The Dream Team: An Interview with iAnthus Capital Founders Hadley Ford and Randy Maslow

Honeysuckle Writes -

While in production on our CANNABIS print issue, Honeysuckle was introduced to the pioneering company iAnthus Capital. A publicly traded cannabis investment firm (ticker ITHUF), iAnthus is one of the most important American companies in the industry today. Holding licenses in six states – Colorado, Florida, Massachusetts, New Mexico, New York, and Vermont – the firm owns and operates cannabis cultivators, processors, and dispensaries that are changing the way of life for medical patients as we know it. At a recent CannaGather meetup, we chatted with iAnthus CEO Hadley Ford and his co-founder, President Randy Maslow, for the inside story. Friends and business partners for years, their witty chemistry still throws off engaging sparks that makes us insatiably curious about these two risk-takers.

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How would you define your roles at iAnthus?

HADLEY FORD: I’m the numbers guy. He’s the product tester.RANDY MASLOW: (Laughing) Exactly! That’s all I do!HF: It’s a good combination. You don’t want to overlap your strengths.

Hadley, I know that cannabis is actually something of a family business for you.

HF: Yes, my mother and father used to grow their own cannabis on the family farm, and I have fond memories at about age 10 or 11 when some local teenagers stole the whole crop. My mom was pretty shook up. She couldn’t call the police about it. RM: I never knew that. That would explain your brother and your sister. HF: So my brother’s got a medical cannabis business and my sister got a medical cannabis business and then they had no access to money. They were always yelling and screaming at each other because my sister would borrow money from my brother and she needed more lights and air conditioning, then he’d need the money back because he needed more lights and air conditioning. So Randy and I got in the middle of it. We said, “Guys, no need to fight. We’ll solve the problem.” So we figured out a way to go get capital, go get resources, and really provide that as a service originally for them, but eventually to provide it to other cannabis entrepreneurs [as well]. Since then, we’ve acquired licenses and partners and set up operations in Massachusetts, New York, Florida, Vermont, Colorado, and New Mexico, with more states to come. Selling the dream and allowing our partners to realize their dreams – that’s what we do. Dream makers, wouldn’t you say, Randy?

So iAnthus really started as a way to take care of your own.

HF: Exactly. And the farm was in Connecticut. We actually grew Christmas trees; they had a full vegetable garden. It was a full-time farm.RM: I never knew that! You’re like Michael J. Fox [in Family Ties], growing up with the hippie parents while you wore a suit and tie every day since you were 10 and carried a briefcase with a financial calculator.HF: “These are terrible margins! I can’t believe you guys are so inefficient here. You’ve gotta start thinking about getting into a grow, Mom.” Actually, my mom used to tell my grandmother that the [cannabis was] French marigolds.

Now, did your parents know all the medical benefits at the time? Is that why they were growing?

HF: I think they saw some other benefits besides medical. I don’t think people spent a lot of time, back in the Sixties, thinking about the medical aspects of it. But it’s clear math, right? We have more endocannabinoid receptors than any other compound in our body, and they respond to the cannabinoids in the plant. So if you run that just statistically, there are thousands of compounds with the potential to deliver medical benefits.

You’ve had a really interesting journey, from the family farm to street performing.

HF: Ah yes, you’ve done your homework. I was a juggler, performed magic, joined communes. I used to travel around for five years doing that.

But you also spent 14 years on Wall Street before getting into the “family business.” How did that leap happen?

HF: I was working at a photo album factory in Norwalk, Connecticut. I was the material handler, so I spent all day moving glue around. The factory was owned by two identical twins, Mel and Shelly. I could never tell them apart. And one day Mel or Shelly comes down with a cigar and he says, “Hadley, I really like the work you’ve been doing. I think you might be management material. What college do you go to?” I said, “I haven’t gone to college.” He said, “Oh, well then, we’ll be talking to you.” And then I knew in that instant I was going to be material handler in the glue department for the rest of my life.So I went to the barber, cut off all my hair; I went to the local high school’s guidance counselor and said, “Give me five or six applications for schools in the Boston area,” and they handed me a big stack of stuff. Randomly, my juggling partner Scotty was in town. We were going through these things: “What about this school?” “Nah.” “What about this one?” “Nah.” Finally I said, “What about Boston University? I could probably get into there.” So I fill out the application and Scotty writes the recommendation, and we mail it out. Two months later I called and said, “Hey I never heard back from you guys.” They said, “Oh, Hadley Ford, you’re the juggler. Don’t worry, you’re in!”I went there and started off as a philosophy major. Even though you’re doing some liberal arts stuff, they make you take other classes, and I took an accounting class. I don’t know why, but I loved it. That was the shift. I started taking more classes in business; I got a degree in finances. I became one of Fidelity’s bank analysts. So it just kind of went step by step, all from Mel or Shelly saying, “Where’d you go to college?”

How did you and Randy meet?

RM: In 1993 I became General Counsel to a company that was a forerunner to what later became known as internet service providers. People weren’t using the internet back then as you know it now. Online sites were called bulletin board systems rather than websites and you would have to connect your computer to each of those servers individually by making what was typically a long-distance phone call.HF: BBS for short.RM: We rented a bandwidth from AT&T and Sprint and created what was essentially a wide private area network, and connected the 35 largest BBS’s around the country to that network. Then we built out local “POPs” or “points of presence” in the 50 largest metropolitan areas in the U.S., so a consumer could dial into a local phone number and reach all these “websites” around the country without paying long-distance charges. So when the first graphical browsers were developed and people began to want to access the internet, we were already set up to become a national internet service provider.

HF: I was working at Goldman Sachs at the time.RM: I actually conned him. We were raising our first real round of venture capital and I had had a single brief conversation with a guy on Goldman’s PIA desk. I followed up with a phone call to a guy from a rest stop on the Ohio Turnpike and his secretary says the guy just left Goldman and she puts Hadley on the phone. I told Hadley that his predecessor was crazy about our deal and we were about to make a decision among competing offers and Goldman was going to lose out if Hadley didn’t get on a plane to Michigan immediately. Hadley came out, saw what we were doing, and said, “This is great!” Goldman led the first venture round along with a top-tier Silicon Valley venture capital firm and our little company eventually moved to Cuptertino and morphed into what became XO Communications.

HF: That’s how we met.

RM: I was in the tech sector as a lawyer and entrepreneur for 30 years. Hadley was the only banker I ever liked! I quasi-retired after XO Communications went public, and became an angel investor in the early stages of Silicon Alley in New York. In 2003 I met a brilliant young guy who started Internet Gaming Entertainment in Hong Kong, the first guys to provide a service whereby players in massively-multiplayer online games could buy and sell virtual currency for real money, which as a lawyer was totally fascinating to me. I joined IGE and we moved the company’s headquarters to the U.S., and proceeded to roll up virtually every competitor around the world.HF: (Sarcastically) I’m sure [your readers are] excited by it.

RM: Well, if you played hugely popular games like EverQuest or World of Warcraft, it was really exciting! We were the guys that allowed you as a player to buy virtual currency and virtual assets for real money, rather than remaining a slave to the game companies who wanted you to play the game for 10 hours a day to achieve the level of character that you desired to play the game with. The development of virtual economies and virtual currencies in these games was in a lot of ways a forerunner to the development of the global crypto currencies we’re seeing now.

HF: He was such a visionary he couldn’t even convince me to join the company.

RM: I tried to convince Hadley to be our Chief Financial Officer. He was the head of East Coast investment banking for Bank of America in New York. He comes over and says, “Let me get this straight. You sell 1s and 0s that you don’t even own, that sit on other people’s game servers, and you’re not in jail?”

HF: (Laughs) That business took off from like zero to $100 million in 18 months.

RM: I sold out my interest in IGE in 2006. So I was just a happily semi-retired tech investor, for eight years this time, until Hadley just happened to click on my LinkedIn invitation one day. He was looking to get into cannabis, he accepted my request to connect, and I called him.

HF: God’s honest true story. My phone is just sitting there on my kitchen table, I’m on the laptop looking at LinkedIn. Literally had not been on it.

RM: You don’t use LinkedIn, we got it. (Laughs)

HF: It’s just that everybody bugs you all the time. But I’m looking at the phone number going, “Randy Maslow? Holy shit, man, this guy is a fuckin’ riot. I’ve got to take this call.”

RM: We had a lot of fun in the early days of the internet. Actually, we still do.

Would you say there’s a secret to success, in cannabis or any industry?

HF: People think a great idea is all they need for a company. There’s a misconception. It’s about the execution. If you have a great idea –

RM: Someone’s gotta execute it. It’s usually not rocket science. You’ve got to just do it. People think there’s some magic involved. They don’t think, “I’ll just fucking do this. If it works, it works.” Most people are naturally risk-averse. They don’t try shit. They won’t leave their jobs. And even though what all of us in this industry do is perfectly legal in each state in which we operate, many would-be entrepreneurs may find it hard to go into what is still an illegal industry on a federal basis. I mean, technically speaking, we’re all drug dealers and money launderers.

HF: He’s the dealer. I launder the money.

Randy, you spent time as a caregiver for a family member. How did that impact your decision to want to build a fund for cannabis investment?

RM: Once a month for almost two years, I was in cancer centers with my mom and witnessed the effects of chemotherapy and immunotherapy, and I’d hear many patients talk about advice from their world-class oncologists at this leading U.S. teaching hospital that “Zofran (an anti-nauseant sold as a pharmaceutical) and other medications don’t work for everybody and that cannabis might work better for your nausea and in restoring your appetite.” And I’m like, “How’s it possible that it’s still illegal and yet many doctors are saying it’s the best medication for certain symptoms?” Then at the same time Hadley’s answering my LinkedIn thing and saying, “I wonder if there’s a business there?”

It was kismet!

RM: We traveled around and did a listening tour for seven months, and we found that the screaming need in the regulated cannabis industry was for what we do today, which is provide a better way to finance and operate grow and dispensary licensed businesses. Traditionally there’s only been a shitty way to do that. You want to go out and apply for a license, you’ve got to find people that will back you, and then they find out they have to undergo criminal background checks or submit tax returns, half of them drop out. And most of those potential investors don’t bring any value-add to the business in any event. So it’s just very highly inefficient. The idea of aggregating a large amount of capital and then investing capital in regulated cannabis license holders while adding operational and financial services value added, like a typical private equity or venture capital firm might do in other industries, is still pretty new. There’s very few people that are doing it today – mostly because it’s federally illegal.

—Stay tuned for Part 2 of our interview with Hadley and Randy, where we find out the future of iAnthus and explore the differences in the US and Canadian cannabis markets! For more information about iAnthus, visit ianthuscapital.com, or follow them on Facebook and Twitter. The stock ticker is ITHUF, available to buy at Fidelity. Look for iAnthus in the pages of our CANNABIS print issue, now available!