Charlie Bachtell (JD '03) is the founder and CEO of Cresco Labs. Throughout his career, Charlie Bachtell has provided legal and business guidance in highly regulated industries, such as residential mortgages, and he currently runs one of the country's largest cannabis companies. We talked to Charlie Bachtell about his career and his time at DePaul Law.
Q. Why did you choose to attend DePaul University College of Law?
I was very interested in coming back to Chicago. I was born here. My extended family lives here. We moved away when I was young, but they all primarily still live in Chicago. I grew up in Arizona and did my undergrad at the University of Arizona [Business Administration and Finance] but was interested in law and wanted to apply to law schools. Being accepted by DePaul gave me the opportunity to return to Chicago and to live in a big city.
Q. What do you remember most about your time at DePaul Law?
What I remember most about my time at DePaul was how that was the point in my scholastic career when I matured. By the time I finished law school, I had reached another level of maturity and professionalism that enabled me to maximize my potential.
What I’ve reflected upon most since graduating and getting into the work force and into real life are the benefits of the thought processes that law school teaches you. DePaul was really good at teaching functional, applicable thought processes. I don't know if this is still the same protocol for legal writing, but I distinctly remember IRAC [Issue Rule Application Conclusion], and that method is something that I've relied on throughout my entire professional career. Being able to identify an issue, come up with the rule associated with that issue, apply the facts to the rule and come up with a conclusion has served me very well. It is a very thoughtful and useful way of problem solving, and that's a skill set that will benefit you, no matter what line of work you go into.
Q. Can you take me through your career and how you ended up where you are now?
At DePaul, I was part of the initial class that participated in the Sports and Entertainment Law Journal. I was a former college athlete [tennis at University of Arizona]. I had played since I was 3, and although that was over, I liked professional sports and wanted to remain in that arena.
Following my first year at DePaul, I went back to Arizona and interned at a sports agency. During my second summer, I started working at a small legal practice called Matera and Associates, which focused on two areas: real estate law and entertainment law. I went there because of the entertainment law practice, which I thought was the avenue I was going to go down.
After my first summer there, I became less interested in the entertainment law side – mainly because they focused on on-air news talent, which I wasn't very passionate about. However, the small amount of real estate work I started doing turned into my primary field. I really enjoyed getting to know the dynamics of real estate law and working with big developer clients, as well as individual buyers and sellers. I liked real estate a lot and continued practicing there for another three or four years.
I left Matera to go in-house and to become a partner at small real estate company. I've always had the entrepreneurial edge and, as opposed to being the attorney for a transaction, I wanted to be on the other side of the table. I enjoyed it, but the timing was terrible. It was Q3 of 2006 - not a good time to be a real estate developer.
Shortly thereafter the business became insolvent, but I had an opportunity for an in-house legal position at Guaranteed Rate. As familiar as I was with the real estate world, being on the lender side of the table and being involved in the finance side of the transactions was an incredible opportunity; it fit my entrepreneurial itch as well.
At the time, Guaranteed Rate had less than 200 employees, so it was a nice sized company, but it was a leap of faith. I was still tying myself into the real estate industry, which at that time was starting to tail off, but I really liked the dynamic of the company and the leadership there. The President was dynamic and had a lot to teach. This gave me the opportunity to have some involvement, not just on the legal side, but also on the business side.
That opportunity grew a lot more after the mortgage collapse occurred and the mortgage downturn turned into a catastrophe. It gave me the chance to be more involved in the business. Had the housing market continued on upswing, I probably wouldn't have had as important a voice. I would have probably been doing more traditional corporate legal work, but because of the challenges the industry was facing and all the things that came along with those challenges, I was sitting at the table for everything. I became a big part of how the company was going to restructure itself.
We knew regulation was coming; every week something new was happening. When your industry is seen as the root cause of the world economic collapse, regulation comes from every angle. That allowed me to be the right hand of the President/CEO. I realized that we had two options - we could either embrace regulations and be at the table with the regulators, or we could fold; there was nothing in between. At that point, I went from being General Counsel to Executive Vice President.
Over the next several years, we not only survived the financial collapse, but we thrived, and a lot of that was because I was given the opportunity to have an input on the business. I couldn't just be an attorney, I had to be part of the business. Every decision I was going to recommend needed to have a viable business component too. You can't just say “no,” you need to come up with solutions. One of my mantras is, “I don't need problem spotters, I need problem solvers.” That becomes part of your DNA when you face failure and the rest of your industry is collapsing. The melding of the legal point of view with the business perspective and coming up with ways that incorporate both into a solution is the best training I could have possibly gotten for my career.
Fast forward to 2013/2014. Guaranteed Rate had 3,500 employees. We expanded to being licensed and operational in all 50 states. We had over 150 offices and became the sixth or seventh largest lender in the United States. A lot of that had to do with our ability to blend regulatory compliance into a successful business model.
Mortgages went from relatively unregulated to massively regulated overnight. We were state chartered, so each branch had different rules. We had to figure out how to message with our customer base and build trust, be fully transparent. We had to get people to want to obtain a mortgage again after the crisis.
How does one go from mortgage to cannabis? Well, if you understand the progression of mortgage banking from 2008 to 2014, you see a lot of similarities.
Cannabis was about to go from unregulated to massively regulated overnight. It would be done on a state-by-state basis. It was another subject matter that had stigma. I had to figure out how to communicate with not just the customer base but also a massive stakeholder base – the medical community, state legislators, and state police. I had to figure out how to build trust through transparency. So, I look at my time in mortgage banking as the foundation for the way I built Cresco Labs.
The mission of Cresco Labs was to normalize and professionalize the cannabis industry, and I knew I had something to offer. When I looked at what Illinois was going to do with cannabis and the state's highly focused, highly regulated model, I knew how it was going to go.
Q. Can you describe what your day to day is like?
The specifics change every day, but it's fairly traditional CEO obligations. I'm responsible for the vision and the mission of the company, laying out the strategic objectives and putting the pieces in place to accomplish it. I am dedicated to showing what the gold standard should be. Cresco is the second largest cannabis company by market cap – around a $3 billion market cap - in the United States. With that comes an obligation to preach the gospel, to show how to do cannabis the right way for the benefit of the industry as a whole.
Government affairs is one part of my day. I've put Cresco in a position to be one of the thought leaders in the industry, and I must make sure that Cresco Labs has a seat at the table with the persons holding the pen that will change, modify or adapt the way this industry progresses and that they hear my voice and that I present a well-rounded viewpoint.
Yesterday (July 18) started with me being on a panel at a big investors conference. 300 people were in attendance for a panel consisting of myself, Illinois State Senator Heather Steans, and Illinois State Representative Bob Morgan – who were both instrumental in getting the getting the adult use law passed in Illinois.
One thing we love about the cannabis industry is that it's a very unique industry where you can create win-win-win scenarios. There is an uncanny ability to say yes to the majority of what a multitude of factions want. That's generally very difficult to do. You have so many different perspectives to satisfy: law enforcement, conservatives, progressives, operators, minority caucuses, social equity issues.
However, Illinois is the first state in the country to pass an adult use law through the legislature. Other states have failed at passing it (e.g. New York, New Jersey) and the successful ones have been ballot initiatives. Understanding what has worked and what has not is a crucial part of my job.
After that, I come back in the office and do one-on-one meetings with department heads to recap Q2 with planning for Q3 and Q4. Investor calls. Investor relations.
Q. What are some of the biggest challenges you've faced?
They're limitless. Part of my professional career since joining Guaranteed Rate in 2007 is encountering nothing but challenges. If you're able to create success in an environment like that, it's because you're able to see problems as opportunities. Problem solving is one of the core values at Cresco Labs. Our Core Values include: the “Ships” of Cresco (Ownership, Stewardship, Leadership) – fairly standard, but there's also “Know your Audience”, “Engagement”, and “Problem Solving”.
The importance of knowing your audience is something that the legal profession has taught me, but in every profession, you'll find the most successful people are the ones who understand who their audience is and can address them appropriately, directly, and specifically. When you grow up in problem industries, you understand the level of commitment necessary.
We often say, "there's no crying in the corner." You have to face adversity head on, throw problems on your back, run through brick walls, kick down doors, do whatever it takes. Cannabis, much like the retail mortgage industry, is all problems. Regulations are constantly changing. You think regulations are going to be one way, but then everything changes. Packaging requirements change, testing protocols change. It's based on the state, so regulations in Illinois are going to be different from those New York or New Jersey. Scaling a business in this industry is always a challenge but developing a scalable business model that is applicable to the greatest portion of your operation is possible, and critically important to your success.
Another major challenge was when Donald Trump was elected President and named Jeff Sessions as Attorney General. Back in 2013, the Department of Justice issued the Cole Memorandum, which described eight reasonable, common sense priorities it had related to cannabis and that if states were to develop frameworks that addressed these priorities, the Department of Justice had other areas to focus on. However, Sessions rescinded the Cole Memo. This didn't change the law – because it wasn't law – but for perception? It was a pretty significant blow to cannabis industry. Now, Attorney General William Barr has voiced some support for keeping the status quo.
But there's a limitless number of ‘biggest challenges’ that we face on a day to day basis.
Q. What do you see for the future of the cannabis industry?
Last year, the legal cannabis industry was $10 billion in the US. The speculation is that it's over $100 billion in the illicit market. I think you're going to see cannabis become a traditional consumer goods industry up there with alcohol, pharmaceuticals, and tobacco. It's going to have its seat at that table. The latest projection is $80 billion by 2030. And that's just the financial future.
The thing I find most interesting about the cannabis industry - and it's something I found interesting the first day I started reading about it - is that it showed me that cannabis can be different than the pre-conceived “Venice Beach” notion that so many people have. I can't think of another subject matter that has the ability to change the way we think about medicine and the criminal justice system. It can be part of a cultural shift, not only locally or nationally, but globally. People are thinking about cannabis differently now and wondering why it has been illegal for generations.
You wrap that in a unique business opportunity plus the interesting dynamic between federal/state legislators and law enforcement and it's the most fascinating thing I've seen in my life. I knew that from the first 24 hours I looked into it, and it holds true today.
There's also the impact that this industry can have on some of the most fundamental problems in American society itself; such as criminal justice and social equity initiatives. Cannabis being illegal has been a big component of gun violence in Chicago. Now you're going to see legal cannabis be part of the solution, actually help the communities that have been most negatively impacted by the War on Drugs. Be able to fund initiatives that can fix the problems created by cannabis being illegal. That's a once in a lifetime opportunity.
I think the future of cannabis and the wide variety of impact it'll have going forward is very dynamic, diverse and super interesting.
Q. What advice would you give to current/aspiring law students?
One of the most important things I’ve learned is everyone should be prepared to commit, engage, and work hard. I've seen in my professional career - and I even go back to my own personal failures - is to have expectations of your potential, but also know that you have to put the work in to make it happen. Some things come easy, but there's very few of those. Whatever you want to achieve, be prepared to work for it because the one thing I can tell you is that I've seen more successful hardworking people than successful talented people.
The ways you learn to approach challenges in law school - which I think DePaul in particular does a good job of - can prepare young adults for any profession if they can apply the fundamental lessons.
Q. How would you describe the DePaul Law alumni community?
I haven't been engaged in the DePaul Alumni network at all. It's not about the school or the people, but a lot has to do with me not being a good networker.
Q. Do you have any final thoughts?
One of the biggest things I've learned is that transparency is key in accomplishing what we've achieved. Open kimono. I've probably given the tour of our Joliet cultivation facility 150 times, and 100% of the time the reaction that I get is “I had no idea. This is not what I expected.” Even our CIO that we just hired from Amazon, after his orientation tour - "I had no idea. This is not what I expected."