Chances are that CFO Louie Reformina never expected to be in the rolling papers business.
Having advanced down a career track populated with different private equity firms, a stint at Goldman Sachs, and a Stanford Business School degree, Reformina could have landed inside any number of industries granting him multiple C-suite doors of entry.
However, not unlike the pick-and-shovel entrepreneurs who once outfitted troves of Gold Rush prospectors, Reformina is confident that his arrival inside the CFO office at Turning Point Brands (NYSE:TPB) is well timed for an uptick in cannabis sales due to the industry’s quickly changing regulatory environment and revised public perception.Read More
In addition to cannabis, Turning Point, a marketer and distributor of “alternative smoking accessories,” is now seeking to satisfy its appetite for growth inside a number of product categories such as cigar wraps, hemp paper and paper cones.
“The majority of our profits now come from our Zig-Zag brand of rolling papers and wraps products—we have now put fixes in place to grow the business to where we can now take advantage of the tailwinds in cannabis,” says Reformina, who first joined Turning Point as vice president of business development in 2019.
“There’s the changing regulatory framework, and then there’s the changing consumer framework,” observes Reformina, who quotes recent research showing that 7 out of 10 Americans favor legalizing cannabis at the federal level.
“The perception 10 or 20 years ago was that cannabis was a drug, whereas today there is a health and benefits perception to cannabis, and this has been accelerated in part due to the pandemic,” explains Reformina, who anticipates a domino effect in the wake of New York and Virginia joining the list of states where cannabis is already legal.
“States will just not want to lose the tax revenue that cannabis will be generating,” adds Reformina. –Jack Sweeney
CFOTL: Tell us a little about today’s cannabis market …
Reformina: In 2012, when Colorado became the first state to legalize cannabis, only 5 out of 10 Americans approved of it. This kind of shows the progression in terms of acceptance of cannabis. In fact, 9 out of 10 Americans today approve of it when it serves a medicinal purpose. And we’ve seen some big deals like GW Pharma being bought out for $7 billion, which shows the market opportunity there from a medicinal perspective. More important, I think that what’s underlying those numbers is the perception around cannabis. I think that there was a much different perception of cannabis as more of a drug 10 to 20 years ago, versus today, when there is a healthy appreciation for the health and wellness benefits of cannabis.Read More
This accelerated through the pandemic, as now people are using cannabis instead of Ambien or sleeping pills. They’re using it instead of opioids for pain relief. I think there has been a sea change in the perception of cannabis that is driving where we are headed on legislation. From a legislation perspective after the November ballots, there were 15 states that approved of federal legalization going into this year, and now we have New York and Virginia that are about to go legal in the next couple of years. And with that, essentially, there’s going to be a domino effect because when New York goes legal, there’ll then be Connecticut, Rhode Island, potentially Pennsylvania. These states don’t want to lose that tax revenue, and likewise, Virginia will trigger a cascade down south. So, I think that this is an incredible opportunity in terms of kind of where the end market is headed. jb
Turning Point Brands | www.turningpointbrands.com | Louisville, KY