Eight months after being shut out of Ohio’s cannabis cultivation regime, the billionaire family behind American Eagle Outfitters, Inc. is developing a second marijuana play, this time focused on dispensary chains and cannabidiol-infused beauty products.

The retail-centred Green Growth Brands Ltd. is backed by Columbus, Ohio’s Schottenstein family, whose interests include shoe-seller DSW, Inc. and a significant stake in the Albertsons supermarket chain.

The company is still in its infancy, with no revenue and few assets. But, like other cannabis companies that have gone public early on through the reverse takeover of mining shells, Green Growth is in the process of listing on the Canadian Securities Exchange through the takeover of Xanthic Biopharma Inc., a little-known former mining shell that owns a cannabidiol (CBD)-infused water company in Oregon.  

Green Growth’s main pitch at this point is its management team, led by retail veteran Peter Horvath.  

“When you look at the resumes of the people running the other U.S. retail firms, there’s nobody with any relevant experience,” said Horvath, Green Growth’s chief executive, who has held c-suite positions at American Eagle and Victoria’s Secret.

“They’re good at raising capital and pumping their story; what we’re looking forward to is delivering the story in a way that they can’t possibly compete.”

The company is aiming to capitalize on the trendy CBD market, bringing CBD-infused health and beauty products like creams, lotions and bath balms to pharmacy chains and grocery stores across the U.S. The brand they’ll use is called 7th Sense. 

“We’re coming at the business less from a nutraceutical, earthy, hemp perspective; we’re really coming at it from a perspective of a high efficacy, high quality, beauty and personal care products,” said Horvath, noting that members of Green Growth’s management team had helped launch Bath & Body Works, LLC.

The other side of the business is a more traditional dispensary play. In partnership with Xanthic, Green Growth is in the process of acquiring Nevada Organic Remedies LLC, which owns a dispensary near Las Vegas, for US$56.75 million.

This would open the door to future dispensary licences in Nevada, said Horvath, and provide a jumping-off point for dispensary acquisitions in other states. In particular, the company is eyeing Florida, Massachusetts, New Jersey and Pennsylvania, more than states with more developed cannabis markets like Colorado or Washington, Horvath said.

The company is currently developing several retail brands, such as CAMP and Green Lily, with the intention of rebranding existing dispensaries it acquires, or opening new ones as it secures licences. 

It’s all forward-looking. And as with most U.S. cannabis plays, it comes with significant political and regulatory risk.

The Schottensteins experienced this last December, when their joint venture with Canadian-licensed producer Aphria Inc. failed to secure one of Ohio’s 24 cannabis cultivation licences. Schottenstein Aphria LLC is appealing the decision.

That said, Green Growth’s backers clearly have an edge in the coming scramble for retail space as more states legalize medicinal or recreational marijuana.

“The Schottenstein Property Group owns like eight million (square) feet of real estate, and they’ve got a lot of partnerships with conventional folks in the real estate market,” said Horvath.  

“As things change, maybe the STATES Act or some of the other things out there, it’s going to open up access to some great real estate for us,” he added, referring to a bill recently introduced to the U.S. Congress that would explicitly let states determine their own legal approach to cannabis.

The company doesn’t have any immediate plans for Canada, Horvath said, citing limits on branding and government control of cannabis retail in Ontario as reasons for staying away.

“That might change by 2020, and we’d be very interested in jumping in,” he added. 

The Xanthic takeover is expected to close in September, after which the combined company would start trading on the CSE under the Green Growth name. Green Growth shareholders will take an 86 per cent ownership stake in the combined company.