C6| Saturday/Sunday, March 7 - 8, 2020 **** THE WALL STREET JOURNAL.
Ahuge
slateof
hopefuls
becomes
ahuge
classof
dropouts.
Here’s
advicefor
their
futures.SO YOU’VE JUST DROPPEDout
of the race for president.
There’s no shame in that. Most
people who run for president
don’t win. It’s like opening a
restaurant. Almost all restau-
rants fail, sometimes for rea-
sons that are not your fault.
Maybe you were simply ahead
of your time. Maybe the world
simply wasn’t ready for “Chees-
estickopolis,” your fast-casual
cheese-sticks-only restaurant.
But dropping out is rough.
It’s so rough, nobody even says
“dropping out” anymore. They
say “suspending my campaign,”
as if running for president is
like a Little League game that
gets called because of thunder-
storms and puddles in the in-O
n the surface, the
pristine Seattle of-
fices of Tilray seem
like a stoner’s para-
dise. There are Fun-
yuns in the kitchen, and pipes and
bongs on display. But there isn’t any
marijuana here—for that, you’d have
to go to the company’s growing fa-
cilities in Canada and Portugal. Be-
sides, the boss, Brendan Kennedy,
doesn’t have much of a taste for it—
or Funyuns.
In 2018, when Tilray became the
first cannabis company to go public
on Nasdaq, it made Mr. Kennedy
rich—and one of the most promi-
nent corporate faces of an emerging
and controversial industry. Like
many entrepreneurs today, Mr. Ken-
nedy makes a pitch that combines
commerce and idealism. He doesn’t
just want to sell cannabis; he wants
to end prohibition, which, he says,
“causes far more harm than the
product being prohibited.”
Mr. Kennedy, 47, didn’t find his
way to the industry through a life-
long love of marijuana or ideologi-
cal opposition to the war on drugs.
It happened instead when he real-
ized that he could make more
money selling pot than as a banker.
Today, Tilray—based in Nanaimo,
British Columbia, home of its first
growing facility—is one of the
world’s biggest publicly traded can-
nabis companies by market capital-
ization, with blue-chip names like
former Republican National Com-
mittee chief Michael Steele and for-
mer Vermont Gov. Howard Dean on
its international advisory board.
Tilray and its subsidiaries employ
roughly 1,400 people across theglobe and pulled in $167 million
worth of revenue in 2019. The com-
pany says that it sells medical mari-
juana products in 15 countries.
Through its High Park subsidiary, it
sells recreational cannabis products
in Canada. In the U.S., where canna-
bis is still federally illegal, it sells
hemp and products containing the
cannabis-derived compound CBD
but doesn’t sell any cannabis.
Tilray’s stock price multiplied
many times after the company went
public in 2018, but the firm has
been dealing with a painful down-
turn in a sector that critics say was
overcapitalized and over-promoted,
with too many greenhouses and too
little investor interest. Recently
worth as much as $13 billion, the
company now has a market cap
closer to $1.2 billion. Mr. Kennedy
owns 15 million shares of company
stock—recently worth about $2 bil-
lion but now hovering around $195
million.
Mr. Kennedy attributes these
troubles to a shift in investor focus
from long-term growth to short-
term profitability. He says that the
company has made some strategic
changes as a result, including focus-
ing on its biggest markets, such asAs a child, he was particularly in-
terested in cycling. At 12, he and his
19-year-old brother rode their bikes
from Seattle to San Francisco. At 13,
they did San Francisco to Tijuana.
At 16, he put on a toolbelt, amassing
passable skills in most areas of con-
struction (except welding). “I could
build a house myself,” he says.
“Electrical, plumbing, all of it.”
Mr. Kennedy studied architecture
at the University of California,
Berkeley, then moved to Seattle to
pursue a masters in engineering at
the University of Washington. After
graduation, he went to work for a
large construction company writing
software, then started his own com-
pany doing the same. “If you have
an idea for a piece of software,
you’re building the software. If you
have an idea for a company and
you’re building the company, it’s all
the same thing,” he says. “I learned
how to do it with buildings, but the
same rules apply to everything
else.”
After two stints as CEO, Mr. Ken-
nedy went to Yale to get an M.B.A.
and was recruited by Silicon Valley
Bank to help start SVB Analytics,
where he estimates he listened to
more than 3,000 pitches. One day,he turned down a cannabis entre-
preneur. Soon after, he heard an
NPR story about an initiative to le-
galize marijuana in California. He
called his friend Michael Blue and
told him to quit his job so they
could go into the marijuana busi-
ness.
“Those things were within three
days of each other,” he says. “It was
one of those things where the hairs
on the back of my neck went up.”
Mr. Kennedy co-founded Priva-
teer Holdings to invest in existing
cannabis companies. But after visit-
ing hundreds of operations around
the world, he didn’t find any pro-
ducers he wanted to put investor
money behind. So Privateer started
its own companies, including Tilray,
and later acquired others. Tilray
and Privateer officially merged last
year.
Mr. Kennedy thinks that the ille-
gal cannabis market is so massive—
he estimates $50 billion a year in
the U.S. and up to $200 billion
world-wide—that to be a successful
company, the product doesn’t need
more customers, just more of them
shopping on the legal market. He
says he isn’t trying to get more peo-
ple to consume the product he sells,
but he will also trumpet the bene-
fits of cannabis over alcohol.
There will be winners and losers
as prohibition is gradually lifted, he
says: The winners will be the people
no longer arrested or incarcerated
for possession and distribution of
marijuana, while the losers will be
“people who consume too much
cannabis.” He adds, “You could say
the same thing about Coca-Cola or
Wendy’s or McDonald’s.”DANIEL BERMAN FOR THE WALL STREET JOURNAL
WEEKEND CONFIDENTIAL|CHRIS KORNELIS
Brendan Kennedy
Navigating the legal cannabis sector’s bad trip
Canada and Germany, rather than
investing more heavily in emerging
markets in Latin America and Asia.
He thinks that consolidation will
continue, leaving the cannabis sec-
tor looking a look a lot like the beer
business, with two or three compa-
nies dominating the marketplace.
“Our strategy is to position our-
selves so that we are one of those
three companies,” he says.Mr. Kennedy was raised in San
Francisco, the sixth child of seven.
His father was a schoolteacher and
his mother a homemaker. His dad
was paid once a month. Money was
tight, and he knew it was pretty
well gone when he would pour milk
into his cereal and hear a thud.
That meant his mom had made
powdered milk “and then put it in a
carton so we wouldn’t know,” he
says. “But you would know, because
it always clumped up.”‘The hairs on
the back of my
neck went up.’JASON
GAYREVIEW
they drop out of
the presidential
race. The first
thing they do is
grow a beard. Al
Gore really got this
going. He lost in
2000, then grew a
beard that made
him look like a guy
who sells goat milk
at Phish shows.
TedCruzgrewa
beard that made
him look exactly like Ted Cruz
with a beard. Beto O’Rourke did
a Beto beard. I’m not sure what
Mike Bloomberg would look like
with a giant beard, but I would
very much like to find out.
There are other distractions
for ex-candidates. You can get a
job going on TV, telling the peo-
ple who are running for presi-
dent exactly what it takes to
not succeed at running for pres-
ident. You could write a book,
but let’s be real. You had a hard
time convincing people to show
up to watch you eat fried Oreos
at a state fair. Getting people to
read a book might be a tall ask.
It gets lonely. You’re going to
miss the trail, the pancakebreakfasts and even the individ-
ually wrapped soaps in the
Hampton Inn. You’re going to
miss the debates so much that
you’ll bring the dog and the cat
into the living room and try to
hold a mock debate. You’ll start
calling the dog “Chuck Todd”
and asking the cat for more
time to finish your answers. It’s
not the same.
Then one day, the phone will
ring, and it will be a person
who’s still running for presi-
dent, and they’ll say they have
something important to ask
you, and they really need you to
keep it quiet. This will be
briefly exciting—your heart will
jump—and then the person still
running for president will ask
you if one of the other dopes
would be a good candidate for
vice president. Your heart sinks.
You want to hang up, but you
stay on the phone, just to hear
another voice and to be re-
minded of the brief moment
when you thought you had a
shot at being the Leader of the
Free World. Then you take
Chuck Todd for a walk to
Cheesestickopolis, which, to tell
the truth, is quite good. ZOHAR LAZARrunning for president. You’re
just another person who can’t
remember the Wi-Fi password.
You’re spending breakfast and
lunch thumbing through the
same Restoration Hardware cat-
alog. You work on puzzles, even
when it’s not raining. You turn
on the TV to watch cartoons,
and wait: Is that one of your
campaign ads? Are you still
paying for those?
You have no appointments,
no meetings, no interviews, no
babies to hold. The last part is
fine. The baby-holding thing got
kind of old. And, as you re-
minded your aides: When was
the last time a baby voted?
Men really go sideways whenfield. Who are you
kidding? It’s not
like you’re going to
restart that cam-
paign in the fourth
inning. You’re done.
Finished. Kaput.
Your campaign is,
as the Pythons once
said, an ex-parrot.
Sure, it’s a bit of
a rush when the
people still running
for president ask
you for your endorsement, but
this is also weird. You don’t re-
ally like those dopes. Just a
short while ago, you were rat-
tling on in public about how
they weren’t fit for office, and
now you’re standing on their
stage, before their fans, in front
of their lousy campaign signs,
puffing them up. It’s as if the
Tennessee Titans had to go to
the locker room with the Kan-
sas City Chiefs after the AFC ti-
tle game and go on about how
much they want the Chiefs to
win the Super Bowl. It’s embar-
rassing.
Then you go home. That’s
when it really gets bleak. Sud-
denly you’re not the personYo u
Stopped
Running for
President.
Now What?