According to Newsweek, “Canadians spend about as much money on weed as they do on wine. Statistics Canada, a federal statistics agency, found that Canadians consumed $4.8 billion worth of weed in 2015, putting the industry on par with the wine industry, which Canadians spend about $5.4 billion on.” – What has been the biggest influence on the cannabis industry that has caused it to snowball the way it has? A shift in public perception or the legal shift? (I previously asked Bert and Vern this question)
Bert emphasized that there is now “empirical data that [marijuana] is actually a medicinal product and a wellness product. Now you have social, governance, and wellness.”
Vern felt that “consumer acceptance of the product has been a key driver to the cannabis industry being accepted as an enterprise.”
I decided to spark the conversation by discussing Samantha’s thoughts on this same question.
I think definitely the stigma is dying down as result of the legal aspect shifting. As a result of that, there are so many more products available now in the market because those two things are coming together. People are able to consume it in so many different ways. People aren’t just smoking it anymore. The demographics are changing. It’s not your stereotypical stoner seen using cannabis. The demographic has completely evolved and some of that is attributed to the products evolving themselves. Its gone from people smoking it to now people drinking it and consuming edibles. There is also the CBD aspect. A lot of the products are just CBD (without THC a product is not psychoactive) but there are also products that include a blend of CBD and THC and they’re being used for all different types of things. For example, consumption is for people who have anxiety, for people who can’t sleep well, for people who are post-op, for people with post-traumatic stress disorder, and obviously for people with cancer. Now marijuana is available in so many forms.
(The conversation evolved quickly from there.)
What do you think will be the biggest subcategory of cannabis business?
Well the subcategory is really CBD and hemp right now. My feel is that a lot of people do not recognize CBD and some hemp as cannabis but it is part of the industry and the business. (We will get in-depth on the differences of Hemp and Cannabis in a later blog). More specifically, the wellness side of the business is huge and i’m seeing that becoming a lot more interesting to people because there are not a lot of people who are not using cannabis recreationally but will absolutely use it for wellness.
One subcategory of wellness will be directly tied to the medical industry. People will want to get involved with and invest in this industry who normally would not otherwise.
I also believe one of the subcategories which will be rather huge will be tied to the Pet Industry. CBD for pets is huge. We are currently speaking with a big client that has one of its major products in pets. It is food and treats. It is for calming, anxiety, itching, etc.
Another subcategory is will be in banking and payments because these guys don’t have a way yet to legally utilize banks and financial institutions for their business (yet). These dispensaries shut down at close and have to literally leave with bags of cash. It’s a huge issue. It is a safety issue.
California and Colorado are the major markets that the general public associates with the industry. What geographic areas hold a surprising amount of job potential?
Well I think the East Coast is opening up a lot right now. For all of the states that are beginning to legitimatize, there is opportunities attached to that growth. I feel like New York, Boston, Pennsylvania, and Miami are going to be really big markets. Although, it will be very difficult for any of these markets to become larger than California. Califnornia will hold the largest global market I believe, but in terms of largest growth potential the opportunities are in other areas, since here on the West Coast so many companies and people in this space already have their feet firmly planted in the ground and there is so much activity already. Yeah I think the East Coast is going to be huge, once it opens up more.
What is the biggest barrier of entry for people wanting to get into the cannabis business?
I think it’s probably just who the players are who are actually hiring. That’s hard to find right now. It’s hard to figure out who is real and who is not and who holds actual legitimacy. Especially in the U.S. there are a handful of known companies but I think you have to do a lot of digging to figure out who it is.
I’m not really feeling like there are true barriers in the same way that there are in technology. For example, if you were to move out to Silicon Valley from the mid-west and you wanted to get a job in tech, there are four trillion other people who are also trying to do the same thing and your shot is about who you know versus what you know. I do not think that that’s the case in cannabis. Right now it is much more inclusive than exclusive. Companies need to find talent for every part of the business. It is no different than any other company that needs to hire people. I feel like people within marketing/branding or anything related to finance have an advantage. I also think there is going to be this huge trend related to people specializing in the legal field for general counsel. And of course, organizations like Protis, who have scaled large teams and partnered to advise fast growing entities within a 3-tier system. Our ability to advise and bring on the right talent for a company that is coming out of “prohibition” into the market is a major plus. We’ve been doing this for 23+ years. Understanding routes to market, distribution, funding, proper internal structuring, and so much more.
I assumed there would be barriers and risks associated with working directly with cannabis. Is there less risk in working with an accessory company that is aligned with the cannabis industry?
Well there is risk obviously, but I think you have to really vet things out in the same way you would with any opportunity. For example, there are all of these tech companies that pop up overnight from someone’s brilliant diea in their garage that is now the latest app or software. Well that’s as risky as anything else, right? You ask yourself: Is this a legitimate person? Is this a good business person? Do they know how to run a company? What is their experience? There is always risk in the unknown.
Okay so associate the risk/reward aspect of “cannabusiness” with the risk/reward opportunity of a tech startup?
Yeah, absolutely!
I think another elevated risk is that a lot of the companies who are breaking into cannabis that have big clients will have a tough sell to actually take on a cannabis client. A lot of the company’s current customers or clients are not going to want to be a part of it. What do I mean by that? Well for example, we just met with a very big cannabis company. The company that did their branding did an amazing job in my opinion. When they came back to make a few changes, the branding company had to drop the cannabis company as a client because it was coming from above that they couldn’t take any clients that are affiliated with the industry. (Sidenote: in our opinion, think that is such a huge missed opportunity and also a bummer!! )
The risk is the association to cannabis – but then it depends. If you are a prominent law firm and you have people who are specializing in politics and the regulatory side and you really know your business, then you’re going to be an incredible asset and value and be well-known in the industry. The same thing for CPAs because everyone needs a good CPA. So the opposite applies in regards to the risk and stigma of cannabis association. I think if you are really good at being able to provide your clients good advice and help, you can grow an incredible business.
The industry is still in its relative infancy. How do cannabis companies attract top talent and adjust their employee brand to mitigate stigma and preconceived risk?
I think that’s changing little by little now. Anyone who is potentially even remotely interested and looking at cannabis now is looking at one of the only growth sectors out there thats fun, sexy, and growing at a crazy pace. I think the cannabis companies that have both a strong consumer brand and more importantly learn to develop a strong and authentic employer brand are going to win the best talent. People are clamoring to get a job there because it’s funded, fun, and managed by innovative management. Then there are other companies that are still figuring out the best way to attract new people. They are trying out job fairs and meeting people at the big events like the NCIA events, MJBiz.com events, etc. Again, this is why we are in such high demand… we get it. Our combination of 23+ years working in a business which has legalities (for example adult beverage) combined with out fairly extensive experience within cannabis keeps us fairly busy. Ultimately, this will come down to partnering with the right talent attraction and advisory firm and/or having the right team in place internally to develop an employer brand that makes your company a destination for top talent.
It’s hard and these companies are overwhelmed because they don’t have the infrastructure in place to do that yet. They are growing at a rapid pace and learning to scale as they go.
Well are there crash courses available or resources that can get a candidate or company familiar with certain nuances to the industry that will help acclamation be facilitated?
What I’ve seen is a media company that seems to be taking off pretty well focusing on cannabis. It is called Green Flower. Their platform is about education in a lot of different ways. I know they are having video series on people speaking about how to get in the industry and how they got into the industry. Green Flower is becoming an interesting source of information like that. You have to just go find the information.
For women, specifically, that are getting into the business, there is a female-founded company called Women Grow. Women Grow has events throughout the country in different cities for entrepreneurs who are primarily female who are interested in opportunities within the cannabis industry.
So I’m going to circle back to the first question I asked where I noted figures and trends from the Canadian Cannabis Industry. Is there anything we should specifically be looking to Canada to learn from or follow?
I have a different perspective because of my background and experience within Wall Street. All of the bigger companies are coming out of Canada now because it is legal there and so there is a crazy amount of momentum. Everyone is trying to get very specialized right now and be first to market.
I just went to a conference a couple of weeks ago and sat in on a panel of the biggest cannabis companies. There are cannabis companies that want to dominate in the beverage space. (And this is all Canada by the way.) There are companies that want to dominate regionally. There is one in particular that is focusing on Latin America because they want to do more outdoor growing versus indoor, and they are growing exponentially. They are the first to some of these markets and they are ALL currently coming from Canada. We have a few domestic cannabis companies that are growing and getting funded but we are pretty far behind because our legal system is pretty fractured around it.
Essentially we are looking to Canada as a road map for what we should do, but more so because their infrastructure is so prevalent and strong that it’s going to tie into our infrastructure directly?
Yes, they are all the leaders right now. (Which leads to THIS which is Constellation investing $4B into Canopy.) Now one thing I should mention is that, in terms of their revenue and growth, Canopy isn’t really the biggest player in the space. There are other people that Constellation could have invested in that some people think may have made more sense. I personally think Canopy and Constellation had a good relationship with each other and said ‘well this first bit of investment went well. Let’s see how this goes.’ Now that it’s gone well there is a follow up investment. Not only are the beer, wine, and spirits companies all rushing to the table, but there are going to be all of these other “Canopy-like companies” out there who are now going to be taking incoming calls and figuring out who they want investments from. They are the leader of the pack in this and people will follow and try to keep partnering with these other behemoth companies. I also think companies will follow suit not just in this space. I think one of the biggest sectors over the next couple of years is going to be in biotechnology and all of the huge pharmaceutical companies will try to swoop in and buy these companies up.
What is the potential impact of the larger brands getting into the industry?
Deals like these cement the legitimacy of the industry. Cannabis will be the next wine and spirits industry but in a better way because wine and spirits don’t have medicinal purposes or properties to it and cannabis is known to benefit and/or treat migraines, anxiety, ptsd, symptoms of chemotherapy, concussions, etc. The legitimacy will allow people to take the industry more seriously and allow for more companies to develop as well as have more funding to come in. These kind of headlines bring the information to people who would not normally invest.
Samantha emphasized that the industry is expansive, growing, and limited only by regulation, infrastructure, the ability to scale effectively and imagination right now. Do you agree with Samantha’s overall take on the industry? Send us your thoughts and opinions! ]]>