John Fritzel | Crain's Denver

In this ongoing series, we ask executives, entrepreneurs and business leaders about mistakes that have shaped their business philosophy.

John Fritzel

Background:  

MJardin is a cultivation management and consulting company for the cannabis industry. It administers third-party cultivation facilities all over the country.  

In addition to co-founding MJardin, John Fritzel is a partner in three other cannabis businesses: Lightshade Labs, Buddy Boy and PotCo. He owns a controlling interest in 44 dispensary licenses in Colorado.

The Mistake:

I was blind to the fact that I would not be able to sell [real estate] properties for at least what they cost.

Before I was in the cannabis industry, I was in real estate. In the general Denver area, from Hilltop to Wash Park and Cherry Creek, you were seeing properties getting bought and scraped. That was the part of the industry I was in.

Banks at that time were lending with 90-95 percent financing on million-dollar-plus loans. I was probably borrowing $15 million to $20 million per year, and I had no business doing that at the time. They kept giving it to me, and I kept spending it. I thought I was going to be Donald Trump or something, from houses to hotels and from hotels to casinos.

We all know what started happening in late 2007 and 2008. Things started to fall apart financially. The house of cards came down. The music stopped, and there were no chairs to sit in.

I was blind to the fact that I would not be able to sell properties for at least what they cost. It didn’t help that I was young – I was in my early- to mid-30s.

That led to a personal bankruptcy in 2010. The public record has it at around $12.1 million. I remember the trustee at that event looked at me at one point and said, “I just have to ask, how does this happen?”

The music stopped, and there were no chairs to sit in.

The Lesson:

The big takeaway from that experience was really a bunch of small things revolving around how not to get in that position again. You’ve got to be careful who you take money from, how you’re taking it and what responsibilities come with it.

I also learned that a market is much stronger than any individual. The market itself determines the state of the industry you are in.

It’s funny, I see properties that I just gave away back then that are selling for millions of dollars now. I guess you have got to have a sense of timing.

We were conducting our business right back then. There was no funny business going on. At the end of the day, it just didn’t matter. It was the industry that was going down, and we were along for the ride.

You put this in the context of marijuana, and you can see a lot of pitfalls in this space. Whether it's local laws changing or the federal government coming in, this whole industry could go away, and we understand that. Those are risk factors, and you’ve really got to know them, whatever your industry.

I don’t think there’s a process you can put in place for this, you just have to mature as a person and look broadly at the market. You’re going to see opportunities. You have to evaluate each one differently based on the time they come up and know what you can do with them.

Ultimately, you have to be nimble, and everything is changing.

You can follow MJardin on Twitter at @MJardinUSA.

Photo courtesy of MJardin.

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