A former Minnesota ER doctor leads one of America's largest marijuana companies

Dr. Kyle Kingsley was an emergency-room physician in Shakopee when he first considered that "medical marijuana" might do a lot more for patients than the profligate alcohol and opioid use he witnessed every night.

Kingsley, 42, who served 10 years in the Minnesota National Guard as a combat medic to help pay for his education, was treating a young veteran of the Iraq war. He had been shot in the back and was suffering "horrible pain and spasms."

"I gave him enough morphine to kill you or me," Kingsley recalled. "He had a high tolerance."

Kingsley talked with the wounded veteran, who also had a prescription for opioids.

"He told me that he had lived in California and hadn't taken opioids and that he'd had almost no pain," Kingsley recalled. "He smoked marijuana [to relieve pain]." But now in Minnesota, where recreational cannabis was illegal, Kingsley encouraged him to find some anyway and get off the large amounts of opioids he needed.

"He said he wouldn't in Minnesota because it was still against the law here," Kingsley said. "He was a straight shooter."

Today, seven years later, Kingsley is CEO of a multistate cannabis company valued at around $350 million.

Kingsley, long interested in horticulture and healing, remembers collecting ginseng for good money in the woods around his hometown of Harmony in southeastern Minnesota. As a doctor, he looked into the history of cannabis.

For generations, it was used to treat pain and emotional maladies. Then Harry Anslinger, a prohibitionist and federal agent, became the first federal drug czar in 1930, leading a division of the U.S. Treasury that declared war on drugs, most notably marijuana. Anslinger was a godfather of the "reefer madness" campaigns that equated marijuana with sexual deviancy and communism. Publisher William Randolph Hearst produced trumped-up stories about black men using marijuana to seduce white coeds and reefer driving people batty.

Last week, the Minnesota Department of Health reported a study that showed cannabis reduced anxiety and other symptoms in people suffering post-traumatic stress disorder. That's ironic today for Kingsley, who saw a lot of alcohol-related damage while working in the ER.

"We joked that if cannabis ever replaced alcohol, emergency doctors would be out of business," recalled Kingsley. "Alcohol often was involved in domestic and sexual assaults, other violence, car accidents … cancer, cirrhosis of the liver. It's laughable that alcohol and tobacco are legal, but it was a crime to use cannabis."

Public opinion has slowly shifted toward legalization of cannabis for specific medical maladies in Minnesota, and for any reason in some other states, most notably Colorado and California.

Kingsley in 2014 quit his $400,000-plus physician job to start Minnesota Medical Solutions (MMS), one of the first outfits licensed to grow, process and sell medical cannabis in the state. He invested $600,000 in savings and borrowed money in the new venture.

Today, Kingsley is CEO of Minneapolis-based Vireo Health, the parent of MMS. It is a physician-, scientist- and-lawyer-led company of about 350 employees that grows cannabis in its own greenhouses, refines the product for specific medical and other uses, and sells it through company-owned and third-party dispensaries in 11 states and Puerto Rico that range from medical-use only to recreational use.

"Minnesota came up with a medical-use focused law [in 2015] and I was comfortable with that," Kingsley recalled. "We are based on science, technology, engineering and medicine. And we seek to build meaningful brands to proprietary products."

Vireo is projected to earn nearly $2 million this year on revenue of $72.5 million, followed by earnings of $21 million in 2020 on more-than-doubled revenue of $187 million in 2020, according to securities firm Canaccord Genuity.

"Vireo places a high degree of importance on research and product formulation in an effort to build out a portfolio of novel products, including its own color-coded line of medical products …," Canaccord analyst Matt Bottomley said in a report this month. "The company has more than a half-dozen research partners and a robust pipeline of initiatives, from customizable extractors to multichannel vaporizers."

Vireo, which has raised nearly $120 million in debt and equity, in March listed on the Canadian Securities Exchange. That's because the marijuana business over interstate lines is illegal in the United States. About 30 other states in recent years have unleashed the industry incrementally, from medical use only to recreational adult usage.

The U.S. pot market is growing fast. Legal spending should hit $20 billion, according to recent reports. Seven of the 10 largest pot stocks by market value on the Canadian Stock Exchange are focused on the U.S., according to Bloomberg.

Vireo's stock price shot over $6 per share in April, before settling around $3 per share in recent weeks.

Canaccord's analysts project a 12-month target price approaching $7 per share for Vireo.

CEO Kingsley, who was paid $252,248 in 2018, after going with little to no salary since 2015, owns about 10% of Vireo's shares.

He's not the only stock millionaire from Harmony. Kingsley raised most of the initial $3.6 million from family, farmers and acquaintances.

Kingsley has proved an able leader of a fledgling, science-based company that's customizing products, oils, vapors, bars, balms and more.

"Everybody deserves quality, precision and safety," Kingsley said.