UPDATE – 

Theory Wellness initiated an ESOP to become the largest Employee-owned Cannabis Company. 

Co-founder and Chief Strategy Officer Nick Friedman told Green Market Report that the business on Wednesday closed a transition into an employee stock ownership plan (ESOP), which is a government program that Friedman said is structured similarly to 401k retirement plans.  “It essentially is a much more robust retirement plan for employees,” he said. “Over time, your employees vest into ownership based on tenure. It’s done in a democratic way, in the sense that simply your ownership is based on your payroll. It avoids executives getting paid at multiples from your entry-level worker; everyone is getting an ownership stake in the company.”  The structure, Friedman said, creates more incentive for employees to perform better and stick with the company longer. And, he said, it’s an “alignment of values” between management and staff.

Will medical (and eventually recreational) marijuana growers follow craft breweries in establishing ESOPs? 

In the US there is a strange relationship at the state/federal level with 33 states and the District of Columbia passing laws allowing medical use of marijuana, and the District of Columbia and 10 other states passing laws allowing for recreational use.  Recently Canada legalized marijuana use across the entire country.

As reported by Stat News In what appears to be a first for marijuana and a major pharmaceutical company, a Novartis subsidiary and a Canadian producer of medical cannabis products have agreed to market them around the world.

According to Bloomberg Law with regards to Craft Brewers:

“The reason that we’re seeing the craft brewers go to the ESOP has a lot to do with their culture. They really want to share what they’re building with their employees, both emotionally, as well as financially,” Sandy Shoemaker, audit partner with EKS&H in San Francisco, told Bloomberg BNA July 15.

“ESOPs have become very popular in the beer industry because of the message that it both sends to consumers and to other people within the industry, like employers, or within other craft breweries,” said Leingang, who has represented breweries and distributors in his practice.

Being an employee-owned company has a lot of advertising value in the craft beer industry, because consumers respond positively to a company with an element of employee ownership, Leingang said. It also helps the companies recruit talent because there’s an interest in having a stake in the company, he said.

It would seem logical that the above arguments would be applicable to a group who have transformed an industry that was at one point underground into a mainstream industry with ~ 2400 licensed US growers and a 2016value of ~$7B USD with a projected growth to $24.1B USD in 2025.