Adam Torres and Christiaan Adam Carrillo discuss the cannabis sector.
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Show Notes:
Innovations in the cannabis sector are providing many opportunities for investors. In this episode, Adam Torres and Christiaan Adam Carrillo, Regional Director of Business Development at Viridescent Capital Partners, explore the Viridescent Capital Partners investment thesis and also the upcoming Newport Beach Investor Conference that Mission Matters will also be attending.
About Christiaan Adam Carrillo
Christiaan Adam Carrillo is committed to supporting others with wealth creation through investing, believing that financial abundance is just as important as spiritual, mental and physical abundance.
Mr. Carrillo believes that the greatest investments should not be reserved for the ultra wealthy as has so often been the standard, but that all deserve to partake in the best available investments to transform their financial standing.
After spending 20 years investing in and guiding others to invest in real estate, Mr. Carrillo transitioned his focus to investments in the cannabis industry.
About Viridescent Capital Partners
Viridescent Capital Partners is a private equity firm that brings extensive experience and flexible capital solutions to companies across the cannabis industry.
Their executive team brings more than 60 years of combined capital markets experience and more than 20 years of operating and investing experience in the cannabis industry, making them a credible partner for investors looking to access the cannabis space.
Full Unedited Transcript
Hey, I’d like to welcome you to another episode of Mission Matters. My name is Adam Torres, and if you’d like to apply to be a guest on the show, just head on over to missionmatters. com and click on Be Our Guest to Apply. All right, so today I have Christian Adam Carrillo on the line, and he is the Regional Director of Business Development over at Mission Matters.
Viridescent capital partners, and also he’s going to be attending. And I think they’re going to have some involvement. He’s spoken in the, at Brad Turner’s conferences in the past. And I think he’s going to have a booth. Who knows his booth might be right next to ours at the Newport beach investor conference.
So first thing first, Christian, I just want to say welcome to the show. Adam, thank you so much. I’m, I’m grateful and honored to be on your show today. I’ve listened to you in the past and so it’s a pleasure. Thank you. Oh yeah. So, so first off . I got to get this out of the way. Like how fun are Brad Turner’s conferences and events, man?
They are great. I actually had the opportunity to attend his conference and be a speaker at his event last year in December in Las Vegas. What a great turnout, just a great group of people. And I love the alternatives. Investment sponsors and companies that are there. So, yeah, I think they’re awesome.
other than the amazing scenery and area, obviously, and then the venue and everything else, like, what are you looking forward to? And why are you attending the Newport beach investor conference? Yeah, so so let me give you you know a blurb on Veritas and Capital Partners and who we are, and that’ll give you a lead into why we’re going to be attending.
So our company, Veritas and Capital Partners, we’re, we are a private equity company specifically focused on the cannabis industry. And I work in business development for the company and I’m always networking, attending events, speaking at events. And my goal and our goal for attending the event is to continue to get exposure for our company, continue to meet new potential investors.
For our company, we, we managed 200 million dollars across our portfolio of companies, and we are just continually looking to get the word out on who we are and the the great impact that we’re having working in the cannabis industry. Wonderful. Jumping around a little bit here like what, what drew you originally to Viridescent Partners and really the cannabis industry?
Were you always in that space? No, you know what? I actually wasn’t. And it’s, it’s a funny story because It was never a space that I had intended on getting into. I had spent I had spent, They sucked you in, Christian, didn’t they? They did. They did. It was the product. No. So I had spent 20 years investing in real estate, focused completely on real estate, buying, buying real estate for myself, working for private equity companies.
And two years ago, I was working at a private Equity company. And once again, we were just specifically focused on real estate, small company. We managed about 300 million, but one of the things we did was we started blending in the space, the cannabis space and the founders of the company focused specifically on the Chinese community as they are Chinese.
And there was no collateral material in English. And so. I was tasked with creating the collateral material for the company for our investment offering for this new cannabis investment. And during my research, I found one of the, the first investment bank in that, the cannabis space.
I reached out to them I got some material from them, marketing material. And one of the questions I asked them, I said, you know, I’m, we’re looking to expand with partners in the cannabis space knowing you’re the first investment bank in this space and whoever you would recommend would be you know, obviously a reputable company and team.
So do you have any recommendations in the investment bank at the time said, yeah, I’ll have somebody reach out to you. A week later, I get a call from Dante Domenicali, one of the partners here at Baird Essin Capital. I got to know him and his team. And we, we became friends. We were looking to do some deals with them at the time at the previous company that didn’t work out.
But over a period of a year, I got to know all the partners in the company and early last year, the opportunity arose for me to join the company. And like I said, it was, it was never An industry that I intended on going into. And the reason being is I personally had stigma around it because of a close family member who was unfortunately very involved with addictive drugs.
And so I classified cannabis in that. And but this goes going back to my childhood. So I had my own personal stigmas to deal with. But I will tell you that. Doing my research two years ago, I started seeing the benefits to society with and it first started seeing Children that had seizures and when they were given, you know, doctor administered and prescribed dosage, cannabis or CBD, they would not have these seizures.
And so. That was my, you know, looked at that and realized, you know, I can get behind this. This is something I get behind. But I’ll also, I’ll also back up to 13 years ago, my wife, she’s in great condition at the time, but post giving birth to our youngest child, she had a heart attack and they had, You know, they operated on her.
She’s in great condition today, but they had prescribed opioids for pain. And they had also prescribed Prozac for dealing with postpartum from that same period. And she looked at the side effects of both and she goes, this is not something I, want in my body. These, yeah. this medicine and prescription drugs and so she started searching and she came upon cannabis and specifically THC pills and so throughout a period of time, I would, say that I started learning and seeing the benefits to society of cannabis and I was like, again, I was like, this is something I could get behind and and it was.
I love investments. I’m a capitalist at heart. I’ve seen what capitalism has done for my family who immigrated from Mexico. And I was like, this is an industry I’m choosing to get involved in. And that was a, it was about a year and a half, two years ago. Wow. What an amazing story. And I think it’s. It’s one that we can all learn from in terms of how, and the industry’s evolving.
I feel like it’s evolving quickly. And I mean, you’re in the middle of it right now. So and in your day to day, like what excites you? Like, let’s just talk shift slightly here to the, to the business side and the opportunity, like what gets you fired up? You know, Adam, it’s the people. I had a meeting yesterday with somebody and I told them, I said that people in this industry, they are open, they are supportive.
And I am just, I am just just thoroughly excited about the, the people first and foremost is just, I would say is a. As a foundation of who this industry is, is just wonderful people who are committed who are, who are committed to what I feel are the benefits of how cannabis and CBD and all of this.
Can have a huge impact on society, you know, and, so I, you know, I absolutely love the openness in the support and generosity of people. I reach out to people in this industry and I’d say nine times. Nine times out of 10, you know, I’ll get a reply back. I’ll get a meeting. I’ll get a conversation with somebody where, where I’m looking for support.
And equally, I offer support and look to connect people. And I just think it’s, I just think that people are just wonderful and beautiful in this industry. So. Hmm. Can you tell us a little bit about the investment thesis over at Viridescent Capital Partners? So like what what types of either founders or companies or niches within cannabis or otherwise?
Like just tell us a little bit more about what makes a good deal. Sure. So have a, we have a very strong team. our chairman and founder is Kevin Murphy. He started his first cannabis company in 2011, 2018, he took it public at a 2. 8 billion valuation Acreage was acquired his company was acreage holdings that was acquired by canopy growth in 2019 for 4 billion. And so we are fortunate, first and foremost, to have a what I feel is a stellar team in this industry. So, in addition to. Kevin Murphy, we have Dante Domenicali, our Chief Operating Officer. Dennis Byrne is one of the partners as well. He came from Kenicord Genuity. And then Jim Dougherty, who was also involved with Kevin at Acreage.
He is our, he is our counsel. And so those four partners lead our company and, and guide us. And You know, the makeup of our company, as I mentioned, we have managed 200 million across our portfolio. 150 million of that is in a mortgage REIT fully deployed throughout the United States, averaging roughly 18 percent interest.
And then we have a fund which currently we have 20 million. It’s a 20 million fund, and we’re continually raising more capital for that. And that’s spread amongst a portfolio of companies whereby we make active. Whereby we have active and passive investments in there, and an example of a passive investment is a company called Jane Technologies.
They are a point of sale system specifically for the cannabis industry and dispensaries throughout the United States roughly 2, 500 dispensaries. They were just, they were just entered a partnership with point of square excuse me, point of sale giant, point of sale. Square back in October of last year, and they’re moving into Canada, and what’s unique about that is Square has Experience in point of sales, but not cannabis.
So they partnered up with Jane technology. So we’re an early investor in Jane technology. And so that’s a perfect example of a passive investment. Now, an example of an active investment in our portfolio is, is Verdescent. And our partners created a 62 million dollar cultivation facility last year. In October, we completed it.
As of right now, we have four harvests that have gone through this facility. 35 percent of our harvests are pre sold and we are, we doing very well and in that facility. And so we just had a recent valuation come in a pre revenue. Valuation on that facility and we’re at 200 million. And so what makes a good investment is well, first and foremost, the ability of our team and, and the connections of our team to identify opportunities throughout the United States and then opportunities that, fit our criteria for one returning capital as soon as possible to our investors.
And then to providing a. You know, distribution dividends, if you will, on a very regular basis after that are what we’re looking for. And then being having expertise as far as our management in this industry, we’re able to put into fund investments that we feel are going to benefit from that.
Most benefit our investors, and then we’ll have the, you know, through our expertise and foresight be able to exit those investments when we feel they’re, they’re ready versus somebody just going at something on their own, entering the space and not having this, having that expertise. If you will. And just for clarification on my end.
So for the REIT component, are you essentially backing like current facilities that are in production? Or like, give me a feel for like, what some of the assets or the type of assets that are held in the REIT? Sure, so primarily cultivation facilities or manufacturing facilities where we’ll loan capital against the, against the land equipment as well as the licenses and as we’d like to say, say, we’ll staple the licenses to the collateral package.
So our collateral coverage. You know, we look for, you know, roughly on average about two times collateral coverage. We’re not looking to take back and take back an operator’s cultivation facility, you know, and, you know, and I’ll share this. This is very important to that point. You know, there’s been, there’s been an example or a case rather of a facility that just couldn’t get their grow right.
And so we allowed six months of forbearance. We, we brought somebody in and we told them to, we told the, the the owner to hire this individual as a consultant, not full time, but just hire them as a consultant to get their grow up and running and going. They did that. They’re on track. We could have foreclosed and taken the facility.
However, we chose not to and it has nothing to do with it. We don’t have the expertise, but we want to be. We want operators to be successful. And what you’ll see in this industry, you know, to that point as well. You’ll see operators in this industry. Excuse me, companies like ours that are loaning capital to operators charging rates of 20, 22, up to 26%.
Now, they can do that. another conversation, the federal government, you know, where it’s still illegal. And therefore, there’s a constraining of capital in this industry. But aside from that. We want to operate in a manner that’s, that’s going to work for all parties. We’re not looking to just win for ourselves.
We want everybody to win and we believe everybody can win. So going back to our, our, our mortgage rate, you know, the sweet spot is 18%. We have loans 16 to 22, but we want to focus on 18. And we’ve had operators come to us and say, Hey, you know, we’ll pay you 22, 26, We know if we do that six months down the road, potentially we would take them back.
And that’s not what we want. We have the ability to act as operators and we do on some things, but we want them to see it work for them. And in a high rate like that, isn’t going to work for us. Yeah, that’s great. and there’s a nuance that you mentioned in there that I, I think I heard correctly and I want to maybe just elaborate a little bit on as you mentioned that it’s collateralized as well by the license.
So what does that mean? And like, why is that important? Yeah, so what it means is, in addition to the land, the land, the building equipment, as far as the collateral, as we would underwrite any real estate. And that would be a traditional, like, for a traditional mortgage, let’s just say, and I don’t know if I should use the word traditional, because that’s probably off, but like, that’d just be for your typical commercial, you know, setup, right?
Yes, and exactly correct. And so, first of all, We’ll first underwrite an asset at traditional use because there’s cannabis use and then there’s traditional use. So there’s two different valuations. Now cannabis use may be a little higher in our valuation, but we will underwrite the asset to traditional use because it’s safer.
It you know, a lower risk for us. Now, to your question as far as, you know, quote, stapling the license to the collateral package, the reason why that is important is that in the example that I gave you, whereby this one operator that borrowed capital from us, for some reason, you know, we, foreclosed for whatever reason.
It’s important to us that we can step into that facility, not just have the facility, but have the license to operate in a legal manner. If we don’t have that license and we didn’t have that license attached to the collateral package, it wouldn’t serve us or serve our investors. Does that make sense?
Yeah, and then one of the reasons I asked you that question is because in my mind, and again, understand, I mean, there’s layers here. So when you think about like an investment or when you think about different potential risks for me, like, okay, that kind of maybe offset some of the other risks from the standpoint as well as just supply and demand for licenses.
Like, it’s not an easy thing to go out and you get another facility, like, you know, licensed, depending on the market, the administration, where we’re at in politics at the given month, let’s just say where, you know, that’s changes by the you know, by the cycle, but even just having something that’s ready to go.
And if you tie that, or I shouldn’t say tie, but if you combine that with the thought process that you have and your team has has experienced it. As operators in a meaningful way you know, versus your, you know, your setup versus maybe another where that doesn’t necessarily have that piece. They have to then look for an operator if they want to foreclose or figure out how to liquidate the assets.
If, I mean, worst case scenario, whatever, if it made sense and if you wanted to, or you went down that path, at least it’d be a structured decision on being able to decide if you want to even operate it yourself. So you’re not in a, you know, a fire sale situation or you know, with your back against the wall or whatever, you could make a logical decision on what made sense for it going forward.
Am I off on any of this? No, you’re exactly right. I’m just thinking myself. You’re very educated on this and I want us, I’d like us to hire you because that’s exactly right. Yeah, yeah, yeah, no, I I I follow the space and I mean my background to me I’m for my long term listeners I mean i’m in finance for almost 14 years before i’ve been media eight years full time, but I like this because I think just like earlier in your career based off of a perception maybe that you had with the short with the with the stories that thank you for being vulnerable enough to share with our audience.
And then you, you looked under the hood and then you’re, you know, you’re kind of thinking about it and figuring you know, there’s other ways to look at this when you looked very objectively and you had a use case scenario with your wife, you know? And I, and I’ve seen, I’ve heard this enough times to know it’s reality.
So now I feel like for many of the investors out there, there may have a connotation on an investment then because they’re tying it to something else in the past that just maybe doesn’t necessarily relate. But based on the layers of this, I don’t know that I’m gonna be bold enough to say is there’s less risks or it’s de risked or whatever it like, anybody listening to this, you can make your own decision on that one.
There are other layers in this particular type of investment that exist that both mirror other commercial areas, whether it’s retail, you could make the same use case near for a retail operator, could do it medical, like all these other fields, like you could say, And you have that same benefit in the in the cannabis space in addition to the supply and demand of licenses Which is again tricky so to me That like when i’m looking for an investment or when somebody’s thinking about that to me that checks a lot of boxes, you know Yeah, absolutely And what comes to mind from you sharing that adam is is that we’re currently talking with a pension fund and The capital from that pension fund, we’re going to be earmarking that you’re marking it towards non plant touching towards a non plant touching category in this industry and make them feel better.
And, you know, I had to call this morning with an individual, you give an example of that real quick, just because I don’t want to assume that everybody listening knows what a non plant touching, that might be the first time they heard that term. Sure. So the reason non plant touching is, is what I would say would be You know, in alignment with our mortgage REIT business model, whereby, whereby you have a building, let’s say, as an example, you as a real estate investor have a building, you lease it out, whether, in that building, they’re printing T shirts or packaging up dog food or for instance packaging up You know, cannabis gummies or edibles or something like that, or even for vape cartridges.
So they could be dealing one step down the supply chain with maybe a product that’s already a derivative possibly. Am I saying that right? And then they may be creating another product out of it versus having to be a facility that’s actually growing the plant. Correct.
Correct. And so if you’re, if you’re an owner operator of, an industrial building, it’s irrelevant to you what’s in there. So that, so an investment in something like that would be non plant touching. And so this, for this pension fund that we’re speaking with. Investing capital with us.
We’re going to put their capital into something that’s non plant touching that if somebody drove by that, by that building, nobody would have any clue what’s going on inside of it. It’s just being leased out to property being leased out. Now, plant touching on the other end would be like our facility, our cultivation facility, where that facility is specifically used to grow cannabis and harvest that cannabis and then ship it out.
you know, I spoke with an individual this morning, he brought up something, which was, he had worded it in such a manner. That was really provided more clarity that this cannabis industry. It’s not really it’s industry.
But within this industry, there are dozens and dozens of subcategories, if you will, that this isn’t just like alcohol, whereby, you know, You produce alcohol and that’s it. There’s, there’s so many subcategories and wanted to throw that. Oh, yeah. And then, then you get into, I totally agree. And then you think about like the compounds that they’re pulling, and then the other things, and then the testing, and I mean the data, I mean, there’s just, we’re like an infancy stage because it’s just a highly unstudied area because it’s.
been such a area that wasn’t really allowed to be studied, but but for a select few in the past. So now that you know, more people are going to have their eyes in the space there’s going to be more and more innovation to come. And I just think it’s, it’s, it’s very interesting. That’s why I’m always excited to bring these types of stories to my audience.
But that being said, Christian We’re about out of time for today’s episode, but I do know that there may be some individuals that are listening to this, that wanna follow up, connect, have more conversations about what you’re doing. What’s the best way for people to follow up and learn more? Sure.
The first way that, you know, I love to communicate with people, you know verbally is I’m going to get my cell phone and then we’ll follow up with some other ways. The first way is my cell phone area code 7 1 4. 206 3853, once again, 714 206 3853, second to that, I am very active on LinkedIn, somebody could find me at Christian Adam Carrillo, there’s two A’s in my first name, C H R R I S T I A A N and then Adam Carrillo.
So those two ways are the best. And then our company website is viridescentcapital. com. And once again, viridescentcapital. com. So, yeah, and I welcome and look forward to speaking with anybody. So. Awesome. And we’ll put that information in the show notes so that our audience can just click on the links and head right on over.
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We have more mission based leaders coming up on the line. Don’t want you to miss a thing. And if you’re a long term listener and you haven’t left us a review yet, come on. Shame on you. Leave that review. Are you kidding me? Leave that review. You know, we, we appreciate it. So really appreciate that.
Seriously. And Adam, been a pleasure having you on the show. Can’t wait to see you over at the Newport beach investor conference. And Hey, thanks Brad for booking you. So thanks again, Adam. Thank you so much. it was an honor and pleasure to speak with you. I’ve been a longtime listener of yours and just thank you.
I am grateful.