JOHNSTOWN — Local marijuana producer Vireo Health is expanding to capitalize on expected growth in the medical and recreational uses of its products in the state.
“As we stand right now, New York is the most substantial opportunity for Vireo Health,” company CEO Dr. Kyle Kingsley said in a video presentation to investors posted Tuesday.
The company is exercising its $1.3 million option to buy 97 acres alongside its existing grow and production facility in the Tryon Industrial Park in Johnstown, where it plans to add as much as 200,000 square feet of production space.
Kingsley told The Daily Gazette on Tuesday that state regulations for newly legalized recreational marijuana production and sale are not complete but the company has enough confidence in the market that it’s moving ahead now so it is ready when the rules are completed.
This may mean that structures are built but not immediately finished and filled with equipment inside, he said. The work will be done in consultation with regulators.
“We intend to expand our facility quite significantly,” Kingsley said, on the expectation that there will be a marked shortage when the legal market opens in New York.
Another significant boost for Vireo is that New York has legalized the sale of whole flower cannabis for medical use, Kingsely said. Consumers prefer that form, he said, but New York until now had limited medical marijuana products to extracts, not the whole flower.
“I think that’s going to be the biggest shot in the arm in New York,” he added.
Meanwhile, Vireo is looking for a larger space for its only Capital Region dispensary, currently located on Fuller Road in Colonie.
And the public may see a name change on dispensaries at some point down the road: On Tuesday, Vireo Health International announced it is changing its name to Goodness Growth Holdings. Vireo Health will be the multistate cannabis subsidiary.
Also Tuesday, Goodness Growth announced that another subsidiary, Resurgent Biosciences, will move into the psychedelic medicine space, with intellectual property development and clinical research but no actual manufacture or distribution of psychedelics.
Kingsley said he initially had been a skeptic about psychedelics but they’ve shown remarkable success in treating disorders such as depression.
He said regulatory approval of medical psychedelics is likely decades away, but he predicted it would come within his lifetime. “It’s going to be transformative,” he said.
Obstacles remain for Vireo, which last month reported a $7 million loss for the first quarter of 2021:
- Because the federal government classifies marijuana as a Schedule 1 drug like LSD, heroin and ecstasy — no medical use and high potential for abuse — Vireo and other companies can’t operate across state lines and build economies of scale, either for recreational or medical use. Kingsley holds some hope that the current leadership in Washington will take marijuana off Schedule 1.
- Because there is little research on medical marijuana that yields knowledge and guidance on specific dosages and effects, many doctors remain reluctant to prescribe it for patients.
- The regulatory framework New York creates for recreational marijuana production and sale remains an unknown.
Despite these factors, Kingsley remains optimistic.
Vireo finished 2019 and 2020 in the red but jumped from $30 million in revenue to $49 million. With major regulatory changes ahead in Minnesota, New Mexico and New York, it is projecting cash flow will turn positive in the first half of 2022 and expects revenue of $140 million to $180 million for all of 2022.