continues to enter states and regions where licensing is limited.

Arkansas, a limited-license medical state with a population of 3 million, stands as a litmus test for the BaM strategy. As of press time, Arkansas had more than 30 operating dispensaries.

BaM finished its Arkansas facility in 2020, partnering with licensee Comprehensive Care Group to build a medical marijuana dispensary in West Memphis. BaM has about 6,000 square feet of cultivation space in the state, which is enough room to nurture 50 flowering plants per state licensing restrictions.

Mills and Hoffman continue to track Arkansas’ adult-use legalization efforts, which were dealt a blow in early August when state election officials rejected certification of a November ballot measure, citing the language. However, the Arkansas Supreme Court sided with a lawsuit from legalization advocates, and the ballot measure is back on, for now, although a future court ruling will determine the validity of the ballot measure, according to reporting from Cannabis Business Times.

“Each state has its own set of rules, but Arkansas has a low number of brands,” Hoffman says, referring to the number of cultivation businesses in the state. “There’s eight now, a small amount compared to California because of its long history in the market. It’s a much different experience in Arkansas, where people become loyal to one brand.”

BaM prides itself on building strong businesses around newly acquired operating licenses.

A favorable market response is not restricted to Arkansas, notes BaM leadership. The MSO also put its flag down in Northeast Ohio, near Cleveland, which is home to a dispensary and production space in another somewhat untouched jurisdiction. Launched in 2019, BaM’s Ohio medical dispensary was among the first dozen of its kind to open in the state, becoming a blueprint for building in the right place at the right time.

“The best way of understanding an opportunity in any new environment, but particularly in a new state, is to have folks on the ground,” Mills says. “In Ohio, we have good relationships with cultivations and supply our own manufactured products to our dispensary. In Arkansas, we have cultivation space that supplies our dispensary with flower.”

Ohio and Arkansas stand out to BaM due, in part, to a burgeoning environment of what Mills calls “co-opetition”—in other words, an atmosphere of cooperation among players even when they are competing for the same clientele.

“Everyone wants cannabis to be successful in a new state,” Mills says. “That’s been an interesting thing to come out of [our expansion].”

Targeting territories on the cusp of adult-use legality can be a financial “rocket ship” for early-adopter enterprises, Mills says.

However, becoming a nationwide brand also requires success in California, where legal marijuana sales are expected to reach over $7.35 billion by 2025, according to New Frontier Data, Mills says.

What is the biggest challenge in launching or maintaining a cultivation operation? “Winning or obtaining a license in a limited-license state, and getting capital to lease, build out and maintain a facility. It’s also challenging putting together a team with a deep understanding of the business.”

What is something most people don’t realize about running a cannabis business? “The amount of regulation and reporting involved. Also, how changes at legislative and local levels can impact business.”

What keeps you awake at night? “The industry moves very quick, and there’s always new developments. Additionally, keeping up with changes across our six states. We never want to miss an opportunity.”

What helps you sleep at night? “We have an amazing team. I’m surrounded by deep cannabis and business knowledge.”

Any advice for other cultivators or future MSOs? “Feed off the excitement of the industry, and network with people who know the business and are successful. Always embrace change and innovate. This is a still a nascent industry with lots of opportunity.”

Yet, the Golden State’s massive adult-use industry continues to struggle with high taxes, local licensing restrictions and tangled legislation, making it difficult for licensed businesses to compete with an entrenched illicit market.

Illegal dispensaries remain a constant thorn, as some jurisdictions don’t have the manpower to shut down every backlot grower. Surviving California’s high taxes and complex bureaucracy requires extensive product knowledge around a robust set of brands, along with ongoing cultivator support, Mills says.

“You need a proven selection that the illicit market does not have,” Mills says. “There must be an appeal for people to continue coming back to your location.”

The next steps for the rising cannabis company include building out the Chicago locations while seeking deals in similar regions with untapped potential.

Six years of developing the company has revealed several lessons, according to Mills. One is leveraging the Body and Mind brand on both its products and its dispensaries under advisement from a marketing group after initial reluctance do so. The Ohio store, BaM’s first dispensary, was initially named The Clubhouse.

“We were hesitant to use Body and Mind as the dispensary name [until] the marketing group outlined the strength of the Body and Mind name, which we now use on all our dispensaries,” Mills says. “Bringing someone in with that knowledge turned that idea on its head.”

The company received additional advice from a general business consultant.

“The big pitfall is compliance …,” Hoffman says, referring to the stringent regulations surrounding the cannabis industry. “There are detailed rules and regulations you won’t know until an inspector shows up. Consulting companies can help you with cultivation, manufacturing and retail.”

Taking a measured approach to growth is another vital lesson, even as company execs glean advice from as many contemporaries as possible.

“This business is still very young, and everyone wants to help each other be successful,” Mills says. “Talk to people you admire. I was shocked by how open everyone is to help each other out. Building on the success of each new facility helped us expand into new markets that would have been challenging to enter otherwise.”

Douglas J. Guth is a Cleveland Heights, Ohio-based freelance writer and journalist.

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