Headhunter Hints Presents: Ask a CEO with Michael Johnson

On this edition of Headhunter Hints: Ask a CEO, with Michael Johnson, Gehl Search Partners asks 8 quick questions. Michael Johnson is CEO of Dalwhinnie Farms and Shift Cannabis, Colorado Cannabis companies. We asked Michael what he looks for in candidates, company culture and the biggest challenges his companies face today.

1. When interviewing a potential leader within your company, what are the three most important things you look for in candidates?

Whenever we’re looking for a new leader, culture is the most important thing we are looking for. Is this person a good culture fit, will they gel with the existing leadership team? Without this, we simply don’t move forward.

It can be hard to determine precisely what makes a good cultural fit, and sometimes I don’t know exactly how to describe that, sometimes it’s a gut feeling. At times it can be a little subjective. Our team just has a certain energy to it, a special sauce. They are fun, but serious. They are honest and direct, but also kind and caring. They are incredible communicators and team players. I am always going to prioritize a leader who can integrate seamlessly into that culture.

It’s important to acknowledge that when I talk about culture, that I’ve already sorted through the resume level details. Do they have the background I’m looking for? Specific knowledge of the role and the expertise to support our goals? Reasonably long stints at each previous job? Do they have a career trajectory that shows growth and consistent promotions? These get sorted out when we’re looking at resumes, and that allows me to focus on the other elements that I’m discussing here.

The next thing I’m looking for is someone who is a solution-oriented thinker. That’s imperative in cannabis, as the primary role of a cannabis leader is problem solving. Our industry is so complicated, that I find my leaders just constantly in a state of problem solving. There are folks who always look towards the solution, and there are those who always look towards the problem. A problem-oriented thinker is an incredible drain of energy and time, and so I’m looking for people who demonstrate an innate ability to drive towards solutions and to have a can-do attitude towards problem solving.

Lastly, I look for people who have a genuine passion for the work that they do. For many folks, a job is a job. Burnout, apathy, cynicism, all of these things run rampant in the industry at large. For my team, that isn’t gonna work. I want people who have a real earnest enthusiasm to do the work that they do. This can’t be faked, and it’s apparent in the interview process. Energy is contagious, and when you love what you do, it rubs off on others. When you build a team of people who all love what they do, then you create something unstoppable.

2. If you had to choose a music genre or a particular song to describe your company culture, which would it be?

I think I would say “Lean on me” by Bill Withers. This is a great song about interdependence. A healthy team is built on this concept, as we can’t always have the answer or be the solution, it’s often a teammate. With a cohesive team built on great communication, mutual respect, and maximum effort, we can lean on our teammates to help get things done and continue to progress through challenges.

3. You’ve led a successful cannabis business for several years now, what makes you the proudest?

We are on the way to a pretty remarkable comeback here at Shift Cannabis. Colorado has been in an aggressive bear market for the past 2 years, and in that time we have been growing leaps and bounds.

Our team has worked hard to take a struggling company and rebuild it from the ground up, improving our product quality, our sales & marketing efforts, and our internal corporate management. I’m proud of the company that we are today and the incredible growth we have achieved in such a tough market.

4. What is the biggest challenge your company faces today?

The toughest challenge right now is the margin compression that has occurred in the last 18 months. On average, wholesale product pricing has dropped 30-40% depending on the category. That coincides with local and national wage growth due to high inflation and a constricted labor market.

Packaging and material costs have risen, shipping rates have gone up, and our taxation continues to be quite high. With increased costs and lowered pricing we are experiencing a real margin crunch. Being successful in this environment takes shrewd operating practices and the ability to rapidly grow market share and reach scale.

That is the toughest part of operating in the wholesale market in Colorado right now, needing to grow quickly, while maintaining cost and living on thin margins. Surviving on these margins is no small feat.

5. What is the most valuable skill a candidate can bring to the table to help overcome this challenge?

The ability to operate on a lean budget is essential. It’s easy to run a department when the budgets are fat, but the ability to scale while cutting costs is a difficult task. Our operational leaders have responded to this challenge quite well, but it’s not a skill that everyone has.

A candidate who has experience operating in a high paced but tight budget environment is very sought after, as that’s the situation we will be in for the foreseeable future. Can we do more with less? The answer is yes, but it takes a smart leader to find the cost savings and to invest in the right places.

6. What is the most challenging position to fill in your organization typically, and why?

Without a doubt it’s labor positions at our rural facility. We operate a cultivation facility in a remote area with a low population density. Hiring and maintaining a workforce in rural areas can be very challenging. There is intense competition for the relatively few laborers that exist in that market, and that makes it tough to attract the volume of applicants that would be ideal.

The way we combat this challenge is to offer competitive wages, a robust benefits package, and a healthy company culture. The combination of these three makes us an attractive place to work and continues to attract quality applicants.

7. In which ways are you looking to grow your company in 2023-2024?

We are on a strong growth trajectory within our current product channels, but continued month over month growth is imperative for us to meet our larger goals. Our growth channels fall into three primary categories for the next 4 quarters; increasing farm revenue through yields & quality improvements, new innovative CPG product launches, and growth via acquisitions.

At our farm we believe there’s a 15-20% yield increase through continued refinement of cultivation practices, and we expect that to gradually increase over the next 6-9 months. That combines with a general trend that we’re seeing of continued upward movement on quality, which results in an increase in ASP (average sale price). The combination of these two elements means we should see a 20-25% growth in wholesale cultivation revenue year over year into 2024.

New product launches should always be the focus of any CPG company. We have a suite of new concepts rolling out over the coming quarters that are fun and interesting, and I’m confident these should drive excitement (and revenue) as we move through 2024.

Lastly, we’d like to bolster our retail footprint, so we are actively pursuing acquisitions in brick and mortar retail to assist in maximizing our margins and strengthening our overall business model.

8. As a trusted leader in your industry, what do you think your greatest contribution has been to date?

Our industry is a very difficult one, especially in competitive and mature markets like Oregon and Colorado where I’ve spent the bulk of my career. Competition is stiff, supply & demand is relatively imbalanced, and wholesale prices are extremely low. To survive, let alone thrive, is a testament in and of itself.

I’m proud of the fact that I’ve led numerous organizations through strong growth periods amidst very challenging market conditions. I’ve demonstrated the ability to develop strong company cultures, achieve consistently high quality across different product categories, and drive revenue growth within tough market conditions. I’m proud of that track record.

 

Gehl Search Partners asks thought leaders across the nation to share their hiring and management insights. We feature C-Suite executives from the beverage, wine & spirits, and cannabis industries.

Looking for more Headhunter Hints for your business to effectively and successfully hire talent? Check out my posts about why money isn’t the biggest motivator for those seeking new opportunities..