This interview was first published in Nuggets, the Star Tribune's free, weekly email newsletter chronicling legal cannabis in Minnesota. Sign up for Nuggets here.
Tribe-owned Mille Lacs Corporate Ventures is making a major play as a cannabis grower with a 50,000-square-foot cultivation facility on track to open this fall.
That's nearly twice as big as the largest cultivator footprints allowed by state licenses (30,000 square feet), and it's just the first of potentially several grow ops to come on the Mille Lacs Reservation.
Joe Nayquonabe, the CEO of Mille Lacs Corporate Ventures (MLCV), talked to the Star Tribune earlier this week about the plans. Below is an edited transcript of that interview.
On the strategy to focus first on growing marijuana rather than opening a retailer on tribal land
Nayquonabe: It was really driven by the legislation. It was brave and really appreciated that the Legislature and governor really supported tribal participation. And almost immediately we thought, whoa, the big competitive advantage for tribes is going to be really leaning in on the grow side of the business.
We don't run into those same canopy [restrictions]. So this first facility will be larger than most if not all the competitors that have state licenses. And in most cases they'll be 15,000-square-foot licenses.
There's a lot of waves out there, and we talk a lot about MLCV surfing where the waves are. Let's do what's right in front of us: That's what made the cultivation side so appealing to us.
MLCV's $100 million question
Nayquonabe: There are so many deals we look at. We have a thing here where we try to look at a thousand different business opportunities a year. About 300 of those will pass some sort of rudimentary test, then from that 300 we try to whittle it down to 30 and do heavy due diligence and invest in one or zero of them.
So the filter we've put on over the last five years is: If we can't turn it into a $100 million opportunity, let's not pursue it. It's going to be really difficult to run up a $100 million retail operation, so that immediately made it less interesting to us. We definitely will be doing it, but that's not our focus right now.
Expansion plans already in the works
Nayquonabe: We're really hoping to break ground on facility number two this year yet. We have in mind to do 250,000 square feet of canopy by 2030. I think it's possible, and that's certainly the big hairy audacious goal we have in front of us to keep us in the frame of mind to think big about this.
The other thing we're really interested in is making sure it's a healthy industry for the state. We're certainly going to be in the mix. It's a sprint that becomes a marathon.
On the operating structure of the cultivation facility
Nayquonabe: It's a subsidiary of MLCV and we also have partners helping us. I'm likening it to our entry into the Indian gaming market. We're taking that same approach, we have some partners helping us, though we're much more sophisticated from a business perspective today.
The idea is the same — let's partner with experts, learn as much as we can and grow from within the tribal community. We just hired our first assistant master grower who is a tribal member, and the goal is to be self-sufficient at some point. There is a steep learning curve to this, especially to live up to the ambitions we have.
Diversifying the tribal economy
Nayquonabe: We have so much support from the community and interest form community members, it's really the perfect storm for us. It's really tough working in the hospitality business, not a lot of people are built for that. So we've been trying to create something that's not consumer-facing, so it hits on everything we're trying to do for the Mille Lacs tribal economy. We're going to have this state-of-the-art opportunity to work in this really fast-growing, multibillion-dollar industry.
It's fully funded by the Mille Lacs band, that's another cool part of this. The tribe really is being courageous in the use of their capital. They're also very savvy investors. We're their wholly owned company, they are the only investor in this facility, and we hope they'll continue to be that.
Getting in early
Nayquonabe: There is a pretty significant price per pound up front, and in our business model we're accounting for the basement (price crash) that pretty predictably comes then rebounds back and stabilizes. That's one of the fun and interesting and even scary part of building the biz plan, you can't be naïve about the fact prices will eventually drop and you'll have to withstand that.
