Josh Rosen, Chief Strategy Officer of Grown Rogue – Interview Series

In an industry as cash-heavy and potentially lucrative as cannabis, having team members with extensive experience in wealth management and strategic financial planning can make all the difference. Nearly every operational choice faced by dispensaries and cultivators involves financial considerations, and seasoned financial professionals help ensure those decisions are executed smoothly. Despite how young and largely uncharted the American cannabis market remains, experienced planners and managers offer vital insights into high-stakes moves like business expansion and technology investments.

To explore how financial management skills translate to the cannabis sector—and why operators benefit from bringing financial planners on board—MyCannabis.com spoke with Josh Rosen, Chief Strategy Officer at Grown Rogue.

What subjects did you study at Beloit College? Which courses ended up becoming the most beneficial throughout your career?

I double majored in philosophy and economics. On the economics side, quantitative methods and basic microeconomics — understanding supply and demand — have been the most useful in business.

Philosophy helped in a different way. It sharpened how I write and communicate, and that shapes how I think through problems today. I tend to view cannabis as one big puzzle, and philosophy trained me to step back and make that puzzle coherent.

How did playing college soccer and basketball strengthen your teamwork and management skills and strategies?

It comes down to communication. Being part of a team means understanding your role and doing your job well, and that dynamic carries directly into business. Sports create a natural environment for competition, cooperation and rivalry – the same dynamics you see inside a company. You don’t need sports to learn those lessons, but they give you a clear, low-stakes place to learn them early.

What roles did you hold with Credit Suisse and how did those roles increase your knowledge in the fields of wealth management and portfolio management?

My early days at Credit Suisse, including my time as an equity analyst, tied me back to the fundamentals of business. I learned to understand value creation down to the unit level. If you’re a retailer like McDonald’s (MCD ), the business is really just an amalgamation of its unit economics, and I covered restaurants for a period, which reinforced that.

Understanding a business through its financial statements and how value actually gets created isn’t something I take for granted now. It’s what allows me to quickly assess what makes sense and what doesn’t.

How did serving as the private equity portfolio manager for the family office of John Sperling give you a better understanding of drug policy reform and how necessary it is in many ways?

Sperling, the founder of the University of Phoenix, was one of the country’s principal drug policy reform philanthropists. He helped fund California’s 1996 medical marijuana ballot initiative. Working for him introduced me to that world and led directly to my involvement in Arizona’s 2010 medical marijuana ballot initiative, which was my entry point into the industry.

I came to cannabis through the policy and advocacy side rather than through the product itself. I don’t have much personal affinity for cannabis, and the same goes for alcohol. My interest has always been about the industry and the policy, not necessarily the plant.

What professionally interested you about joining the cannabis industry and founding 4Front Ventures? Given all the years with prestigious financial services companies you worked for previously, did you have any concerns about founding a cannabis company?

I started looking at cannabis as an investor in 2010. I’m a fundamentals-driven, bottom-up investor, so I approached it the way I approach any industry: by trying to understand supply and demand across the full production chain.

Working with Kris Krane, who came out of Students for Sensible Drug Policy and then Harborside in Oakland, we mapped out which states were likely to legalize, by what mechanism and on what timeline, and built an advisory business focused on regulatory evolution, licensing and retail. We ended up acquiring the business from John Sperling’s family office and pivoted the business to touching the plant. That work led to the 2019 acquisition of Cannex Capital that formed 4Front Ventures, augmenting 4Front’s retail heritage with Northwest Cannabis Solutions’ cost discipline and production efficiency coming out of Washington.

Because I came in through the fundamentals, the professional case was straightforward for me. It was a real industry with real supply and demand dynamics to solve, which is the kind of problem I look for regardless of sector.

What are your regular and lesser known duties as Chief Strategy Officer at Grown Rogue? How did your experience with both 4Front and the wealth management companies assist greatly in those duties?

About 25% to 30% of my time is focused on Grown Rogue’s core. I work closely with our leadership team on the foundation to support growth.

The rest of my time is spent evaluating distressed assets across the industry, determining which opportunities make sense, what they’re worth and how aggressively we should pursue them. Our facility in Dwight, Illinois, formerly operated by PharmaCann, is a recent example of that work.

A lesser-known part of the role is that I’m not anyone’s direct manager, which lets me focus on finding the next opportunity while watching talented people get the resources they need to succeed. My background in equity research and portfolio management is what allows me to evaluate those distressed opportunities quickly and accurately.

When it comes to a cannabis company that operates in multiple states like Grown Rogue, what are some ways that you’ve effectively managed the capital and ensured that those investments into expansion paid off?

It starts with understanding local market dynamics. As we enter a market, we look at what’s most relevant there, driven by supply and demand and mapped against our own capabilities. We define the opportunity, then work backward to make sure it fits Grown Rogue’s strengths and our available bandwidth. It isn’t overly complicated.

This industry has attracted a lot of hype over the years, with people believing that getting in early would make them rich, and for some it did. That attraction creates a fear of missing out. A lot of disciplined capital allocation simply comes down to avoiding that impulse and sticking to the fundamentals.

What are some common mistakes that some cannabis operators can make when it comes to capital management and wise spending? Why are those issues so frequent to begin with?

The biggest mistake is building a financial model that assumes you’ll sell everything you produce. It goes back to the earliest days of the industry: build a facility this size, produce this much product, sell it all at this price, and the math works. It’s a build-it-and-they-will-come model, and the reality is that sell-through is hard to achieve.

Back in 2012 and 2013, as Canadian licensed producers were forming, I saw investor decks that assumed supply needs equal to 700% of the country’s anticipated demand. Everyone built models as if they alone would capture the market, without accounting for the fact that there’s only 100% market share to go around.

Overbuilding, combined with an overly optimistic view of demand, is a mistake that’s been made repeatedly in this industry and still gets made today.

Why are the services that Bengal Capital provides to cannabis companies so very vital? What are some cannabis industry success stories that Bengal Capital has been instrumental in?

The clearest example is Grown Rogue. We started our fund at Bengal in the summer of 2021. The MSOS ETF, which we view more as a sentiment indicator than a true benchmark, is down almost 90% since then. Without shorting anything, we’ve produced positive returns over that period.

That comes back to understanding the supply and demand fundamentals of the industry and only investing in what we know well. We pivoted quickly toward smaller, more targeted positions and avoided many of the larger companies in the space because of concerns about how they approached capital allocation and local market building. That discipline allowed us to preserve capital.

Grown Rogue was still in its early stages when we first got involved in 2021, and pairing our fundamentals-driven approach with a team and capability set we believed in has been a big part of the result. We’re not up dramatically, but on a relative basis, very few sectors survive a 90% drawdown. Preserving capital through that kind of downturn is the real success story.

As someone well-experienced in both cannabis and financial management, what do you think the biggest ripple effects of a federal rescheduling or similar reform would be?

I look forward to the day cannabis attracts more institutional capital and the level of diligence that comes with it. Institutional capital tends to be discerning, particularly with newer industries, and this one hasn’t always held up well to fundamental analysis. As bigger investors enter, I’d expect that to push better corporate behavior, better management decisions and ultimately better outcomes for customers through safer, tested product. That should also help the industry shed some of its stigma.

What I don’t buy is the idea that rescheduling is an easy button. Federal legality won’t automatically make business easier. In a lot of ways, it will just bring more competition.

Thank you for joining us, Josh! For more information about Grown Rogue, please visit its website.