The Startup Vision of a Medical Cannabis Pioneer
When it comes to the mega-million-dollar startup founded by former pharmaceutical executive Mike Smullen ’76, it’s easy to focus on the dollars. But his research-based company has also pushed the industry, launching innovative new products and an upscale retail experience that have improved the lives of countless patients
BY SEAN MARKEY
Pootie Tang. Pillow Factory. I-95. Banana Hammock. Modified Grapes #4. Durban Dream. Tangerine. Triangle Kush. The strains sound like the stud registry of a tripped-out thoroughbred stable. Snoop Dogg meets the Kentucky Derby. Make that the Kentucky doobie. Even through a double-layered N95 and cloth mask, the flower rooms of genetically pimped-out Cannabis sativa and indica hybrids pack an olfactory wallop. Floral and citrus aromas jostle like the hops in a fruity IPA. Meanwhile, in the industrial-size drying rooms, the scent landscape evokes sun-dried grass cuttings and freshly baked bread.
Mike Smullen ’76 and his amiable business partner, John Tipton, are showing off their $45 million, 220,000-square-foot medical marijuana growing facility in Apollo Beach, Fla. Money may not grow on trees, but as Smullen and Tipton can surely attest, it grows in three-gallon pots. At today's market price, legal marijuana flower (aka “bud”) retails for $5,200 a pound, making cannabis is the world’s most valuable cash crop. A single female plant can produce nearly half a pound of flowers, on average, putting its retail value at $2,500 or more. Last year, Smullen and Tipton grew $110 million worth of weed in Florida. Next year, the partners and their recently acquired parent company will more than double that. Tipton, who oversees grow operations, says he just inked the contract to build a second, 300,000-square-foot grow facility in Palatka, Fla., later this year.
For Smullen, a veteran pharmaceutical and biotech startup sales executive, it’s been a wild, near-perfect ride—the second mega-successful startup of his career. This time, it’s personal. Smullen’s daughter battled epilepsy in childhood. He launched his marijuana startup, Alternative Medical Enterprises (AltMed), in 2014 after learning about the ability of cannabis to dramatically reduce epileptic seizures. Now, having navigated early, make-it-or-break-it regulatory setbacks, Smullen’s company has taken off like a Cape Canaveral rocket. In the past three years, his startup opened 31 MÜV-branded retail locations in Florida alone before his company was acquired by Verano Holdings Inc. in February—making the Chicago-based venture the third-largest marijuana company in the country. That same month, Verano debuted as a publicly traded company on the Canadian Securities Exchange with a market valuation of several billion dollars. U.S. sales are expected to reach three-quarters of a billion dollars next year.
With Smullen at his side, Tipton guides us through the warehouse-size facility. Our first stop is a narrow, unprepossessing room dubbed Clone 1. Inside, Regan Clement, assistant manager of propagation, explains how cuttings are taken from genetically identical mother plants and nurtured for 20 to 22 days until they establish viable root systems. Every week, she and her colleagues churn out 1,400 new plants. Each plant is tagged with a barcode to track growing conditions and yield.
“It’s hard to believe,” Smullen says, still in awe of the process. At any given time, 25 strains of high-yielding cannabis sativa and cannabis indica are grown in the facility’s 33 indoor “vegetable” and “flower” rooms. We poke our noses into a number of them as we thread a maze of hallways. Along the way, we visit the facility’s onsite testing lab; refining rooms where CBD and THC oil are extracted from harvested plants; and production facilities, where joints are rolled, time-release transdermal patches are manufactured, and other THC and cannabis products are made.
Near the end of our tour, Smullen introduces me to Walt Webster, a former vice president for Russell Stover candies. Webster takes us on a Willy Wonka–style spin through several makeshift industrial kitchens, where workers stir metal mixing bowls and saucepans at a furious clip, producing THC- and CBD-infused gummies, chocolates, and other edibles.
The most memorable sight of the day is Flower Room 4, one of many flower rooms where plants are pampered during the final six to eight weeks before harvest. Roughly the size of an indoor tennis court, the room is crammed with 800 plants growing under 600-watt grow lights choreographed to mimic the waning daylight of late summer. The sleight of hand tricks the plants to pour all of their energy into flower production. At the invitation of Smullen and Tipton, I climb a stepladder to get a bird’s-eye view. Spread before me is a $2 million canopy of legal cannabis. But that isn’t the only sight to behold. One doesn’t have to look very hard to also see the revolution of legalized cannabis, which saw $17.5 billion in U.S. sales last year, currently lighting up the country.
In some ways, Mike Smullen is the last person you’d expect to jump into the marijuana business. In so many others, he was the perfect person to do it.
Smullen grew up in Burlington, Vt., playing high school sports back when the city was still an IBM town and IBM was the Google of its era. Somehow the company’s “inspired performance” business ethos seeped into Smullen’s consciousness. (To this day, building the right culture in a company is one of his core beliefs.) Smullen planned to attend law school after college. Instead, he followed his father’s footsteps into pharmaceutical sales. “I saw a guy that loved his work and came home happy every night,” Smullen recalls. Beginning as a sales rep, Smullen worked his way up the career ladder in pharmaceutical sales, from district and regional manager to national sales director to senior vice president of sales, discovering his knack for making people excited about coming to work for him. Smullen has always liked startups. Four of the five companies he has worked for have been pharmaceutical or biotech startups. “Every company that I joined always had some really innovative technology in drug development going on,” he says. The last was a Gaithersburg, Md., biotech startup called MedImmune, where Smullen served as senior vice president of sales, one of the company’s top 13 executives. MedImmune successfully developed a drug to treat respiratory syncytial virus in premature infants. In 2007, AstraZeneca bought the company for $15.8 billion. Shortly afterward, Smullen retired. He was 51.
Smullen thought his retirement might last a year. As he frames it, he’d been to mountaintop with MedImmune, so he wanted to choose his next move carefully. “It really became a bit of a challenge,” he says. “How do I find something that would top this experience?”
Smullen stayed on the sidelines for seven years. During that time, three events affected him deeply, planting seeds that would later blossom into his medical marijuana startup. The first, was his brother’s long and ultimately unsuccessful battle with cancer. “He’s been quite open in sharing that experience,” says AltMed colleague Todd Beckwith, who serves as director of corporate relations.
The second was his daughter’s struggle with epilepsy, which began when she was just two-and-a-half years old. She was sitting on his lap one day when she had her first grand mal seizure. At the time, Smullen says, he had no idea that she was experiencing a seizure. “It was one of the toughest experiences I’ve ever had.”
“Once we found out that it was epilepsy, I was relieved,” he says, “because I knew there were anti-epileptic drugs out there that could help prevent her from having more seizures. But those drugs are very, very powerful, particularly for children.” While the drug his daughter ultimately took controlled her seizures, it made it difficult for her to focus, Smullen says, and left her lethargic, affecting her relationships and social life. When she was 11, Smullen and his family decided to take her off all medications. They felt like they finally got their daughter back.
The third and final spark that ultimately inspired him to launch a medical cannabis startup occurred when Smullen chanced upon the CNN documentary Weed. In the first episode of the three-part series, medical correspondent Dr. Sanjay Gupta featured the story of Charlotte Figgi, a young girl from Colorado with Dravet syndrome, a rare form of intractable epilepsy. Figgi was wracked by 40 to 50 seizures every day. Desperate for a solution, her father learned of a boy in California with the same disorder who was being treated with cannabis low in tetrahydrocannabinol (THC), the compound that makes you high, and high in non-psychoactive cannabinol (CBD). When Charlotte’s mother gave her daughter her first dose of CBD oil, Charlotte’s seizures stopped the very next day.
“I probably watched it 10 times,” Smullen says. A self-described conservative, Smullen says he had never been around marijuana, let alone used it. He “had a pretty strong view that marijuana was not real medicine,” he says, “but I decided to do my homework.” Smullen dove into the research. After reading studies and talking to people he knew in the pharmaceutical industry for several months, he was convinced. There really is something here, he thought.
Smullen sketched out a business plan on a yellow legal pad, and one night he approached his wife, Traci. He told her he was convinced that there was a business to be had, one that could make a difference in the lives of many people, including their daughter’s. The cannabis green rush at the time was a bit like the Wild West, Smullen recalls. Many of the early players were what he describes as “marijuana enthusiasts.” His background, however, was in cutting-edge biotech and pharmaceutical startups. But being an outlier allowed him to see an opportunity. What he saw was an open field to apply the standards, rigor, and serious R&D investments from the pharma industry to a medical marijuana startup. There was one major problem, however. Marijuana still wasn’t legal in Florida.
Smullen moved ahead anyway. Drawing on personal savings and money invested by friends and family, he launched his startup in January 2014. One of his first moves was to hire PhDs from the Center for Drug Discovery and Innovation at the University of South Florida to begin research into novel delivery devices that could provide precise dosing. “We were very focused on things that most people in this industry were not looking at,” he recalls. “Things like metered-dose inhalers, nebulizers, and transdermal patches.”
Ten months later, Smullen and his wife gathered with friends and family who had invested in his company for a November election night watch party. The investors were primed to see Florida voters pass a referendum that would legalize the production and sale of medical marijuana. The vote in favor was 59 percent, 1 point short of the required 60 percent supermajority needed to pass. It was crushing news. Smullen spent the next week struggling to find a path forward for his company, unsure if it could survive. “He never gave up,” Traci says. Smullen decided to move company operations to Arizona, a state with a far more accommodating business and regulatory environment for cannabis startups. AltMed staff worked on branding, marketing plans, and expanding their knowledge of cannabis cultivation. After buying out a small Arizona grow operation, AltMed became the first to earn an ISO 9000 quality standard rating.
Two years later, in 2016, Florida voters approved Amendment 2, legalizing medical marijuana use by doctor-approved patients. Having invested two years and millions of dollars in research, development, and early trials, Smullen had a business model and product line waiting to be unleashed. What he lacked was a license to operate. Florida lawmakers had set the barriers to entry intentionally high, stipulating that only nurseries in operation for 30 years or more could legally grow cannabis. Licenses were limited in number and hard to come by. Then Smullen remembered someone he had met at a cannabis industry conference in 2014. Someone he liked and who shared similar business values as his own. Even better, the person worked for a Florida plant nursery owned by the same family for several generations, one that had recently acquired a marijuana license. Smullen called John Tipton at Plants of Ruskin and proposed a merger. The rest, as they say, is history.
“So how comfortable are you with cannabis?” Danielle Palaza asks, her brown eyes bright above a black face mask silk-screened with a red lipstick kiss. We’re standing in a MÜV dispensary in Wellington, Fla., a sprawling suburb west of Palm Beach, where the 26-year-old “med tender” works.
Before reporting this story, my answer would have been, “Not very.” But the nagging injuries I’ve accumulated over the years from running (knee), skiing (shoulder), and too many hours at desk (lower back) never seem to go away for long. Add the stress of magazine deadlines and poor sleep, and I’m a shadow of my former self.
Because I live out of state and don’t hold the requisite doctor-issued Florida medical marijuana patient card, Palaza and I agree to pretend that I’m a real patient. I want to get her advice and hear her sales rap.
“I’m not interested in getting stoned,” I tell her. “I just don’t want to feel pain.”
As a rule, only staff and card-carrying patients are allowed inside the dispensary. At first glance, the retail store looks like a place selling expensive Swiss cosmetics. The interior is sleek and modern, with bright lighting, long sight lines, and displays showcasing a wide range of products, from THC- and CBD-infused vape pens, cartridges, and inhalers to edibles, tinctures, concentrates, and lotions. Mostly, it’s the product packaging that’s on display. Pre-rolled joints, loose cannabis flower, and just about everything else is kept in the rear of the store behind a long, glassed-in counter staffed by a half-dozen med tenders.
Palaza reaches across a display table and grabs a hydrating lotion, a sports gel, and a pain relief cream from a collection of unguents infused with CBD and THC oil. The products contain 1:1 ratios of CBD to THC oil in 60-, 100-, and 200-milligram doses. “These three right here are going to benon-transdermal, meaning they won’t go into your bloodstream,”she says. “They won’t have any psychoactivity.”
Despite three tries at physical therapy, lingering tendonitis from a rotator cuff injury 20 years ago continues to dog me. Forking over $65 for a 1.7-ounce bottle of MÜV Pain Relief Cream to erase that chronic ache, even temporarily, seems like a bargain. I don’t just want to buy lotion; I want to buy company stock. If it didn’t click for me earlier why medical cannabis is the next big thing, it does now.
But what has really drawn me to Wellington this Friday is the chance to meet with the store’s 35-year-old general manager, Lindsey Marini, and her 67-year-old mother, Lori Fox. Both use medical cannabis to cope with serious health conditions. Marini has epilepsy. Fox has late-stage progressive MS.
With the pandemic still flaring in April, Marini has arranged a meeting in a small glassed-in conference room near the entrance of the MÜV dispensary. Fox may be confined to a wheelchair by her disease, but her outsize personality and humor are not. Just a few minutes into our 45-minute conversation, it’s clear that both women are passionate advocates of the power of medicinal cannabis to improve patients’ lives. In Marini’s case, the busy mother of two young daughters uses a daily regimen of CBD tincture, a metered-dose cannabis inhaler, vape pens, and marijuana flower. The products, Marine tells me, help control her epileptic seizures by reducing the stress and electrical brain activity that trigger them. “I haven’t had any breakthrough seizures in five and a half years,” she says.
For her mother, Lori, the victories are far more modest but no less important. “All we can do is make my mother comfortable at this point,” Marini says. A vape pen loaded with Banana Hammock THC allows Fox to bridge the four-hour gap between doses of OxyContin. That and other cannabis products, such as THC-infused gummies, can restore the use of her right arm long enough for Fox to enjoy a game of mahjong with her girlfriends or an extra 20 minutes of FaceTime with her grandchildren. “It’s everything,” Marini says.
Since its founding, AltMed has supported many area nonprofits that help people with serious medical conditions, including epilepsy, arthritis, PTSD, Parkinson’s disease, and cancer. The company’s philanthropic outreach is led by Traci Smullen. One of the families she introduced me to was Kevin and Shaina Swan. Kevin was diagnosed with ALS, a degenerative nerve disease, in 2012. As his disease has progressed, Kevin has lost the ability to control motor function throughout his body. He is now confined to a wheelchair or his bed and requires round-the-clock care. However, thanks to eye-tracking software and an iPad-like computer screen, Swan is still able to communicate with his eyes, typing messages that can be sent as email or turned into vocalized speech. Swan tells me via email that he started using cannabis when it became legal in Florida. “Right now, I wear a THC-CBD patch every day. I also use a THC spray occasionally.”
I asked how medical cannabis has helped him. “The biggest benefit that I have noticed is that I no longer take Xanax every day. Before I started wearing the patch, I had a regular dose of Xanax,” he tells me, adding that the time-release patch “has worked wonders for my anxiety.”
“Living with a terminal disease that hasn’t had a scientific advance in 30 years, I was really skeptical about the benefits of cannabis. However, it has been a complete game changer for me.”
One day, I join Smullen for a tour of his company’s Apollo Beach grow facility. En route, we stop at a MÜV dispensary in Sarasota, about an hour south of Tampa on Florida’s Gulf Coast. Located in a small but pleasant suburban strip mall called Cobia Bay, the dispensary is AltMed’s second oldest. If you want to stare deep into the heart of the mainstreaming of legalized cannabis in America, this is as good a place as any. Whether by chance or by design, the MÜV dispensary is flanked by a marijuana doctor’s clinic and a pizza joint. Nearby are a SleepNumber mattress outlet and a UPS Store.
As we step inside, a 20-something receptionist with a man bun named Shane buzzes us into the dispensary. There, Smullen introduces me to Cheryl Ransdell, the dispensary’s general manager. Ransdell used to work in floor sales at Lowe’s and joined AltMed in 2019. Like every employee I’ve spoken with, Ransdell seems to love her work and believe in AltMed’s mission as a company. If all of AltMed’s 800-plus employees feel the same way, it’s no wonder the company is successful. Ransdell erases any further doubt when Smullen asks her how many patients come through the door every day.
On a slow week, the average patient count is 216 each day, she says. “On a busier week, it’s almost 300.” Each patient spends over $100 per visit, on average, putting my conservative, back-of-the-envelope estimate of the dispensary’s annual haul at over $6 million a year.
While Ransdell and I talk more, Smullen steps out to his SUV to retrieve his medical marijuana patient card and returns. Clutching a sheaf of twenty-dollar bills, he approaches the counter to buy five boxes of indica-infused blueberry-flavored Wana Soft Chew gummies. Smullen never used marijuana before launching his startup. But he does now. “Sleep is the biggest thing for me,” he explains, adding that it also helps him with neck and back pain, which he has experienced since a car accident. (He was rear-ended while waiting at a stoplight.)
Smullen hands $125 to his med tender, a woman with close-cropped salt-and-pepper hair named Karen, who used to be an NYPD cop. She makes change then applies prescription-like labels to Smullen’s purchases. “That way if a patient gets stopped, the police know it’s theirs,” Ransdell explains.
His transaction complete, Smullen walks down the row of med tenders, stuffing crisp $20 bills into their respective tip jars. The gesture is sincere, a way for him to acknowledge his staff’s hard work and signal his appreciation. “That’s Mike,” says Marini, the general manager of the Wellington MÜV dispensary, when I mention it later. “He does that in every store he visits.”
The following Saturday, Smullen will be in St. Augustine for the grand opening of the 32nd and newest MÜV dispensary. If all goes according to custom, Smullen and his business partner John Tipton will invite staff to gather in a circle before the doors open for a pre-game pep talk. When it’s his turn to speak, Smullen will recall the history of AltMed and the inspiration behind its founding. He will tell employees that AltMed is the best cannabis company in the country. He will remind them of the responsibilities they have to be the face of the company as they help patients regain or improve their quality of life. He will emphasize the tremendous opportunities that the new hires have for their own personal growth. He will share his hope that they seize the moment and run with it.