Sure, profits per partner are nice in Big Law. But medical marijuana is where the real money is at.
At least that’s the case for Teddy Scott, John Leja and Jeremy Unruh, all of whom left their positions as partners in Polsinelli’s Chicago office in early 2015 to form PharmaCann LLC, one of the country’s earliest cultivators and dispensers of medical marijuana. Less than four years later, the Oak Park, Illinois-based company was sold this week to MedMen Enterprises Inc. for a record high in the budding legal cannabis business: $682 million.
That’s a lot of green.
PharmaCann was co-founded by Scott, a former intellectual property partner with a doctorate in molecular biophysics, and Leja, the former vice chairman of Polsinelli’s IP and technology department. Scott was CEO of PharmaCann at the time of the sale. Leja left PharmaCann in April 2016, according to his LinkedIn profile. Unruh, a former litigation partner at Polsinelli, was hired as PharmaCann’s first general counsel and now serves as its director of regulatory and public affairs.
The deal was led by the companies’ in-house legal departments, Unruh said in an email. Robert McQueen, a former associate at Fried, Frank, Harris, Shriver & Jacobson and Katten Muchin Rosenman in New York who was hired as PharmaCann’s general counsel earlier this year, ran the transaction for the company alongside Daniel Edwards, his counterpart at Culver City, California-based MedMen, where Edwards serves as senior vice president of legal affairs.
The sale represents an exclamation point on a wildly successful business venture that began when Scott walked into Leja’s office in January 2014 and said, “I got it.” Scott told The American Lawyer that the idea for PharmaCann came to him after he researched Illinois’ plan to begin medical marijuana sales.
“The more we got involved with it,” Scott said in 2015, “the bigger the opportunity we saw, and the more we got interested.”
Also helping start PharmaCann were Scott and Leja’s wives, Norah Scott and Christina Leja. The company grew from two cultivation centers and four dispensaries in Illinois to one of the country’s largest legal marijuana operations. It now spans six states and operates 10 retail stores and three cultivation centers. PharmaCann also has licenses for retail stores and cultivation centers in Massachusetts, Michigan, Ohio, Pennsylvania and Virginia. PharmaCann also owns a retail license in Maryland.
The combined company will have a portfolio of cannabis licenses in 12 states with permits to operate 79 cannabis facilities. MedMen cited an estimate by the Cowen Group that said the 12 states in which the company operates will have a total market size of $40 billion by 2030. Cowen, a New York-based financial services firm that has been a backer of Canadian cannabis company Tilray Inc., which went public on the Nasdaq this past summer, claims that the total cannabis market will reach $75 billion in sales by 2030.
“This is a transformative acquisition that will create the largest U.S. cannabis company in the world’s largest cannabis market,” said a statement from MedMen co-founder and CEO Adam Bierman. “This would not have been possible even two years ago and is a testament to how far both the industry and these two companies have evolved. PharmaCann’s leadership has built a world-class organization, and we are excited about the value this transaction is creating for shareholders.”
The $682 million deal is an all-stock transaction that will give PharmaCann’s shareholders roughly 25 percent of the combined business. MedMen began publicly selling shares on the Canadian Stock Exchange in May. At the time, MedMen said it was valued at $1.65 billion. Earlier this year, the company hired Deloitte principal Lisa Sergi Trager—a former tax lawyer at O’Melveny & Myers and Proskauer Rose—to be its general counsel.
While it’s unclear just how much the founders of PharmaCann will make from their company’s combination with MedMen, it is likely they beat the returns of Big Law.
Since they departed Polsinelli in 2015 through estimates for fiscal 2018, Polsinelli partners would have made, on average, $2.8 million during that four-year period. The average Am Law 100 partner would have made $7.1 million in that time frame, while a partner from Wachtell, Lipton, Rosen & Katz, the wealthiest of the bunch, would have taken home a bit more than $24 million, if not more.
Of course, those lawyers spent those years billing time, rather than growing grass.
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