Bachtell and Caltabiano decided to start the company in October 2013, two months after former Gov. Pat Quinn signed legislation that made Illinois the 20th state to legalize medical marijuana.
They gathered three friends and put in $3.5 million of their own money and hired Colorado’s Denver Relief Consulting, handing over 6 percent of equity in exchange for a crash course in everything they didn’t know about the operational side of growing and selling marijuana.
By fall 2014, they were ready to submit licensing applications.
Illinois had just divided itself into 21 dispensing districts that followed its state police districts and was accepting applications for each one.
Cannabis designed for you.
Bachtell and Caltabiano decided to submit three, assuming they’d win one or two, tops. They skipped Chicago and went for Joliet, Kankakee and Lincoln instead.
Cresco Labs Inc.
They won all three. By the end of 2015, all three sites were up and running.
Now it was time to master the product and make sure they could appeal to a wide audience of people who wouldn’t be caught dead buying a baggie of bud stamped with a Jamaican flag.
The partners spent six months refining the message.
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“We recognized earlier than others that branding was how this industry was going to become normalized,” Bachtell says. “We thought of this as (a consumer packaged good) from the start.
This is like Tylenol, Budweiser, Coca-Cola.”
That meant creating four distinct brands: Cresco, a combustible (i.e. smokable) or vapable product that they describe as “elevated” cannabis for veteran consumers; Reserve, a premium line that comes from plants specially bred for years; Remedi, products for customers consuming cannabis for medical reasons that come in tinctures, capsules, sublingual oils and transdermal patches; and Mindy’s edibles, a line of high-end chocolates and gummies created by local culinary star Mindy Segal.
“Cresco realized bringing cannabis into the Midwest was going to require taking extra measures to normalize the subject matter,” says David Wenger, a New York attorney who recently left a 12-year legal career to begin advising investors on the U.S.
marijuana industry. He’s a personal investor in Cresco, too.
“They established consistent, powerful messaging that helps consumers, regulators and the medical community feel more comfortable.”
Along with creating high-end, professional-looking brands, Bachtell and Caltabiano got serious about hiring similarly high-end, professional-looking résumés.
The company now employs 300 people, up from 100 at the beginning of 2018, and is straining its River North headquarters, its leaders say. In addition to executives from Abbott, AbbVie and McDermott Will & Emery, Cresco employs Matt Rowbotham, a former sous chef at Next—Grant Achatz’s themed tasting-menu restaurant—and named Dr.
Charles Bush-Joseph, a prominent orthopedic surgeon affiliated with Rush University Medical Center, to its medical advisory board. (Bush-Joseph received stock options from Cresco and cannot certify his own patients for medical marijuana.)
Today, Cresco operates in six states—Illinois, Pennsylvania, Ohio, Nevada, Arizona and California—and says it will be in three more this month.
Bachtell and Caltabiano decline to identify those states but say they’re focusing on the eastern half of the country and have applied to Michigan and New Jersey. They say the company is cash-flow-positive and has been for some time, though they decline to give revenue numbers.
“It’s all about changing the perception” of marijuana, says John Downs, director of business development at Arcview, a research firm in Oakland, Calif., that tracks the industry.
“As the stigma melts away, the opportunity is great.” He adds that Bachtell and Caltabiano are “smart operators who came in understanding the importance of establishing best practices.
Building National Brands
They’re very attractive to investors.”
Their end goal, Bachtell and Caltabiano say, is changing as rapidly as the industry. Three years ago, they hoped to build a company that could be acquired by a giant like Molson Coors or Coca-Cola, both of which have recently dipped a toe into the waters of cannabis-infused drinks.
Now they say they’ve moved beyond that. “Today we ultimately think we could partner with some of those (packaged-goods giants) rather than being a takeover,” Caltabiano says.
“If we’ve learned anything, it’s how dramatically the landscape can change in a very short period of time.”