How a doctor and friends built Minnesota’s most valuable cannabis company

Dr. Kyle Kingsley, founder and chief executive of Goodness Growth Holdings, may be Minnesota’s most prominent advocate of regulated cannabis for medical and recreational use.

Kingsley, 44, a 10-year veteran and combat medic in the Minnesota National Guard, was no teenage pothead.

The one-time Twin Cities emergency-room physician eschewed marijuana until he started studying it as a possible alternative to opioids and alcohol that infused the trauma he witnessed in so many of his patients.

“Kyle is just a natural leader,” said Matt Brown, owner of Estelle’s Eatery in Harmony, Minn., Kingsley’s hometown. “He’s a friend. And when he talks, people listen. And this [cannabis movement] is bigger than him. And he knows it.”

It’s personal with Brown. His 2-year-old daughter, Gabby, the youngest of three children, died in 2019 of a rare form of leukemia. Her pain in the last weeks of her life was mitigated significantly by medical cannabis. And Kingsley was there for Gabby and her family.

Kingsley walked away from a $400,000-a-year job in an emergency room in 2014 to research and start, at no pay for two years, what is now one of America’s larger cannabis seed-to-retail operations.

Until last week, Goodness Growth was known as Vireo Health. It changed its name and said its biosciences subsidiary would branch out into research of psychedelic medicines. The move signaled that the Minneapolis-based company is moving from investment stage to growth stage.

The 450-employee, multi-state outfit has a public-company market value of more than $300 million. It projects an operating profit before interest, taxes and depreciation next year of up to $55 million on revenue that could more than double to $180 million.

It operates eight retail stores, called Green Goods, in Minnesota and eight in other states, with plans for more.

More than three-quarters of Americans approve of medical cannabis, and more states are enacting legislation to allow its use.

Kingsley, who cites growing favorable research for the use of cannabis to treat pain, was among those who persuaded the Minnesota Legislature this year to expand the limited medical use of cannabis beyond oils and pills to include lower-cost dry flower — or smoking. Gov. Tim Walz signed the bill into law this spring.

Kingsley predicted that adding cannabis flower would reduce by half the cost of medical cannabis, which is not yet covered by insurance, from an average of $250 a month.

That will improve accessibility and participation overall as well as the economics for Goodness Growth. Bottom line, it should improve public health at lower cost.

“In 2019, opioid overdoses hit a tragic record high with 428 confirmed deaths of Minnesotans,” Kingsley testified in February. “In that same year, zero died from a cannabis overdose.”

Kingsley’s company includes doctors, scientists and a top marketer who once worked for Anheuser Busch, famous for its Bud Light beer. Among its oils and joints, Goodness Growth now boasts one line called “Lite Bud.”

Critics see cannabis as just another drug. Kingsley said he founded a science-driven company that provides a safer, effective alternative to opioids, alcohol or tobacco for people suffering from pain and emotional trauma.

Working at a Twin Cities hospital a decade ago, Kingsley injected a wounded Iraq war vet with enough morphine “to kill you or me,” he said. The man was hooked on opioids, but he told Kingsley that, while living in California, he had managed his pain with marijuana instead. Today, that vet can legally smoke cannabis to relieve his pain here.

The Legislature liberalized Minnesota’s law this year partly because of expert testimony and the stories of Minnesotans who had gotten relief from cannabis.

Goodness Growth also is working with medical centers, such as at Johns Hopkins University in Baltimore, on plant-based psychedelics, including derivatives of mushrooms. They may yield effective ways to treat depression and other maladies other than with narcotics.

“I’ve come 180 degrees, kind of like cannabis,” Kingsley said last week. “I thought it was an irrelevant recreational substance. We want to replace what Big Pharma has to offer with plant-based alternatives. It will be a multi-decade opportunity. “

Kingsley’s board now pays him $360,000 annually. And he has earned 5.1 million option shares that he can buy at a huge discount to market price of $2.50 per share recently.

Kingsley put up the first $600,000 invested in Goodness Growth. Friends and family from Harmony put up the next $3.6 million.

Analysts who follow the company have a 12-month target price of $3.75 per share. The stock has traded under $2.50 for most of this year.

There may be more millionaires with seed caps dining at Estelle’s.

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