269: The Rise of a Cannabis Mogul, with Reef and OneQor Founder Matthew Morgan

Cannabis King How Matt Morgan, a misfit from Montana, took the booming marijuana industry by storm. A typical life was not in the cards for Matt Morgan. Fortunately, he found an atypical career. Growing up, he was fired from every traditional job he ever had, and when he tried college, he lasted just 10 days before dropping out. Next, Morgan became an electrician apprentice at the age of 19, still hoping to find a career path that he might enjoy. But like his previous ventures, this too was short-lived and he resigned after a year. Having always possessed an entrepreneurial flair, Morgan did find quick success as a realtor, which would lead him in a roundabout way to the world of legalized marijuana. Finally, it was in the Wild West of the cannabis boom where Morgan found his home. Within a three-and-a-half year period, Morgan would become one of the most recognizable leaders in the cannabis industry. He is the founder of multiple cannabis companies, such as Bloom Dispensaries and Reef Dispensaries, with the latter becoming the first in the world to hit a $100 million revenue run rate. In 2018, Morgan was named one of the most influential people in cannabis by High Times. But as we all know, the highs are so often preceded by lows, and had there not been an financial crisis in 2008, he may have never entered the business in the first place. Taste of Entrepreneurship Growing up in Missoula, Montana, Morgan had a hard time finding his niche in the working world, but he did find one thing that he was quite good at, which ended up being a gateway drug to starting his own business—real estate. “ really opened up my eyes to entrepreneurship,” Morgan says. “Running your own business. You know, basically, eat what you kill. It’s totally up to you, whether you’re going to survive or not. That’s the type of environment that I thrive in.” And thrive he did. By the time he hit 22, Morgan became the managing partner of his own real estate company. By early 2008, he had begun to take notice that prospective homebuyers were reaching out to him with very specific guidelines on the type of home they wanted to purchase. Not only were they asking for roughly the same amount of land, they were all specifically requesting that each home have a shop out back — a detached garage or external structure that could be used as a hobby space. And if it didn’t have a shop, he didn’t have a deal. This left Morgan perplexed. He had met most of their demands, and more times than not a deal fell through because of this one caveat. This finally left him to ask himself, “what’s so important about these shops?” At the time, Montana’s legal cannabis industry had just started to boom, and people wanted in with a place to grow. This was an industry that Morgan was not in tune with at the time, but he started to pay attention to. Then the financial crisis of 2008 hit and Morgan’s real estate business was dead in its tracks. He needed a new play. Despite his youth, Morgan was old enough to have seen one tech boom and one housing boom, and had an itch that he may be in the presence of the next gold rush. “All these crazy people talking about this marijuana stuff, there must be something to it,” Morgan says. “So I started digging into it.” One day, after months of research, it became clear to him that marijuana was going to be the next big boom. “That day I went and found a light and a warehouse and I was damned if I wasn’t going to grow some marijuana, “ Morgan says. Growing Pains With the exception of spending some time on his grandparent’s farm, Morgan wasn’t that experienced in horticulture. He knew the basics of how to grow some crops, but after looking around at the competition, he felt he could succeed in marijuana. “How hard could this be?” Morgan says. “There’s a bunch of hippies in tie-dye with hoop houses out in the wilderness growing, you know, grade-A cannabis. I’m sure I can figure it out.” He didn’t. At least not at first. Morgan set up a small operation in his garage, and after about 15 failed attempts, he finally found a grow system that worked. Then in 2009, he teamed up with another grower in Montana and they opened a state-of-the-art, 15,000-square-foot cultivation facility, one of the largest in the state at the time. This new abundance of space gave them a controlled environment to grow a significant harvest of plants. Within Montana’s medicinal marijuana caregiver program, as long as you had a patient card, you were legally allowed to grow six plants per patient that you were a caregiver for. With Morgan’s patient list growing to over 500, he was legally growing over 15,000 plants. Not bad for a guy who didn’t know much about the business just one year prior. But just as quickly as he had struck gold, a new law would bring things grinding to a halt. Next Stop: Arizona Per Morgan, in 2009 Missoula’s population was over 65,000 people and the city was home to over 60 dispensaries. That equates to around one dispensary for every thousand people. In short, that’s a lot of dispensaries. The state began to worry that the new industry was growing too quickly. So to help slow it down, Montana had an emergency legislative session and reversed its laws so that a caregiver could now only have three patients total. Instead of having 15,000 plants, Morgan was suddenly only allowed to have 18 plants total. Once again, Morgan was stopped dead in his tracks. Feeling the cons outweighed the pros of running the facility in violation of the new laws, he shut down his operation in 2010. Having tasted the fruits of his labor, he turned his focus elsewhere. He immediately began to look around the country for states with more favorable marijuana laws so he could scale a business. “I knew I had the skills sets at that point, I just needed the right vehicle and platform to do so,” Morgan says. Arizona ended up offering that platform. The Grand Canyon State was about to roll out an extremely favorable and innovative program that was to be the first of its kind, and Morgan wanted to be a part of it. Morgan says the state’s population was also substantially larger than Montana’s, and it was going to allow a permit holder to have unlimited plants, unlimited square footage to grow, and unlimited weight in product. He felt like it was a “dream” and couldn’t wait to head south. “I literally packed up all my stuff into my Chevy Silverado and I drove down to Arizona within that week,” Morgan says. “And literally, probably the best decision I’ve ever made. I was 25 years old.” Upon his arrival, Morgan opened up a chain of hydroponics stores to help gain a foothold in the area and to network with the locals as he waited for the new laws to roll out. While doing so, he befriended the son of a senator who would become key in helping him land one of the state’s limited marijuana licenses. (Morgan chooses not to divulge the senator’s name during our interview.) “These licenses were looked at as a valuable asset,” Morgan says. “There’s no way these guys are giving some kid from Montana one of these licenses that could end up being worth, you know, millions of dollars.” His chances may have been slim, but a senator’s chances were very good. After agreeing to terms, Morgan says he and the senator’s son partnered up and convinced the senator to put his name on the application. Soon thereafter, the two won a Sedona license through a lottery system and within four weeks after that, they purchased a Phoenix license on terms from its winner for $450,000. With two licenses under their belt, Bloom Dispensaries was well underway. Like Morgan’s real estate business, Bloom took off, and in under a year grew to 100 employees and was generating $1 million in revenue a month. Everyone came calling. By 2013, Bloom was drawing national attention and was destroying its competition. This led to private equity firms and wealthy families to reach out to Morgan for advice and potential opportunities. “People were starting to look at marijuana,” Morgan says. “It was still kind of in the shadows, but it was starting to come to the light.” Due to Morgan’s knowledge in the space and Bloom’s exponential growth, companies wanted to replicate his success and learn his secrets. However, Morgan says one such wealthy family, worth billions, wanted to do more than talk. They wanted Morgan and offered to purchase Bloom in order to get him. However, after negotiations between the family and Bloom’s investors fell through, the family extended a proposal to only Morgan for him to come and launch their new venture. Realizing a good opportunity when he saw it, Morgan accepted their offer. As for Bloom, he divested his shares and gave the company to his partner in order to remain on good terms. Now armed with over $100 million in capital from his new partners, Reef Dispensaries was born. And its growth was on a whole other level. “I came out of the cannon like a cannonball,” Morgan says. Reef quickly expanded to 200,000 square feet of cultivation, had two extraction laboratories, and six retail dispensaries, with one of them becoming the busiest dispensary in the world. And to top it off, Reef became the first cannabis company in the world to hit a $100 million run rate. Despite the success Morgan was able to create at Reef, he says tensions began to grow between him and his partners. After months of disagreements, Morgan resigned as CEO of the company in November 2017, forcing a buyout and shocking the cannabis industry. The Next Frontier Morgan’s next major move took some time to develop. Much like the beginnings of Bloom, an entrepreneur reached out to Morgan about a potential partnership. However this time, the individual challenged Morgan to look at the other chemical compounds in the cannabis plant other than THC, and to research how they were being used in the healthcare space. After spending close to a year discussing healthcare and the science on how to use cannabinoids, the two of them founded Oneqor Technologies. “It’s really a hybrid of a biotech pharma company that’s leaning heavily on cannabinoids in the cannabis plant, excluding THC, the psychoactive one,” Morgan says. After spending 10 years in the THC business, Morgan says he was becoming bored with the industry. Oneqor presents something new and exciting for him, plus he’s able to operate it almost like any other typical business. Working in a business that doesn’t deal with THC is a whole new frontier, and one with barely any restrictions. And without the restrictions, Morgan’s ambitions grew. On top of helping brands such as GNC create private label CBD products, Morgan wants Oneqor to revolutionize the market. He hopes to dominate the cannabinoid industry in the same way Intel did with computers by becoming the secondary brand. “If you see a product and you know it has cannabinoids in it, I don’t want it to say CBD inside,” Morgan says. “I want it to say Oneqor inside.” Matt Morgan’s Playbook for Building a Business In a span of less than 10 years, Matt Morgan became a leader in the cannabis industry by creating Bloom Dispensaries and Reef Dispensaries, along with his new venture Oneqor Technologies. After some early growing pains, Morgan came up with his own playbook on how to grow a successful business. Believe In Something Many founders, especially first-time entrepreneurs, tend to look at only the financial aspect of creating a business, rather than if it’s something they actually want to do. Other times, people may start a company because they feel that the idea might be a fun thing to do. Morgan believes, that although the financial upside is something to consider, you must also believe in the product and have passion for it if you’re looking to build a company. Otherwise, you may lose interest and not do the things needed to succeed. “You shouldn’t pick something you want to do because you think it’s cool,” Morgan says. “You should pick something you do because you believe in it and you see a lot of upside potential. Or else, what are you doing it for?” Look at the CEO Morgan credits much of his early success to the teams he’s built. From building a C-suite team to hiring the employees for his stores, he believes that everyone is important. And to find those right employees, it starts at the top with the CEO. That means either looking within yourself if you’re the CEO, or by sitting down with your leader and asking them what their core values are. Skill sets are important, but if your employees don’t share the same values, the culture won’t work. “You want to hire people that have the same core values as you, because you can’t teach people core values,” Morgan says. “They’re born with that…or their environment, whatever it may be. You can teach people anything, but you can’t teach them that.” Be Uncomfortable Another trait that Morgan says led to his success is the ability to go outside his comfort zone. He used to be a nervous wreck, he says, but wanted to rid himself of that anxiety. So beginning from the age of 20 until he was 28, he put himself in uncomfortable situations daily in order to grow as a person. This not only helped in his everyday life, but also as a professional and leader. It helped him with everything from speaking in front of 10,000 people to raising capital for his businesses. In order to succeed, you must be willing to put yourself in uncomfortable situations and get to the point where you’re calm and collected in every situation. “Human beings have a defense mechanism and they don’t like getting out of their comfort zone,” Morgan says. “You don’t know what to say, what to do, how to operate. But that’s really your biggest growth potential as a human being, is outside of your comfort zone.” Maintain Focus Among the Chaos Founding your own startup can come with lots of unexpected surprises. Especially within an emerging field such as the cannabis industry, things can become chaotic as the rules are still being established. Unfortunately, there will be a lot of chaos around you, a lot of drama, and a lot of arguing. But the only thing you can do is figure out how to control your reaction to it and always remain focused on your goals. Find what makes you relaxed and focused, and master it. “One thing that has really helped me with that is meditating,” Morgan says. “It’s really helped me, you know, keep my concentration, collect my thoughts. … There’s not really anything that can rock me mentally.” Interview by Nathan Chan, feature article reprinted from Foundr Magazine, by Nick Allen Key Takeaways A look into Morgan’s struggles to fit into the traditional working world How real estate became the gateway drug to entrepreneurship The impact of the financial crisis of 2008, and how it led Morgan into the cannabis industry From 15 failed attempts at growing marijuana to a patient list of over 500 How a change in Montana’s laws sent Morgan’s business to Arizona The political relationships that helped the launch of Bloom Dispensaries How Bloom Dispensaries reached $1 million in revenue and dominated the cannabis industry Why Morgan decided to sell Bloom and launch Reef Dispensaries with new partners Growing Reef Dispensaries to become the first cannabis company to hit a $100 million run rate Behind Morgan’s decision to quit as Reef Dispensaries’ CEO and his next step with OneQor