An Informed Business Marketing How-To Guide by Dino H. Carter
Saying the cannabis industry is saturated is the understatement of the year. While sitting on my Harley the other day, waiting for the red light to change on a busy Los Angeles junction, I saw that all the billboards in the junction promote a different dispensary. And this is just a small example that shows how many players in the cannabis space try to get the consumers attention.
May it be medical, recreational, THC, or CBD, the market is overflowing with cannabis businesses. Everybody jumps on the cannabis wagon. Big money and corporate America is already deep in the cannabis space, and if you think that flooding your Instagram feed with images of your oil or tincture is what will make you a millionaire, you are mistaken. I am sure a lot of you who read this now already discovered that it is much much harder than you thought, right?
As a brand & marketing consultant I meet, talk, and work with many different sorts of cannabis businesses, and just like in any other industry, only a few understand what branding and marketing are all about and why it is so important for your business success.
Last week I was at a cannabis business event and met a lot of cannabis business owners and entrepreneurs. After the event, I went online to check their websites. Almost all the websites look the same, sell the same products, offer the same services, and have the same messaging (if they have any messaging at all). How many companies can claim “Your trusted source in cannabis” if all of you are my trusted source, how do you expect me to believe any of you?! This is where brand strategy comes in.
Branding is not designing your logo or great looking packaging, and marketing is not influencers or facebook ads. You use branding & marketing in a very deep and highly strategic way. The goal is to get in front of as many specific customers as possible. You want to make them understand why they should buy or use your cannabis product or service, and not the competition. If you think the features of your product are what create sales, you are in for an excruciating realization of the truth. People don’t buy products; people buy personality.
People buy what makes them feel in a specific way. Why do you see a line of people outside an Apple store but not outside any other mobile phone store? Is it because the iPhone is such a superior device than others?
2019 research shows that more than 60% of marketers today do not understand what branding and marketing are and how to implement them in an effective way. Unfortunately, there are not enough pages in this magazine for me to cover all that you need to know about branding and effective marketing. I will give you the most critical aspects of branding, which is crucial for effective marketing in a saturated industry.
The best way to look at branding & marketing is through ‘customer acquisition’. The customer can not relate to your product if they do not understand why they should buy YOUR product and not the competitions. Because of this, how can you expect to have high customer acquisition rate? That is why you need to build brand personality; you need to discover your brand and its differentiation.
It is hard to find your brands differentiation because:
1) the distinction is usually an intangible aspect
2) the differentiation should be from the consumers’ point of view, not the business
3) because most owners and managers are too involved with the product or service they sell, thus can not see its perception from the consumers’ point of view
The differentiation can be in many aspects, one of them is the features of your product or service, but the functions are not what generates long term business longevity. I am sure some of you have great products or services, but sales are low. It is usually not because of the product or service; the sales are low because of the marketing – the branding was wrong.
Now, when I say the branding is wrong, I do not mean the logo or packaging is not good. I mean the product or service did not have a personality or did not communicate its personality in a way that is aligned with its target consumers.
The best way to build brand personality and align it with the right consumers is to think of your brand like a person: Who is the brand? How does it make the customer have a positive emotional connection to your brand? How does the brand make the consumer feel? What is your brand’s voice? Is it an educating voice, fun, professional, street style? What are your brand’s values and personality traits? Helpful, fearless, energetic, reliable? What is your brand’s ‘reason why’ – why does your business exist?
When you have this brand personality, you need to focus on your specific customer base. Let’s say you sell soil or nutrients for growers. If you focus only on home growers, instead of all kinds of growers for instance, it will be easier for you to know your brand better. You will understand how your brand is making this specific consumer base feel, what media outlets you should use to get in front of your consumers, and what kind of ads and content they want to see, read, and consume.
When you say that “everyone” is your target consumer, you are in for a fall. Believe me, I have seen it happen in all industries in many different countries in more than 20 years of marketing work.
Who exactly do you target and why? You should design and produce service/product that is targeted at a specific customer, specific demographic. For example, a vape pen that is aimed at very affluent young females, which is a small base but a powerful one. In this case, everything must be aligned to this customer base. From the product to the website, to the packaging, to the ads, everything must suit the demographic. The product should be well made from the best materials; the packaging should be extremely luxurious (and cost appropriate). For this brand, the ambassadors must be rich young females, the brand events must take place at super-exclusive venues (with Moet & Chandon champagne served), and this brand’s ads shouldn’t be in stoners magazines, but in luxury living magazines. Make sense?
When you think about brand differentiation, think about this: brands are like celebrities – there are some actors, musicians or athletes you like and some you do not. Not just because of the way they act in movies or the way they play football or sing. Some of them you feel more ‘connected’ to and some less, some have a personality you like and some not so much, right? The same goes with brands – to some, you have positive emotions, and to others not so much, and your best friend might like one brand that you do not care for.
Everything you do with your brand; from the dispensaries you sell your product at, the packaging, events, and trade shows you appear at, or sponsor, your tagline, to your social media and the rest of your content; everything needs to be “on brand” and not on trend! Focus on a specific customer base, find out how your product can make them feel the way they want to, and then communicate clearly.
This is how you elevate your cannabis business above all the noise in the industry.
To conclude, here is an excellent example of brand differentiation: Tesla and Prius. Both are electric cars, but they are two completely different brands focused on two extremely different customer bases. One is about the environment, being environmentally conscious, and saving money, while the other is about speed, style and show you have the funds to drive a Tesla. That is why both brands marketing activities are entirely different, even though they are both very similar products.
Dino H. Carter is the Founder of D Branding, a Global Branding & Marketing consultancy accelerating growth for businesses and entrepreneurs. Dino has over 20 years of international marketing experience, including work with MTV, Levi’s, National Geographic, and more. He is a speaker, podcasts guest, a regular contributor to different publications in the USA and Europe, a member of the AMA and the Hollywood Chamber of Commerce.
Securing Funding and Strategic Investing Within the Cannabis Industry
By Serge Chistov, Chief Financial Partner, https://honestmarijuana.com/
Every new industry experiences some obstacles at the outset, particularly when it comes to securing funding. Investors, whether venture capitalists or standard banks, can be weary when the industry involves product lines that aren’t universally embraced, or as in the case of marijuana, are illegal at the federal level.
State by state regulatory hurdles for production, packaging and so on, is just one of the issues that can make it more difficult to fund a cannabis business, but there are ways that companies can grow, with fewer bumps in their road.
Typical hurdles for securing investment for cannabis businesses
The cannabis industry is no different than any other business except for the fact that it is a specialty business. With that comes the need to look for funding among investors who have some knowledge or appreciation for the business.
As to some of the hurdles mentioned above, the state by state difference in regulations surrounding the cannabis industry is one of the concerns that investors can have. Since cannabis is still illegal at the federal level, there can be an array of hurdles at a state and local level that makes opening a cannabis-based business trickier to work with.
Lenders might also have some objection because their religious beliefs will prevent them from touching this sector. The morality question is a factor in other industries as well, including gambling, adult entertainment, and so on, but as you likely know, morality has not prevented those industries from growing exponentially over the last decades.
Banks will work with cannabis money to some extent, but won’t invest
Banks and credit unions may be more open to working with cannabis money, but investing isn’t an option. They let the industry pay to keep the money in the bank. Cannabis companies have access to check writing and bank reconciliations and cash/check deposits, but it’s unlikely financial institutions would invest or put their license at risk.
There are limits to a bank’s willingness to work with income from a cannabis business as well. For example, they will try to exclude this money from your income statement. That income would not come into play with a decision to lend business money for something else. They will not use money coming as a result of the cannabis industry as justification in giving a customer a loan.
Finding and vetting potential investors
Any cannabis business that is searching for funding will need to have a very clear, well-articulated business plan. It is important to understand all of the same factors of opening any other business, including cash rate, regional build-out, the best/ worst scenario of sales and growth. Presenting all of this information is something that any investor would be looking for.
From that point of view, a business in the cannabis industry is no different when it comes to getting funding. That said, it might be to your advantage to look for unique lending or investing groups that either currently specialize in the cannabis industry or are starting to open their books with a plan to ultimately specialize in cannabis.
Funding has opened up to more players. There are more industry participants who have their own funding right now. There is also more interest in the sector, more participants, and more insiders of the industries that are willing to invest in the right idea. If you have a good business plan with the right technology, right idea, right people, right places and a general understanding of why consumers will pay money in whatever retail location for your product, then this proposition should not be any different than opening a pizzeria, for example.
In terms of finding those investors to pitch to, one viable way is to attend investment conferences. Go and speak to people in the industry. Visit people at national expos and shows. The internet is also a good resource. Different cannabis capital groups are out there, but it’s a question of what we call “smiling and dialing.” You’ve got to put in the legwork to find the right investors. It is really not much different than if you wanted to open a chain of salons. You need to allocate and isolate people that historically have been investing in the industry. They already have an interest, so start the conversation, and you’ll be surprised that one conversation will usually bring a result that will take you to the next level.
Opportunities to invest in the cannabis industry this year
From the standpoint of the investment community, there is an opportunity to work with the data that is already out on the market. You can definitely see the trends and sales, which makes it easier to get an accurate picture of the local market. I believe that the brands are becoming a point of interest to some national investors. The advice is the same for investors looking for opportunities in the cannabis industry as any other: do your research. There are more information sources available than ever.
Production and retail facilities are self-sufficient operations, producing steady cash flow and profits. An ability to consolidate a profitable operation and stay independent will create a pretty powerful stateside distribution, production, and retail environment.
Technology will continue to be a beautiful thing to look into because, at one point or another, our belief is that cannabis will become part of our vitamin portfolio just like vitamin E, B, and A. We are going to be consuming cannabis as a part of our diet, as a part of our tribal engagement and as a part of our healing processes.
Another aspect of the business is the consumer product innovation in packaging. Reducing the amount of plastic in the packaging is a positive step, and some brands are innovating plastics that become more earth-friendly, just like any other industry.
There are plenty of opportunities to look at, so long as you remember that this is a rapid growth industry, at least for the time being. When clear federal legalization comes into play, the big guys will come in and run cannabis businesses in their existing facilities. For now, though, there is still a tremendous opportunity for investors to find niches and do well. And that, after all, is what investing is all about.Serge Chistov is a cannabis industry expert and Chief Financial Partner with Honest Marijuana Co. Honest Marijuana has been a leader in cannabis innovation since it’s inception with an organic approach to the growth, production and packaging of cannabis, the launch of the first-ever organic hemp wrapped machine rolled blunts, the invention of the now patented Nanobidiol Technology, and the first company to bring THC-O-Acetate technology and products to market.
Cannabis Industry And COVID-19: All You Need To Know
COVID-19 has devastated even the most developed countries in the world, decimating the economy and bringing non-essentials to a halt. A pandemic is an unprecedented event that has directly or indirectly affected more than three-quarters of the world population.
The cannabis industry is also majorly impacted, falling under the pharmaceutical and agricultural domains, which fall in the essentials category. Here is how the COVID 19 Pandemic has changed the cannabis industry.
Practicing Social Distancing
Several cannabis companies have issued guidelines for their cannabis growing facility to practice social distancing among employees. Similarly, many businesses have resorted to reducing staff working hours and the number of personnel they deploy to harvest or keep the plant in check. They aim to keep the supply chain running while complying with the necessary precautionary measures to prevent spreading the virus. Most countries are trying to make cannabis available to users, especially those with chronic conditions, to help them navigate the pandemic in better health.
Most dispensaries are trying to cut down on the workforce and establish safe sales protocols to ensure they can still make products available for customers. The government enforced home quarantine has shown an increase in the consumption of cannabis products.
E-commerce delivery has seen a drastic rise in all countries with a specific demand for groceries and medical products. Safe shopping from the ease of their homes without risking exposure to the virus has encouraged more shoppers to pick delivery alternatives.
Cannabis is not left behind with a surge in online orders. With some states declaring marijuana as essential and keeping the stores open, businesses are rushing to adopt delivery practices to encourage sales.
Enabling customers to place orders through the web or telephone that can then be delivered to their home the same day makes for safer shopping experiences for customers, resulting in an overall boost in sales and customer base. Delivery drivers have shared that their working hours have increased dramatically since COVID-19 and that customers are grateful to have their orders delivered to their doorsteps.
By deploying delivery drivers who follow proper social distancing protocols to reduce contact during the sales process, businesses are sustaining during this pandemic.
Telemedicine and curbside pickup service are on the rise in several states. Some states have seen a surge in telemedicine for patients to obtain medical marijuana cards to purchase products. Many dispensaries are also now offering curbside pickup service to customers so they do not have to enter the store and can still buy products.
The grow shops are also seeing better demand because of the pandemic. More people are now buying seeds to cultivate their cannabis plants at home. It is far more common to see people purchase green crack feminized seeds for their use at their homes since COVID-19.
Consumption trends are drastically shifting in many COVID affected countries. A survey by the AmericanMarijuana.org consists of 1000 self-identified medical cannabis users, and recreational cannabis users showed over 40 percent of respondents say that their consumption volumes remain the same as before. About 29 percent suggest that they are consuming more. The industry has also seen an increase in new user consumption since COVID-19.
The first change in behavior is majorly towards sharing cannabis equipment and joints. Many fear that this could transmit infections, and about 70 percent of them say that they have stopped sharing blunts, bongs, mouthpiece, joints, vape pens.
The stock market for cannabis has also been affected and has behaved reactively to the situation. Cannabis company stocks have seen steeper losses compared to other markets but have also responded quickly to market upticks. Given it is a newly evolving market, companies in the cannabis supply chain could lose money due to restrictions imposed on the industry and a slow economy.
While it is true that many businesses are suffering due to the pandemic, many have also shown increasing revenue due to quick thinking and new measures to prepare for self-quarantine. For example, enabling delivery channels early, combining grocery deliveries with cannabis or other medicine deliveries, video calling infrastructure, and increased production while adhering to government advised safety precautions are some of the measures taken by prominent companies.
Many new and small companies have had been able to pivot and make quick changes to their business models to adapt to the changing federal and local policies and requirements. Additionally, businesses are marketing to a broader audience than before, which reflects in the surge in their revenues.
Demand and Supply
There has been a tremendous uproar of demand for cannabis for both recreational and medicinal purposes. With the unpredictability of the lockdown, people have started hoarding supplies to last them for months, which has impacted the supply chain hard.
The classical model of economics dictates that when a commodity’s demand rises, companies tend to decrease prices to gain market share. But in this unprecedented situation, companies reluctantly have had to increase the prices to account for delivery prices, inflation, and the rising cost of doing business, and in some cases, to retain the workforce.
Many companies have doubled the shifts of their growers, increased packaging machinery, and have adopted new business models where production and delivery are key. Their biggest fear, however, is running out of the products.
Companies are expecting the government to help with the situation by providing financial relief packages to aid with production or deliveries. The unmatched demand and supply levels have triggered individual growers to start black market sales to sustain their business.
Whether it is medicinal or recreational, the government’s recent statements start to eliminate the negative bias over the use of cannabis persisting over decades now.
This step indicates that the government embraces the necessity of the product for those who use it, eliminating the stigma of criminality that affects the industry. States are continuing to develop innovative means to utilize technology to make cannabis available during the pandemic.
Many medicinal and recreational cannabis consumers have started questioning companies and authorities regarding the demand and supply of cannabis. The most important thing for these businesses is keeping their employees safe so their companies can continue functioning. Measures adopted by the cannabis supply chain to accommodate the changes in the industry can help companies to survive.
About the author: Rebecca is a cannabis and health industry consultant who frequently writes about the latest trends in the industry with only one motive that is to create awareness about healthy living. She has been writing for a long time now and is becoming a recognized name in the cannabis industry.
Honest Answers: COVID-19 & the Cannabis Industry
Serge Chistov, Honest Marijuana’s Chief Financial Partner, sat down with NUGL Magazine for a Q & A on the impacts COVID-19 is having on the Cannabis Industry.
How Will the Pandemic Change Cannabis Consumption Habits?
I believe that people will definitely give a second thought to exchanging personal objects such as passing a joint. Likely they will concentrate more on the individual pre-rolls. I think it will definitely affect some old practices that were not only just prevalent in smoking cannabis but also to eating in general and personal hygiene. I believe that part of the tribal tradition will always exist and there are those that take the responsibility of personal hygiene differently than others. Overall, I would expect an improvement in the practices but I also think that some of the traditional users will still be around for a while.
What Might Cannabis Consumers Turn To Instead?
Pharmaceutical grade products with different variations of consumption will give more visibility to the edibles, including fast-acting edibles, as well as transdermal applications-specifically pain directed, etc.. It will bring about better awareness and understanding of the industry in general and the options consumers will have access to.
Has Cannabis Use Increased During the Pandemic?
When people have more time on their hands, they tend to partake in substances more often. So yes, the consumption of cannabis has increased for the consumer that has more free time right now. Many people take free time as an opportunity to relax and some choose to do this with cannabis. It also goes without saying that this is a stressful time for many who are turning to cannabis and related products as a way to reduce stress and relax. The pandemic is becoming similar to an extended war which will create a lot of PTSD and a lot of nervous breakdowns.
Also, the fact that the cannabis business in the legal cannabis states has been deemed an essential business during the shutdown is a huge endorsement to the importance of the industry in the medicinal, tribal and cultural life of our society. This gives the industry an additional level of legitimacy among skeptics.
How has Covid-19 Impacted the Business Side of the Industry?
With the industry not being centralized, many states who have legalized cannabis are not able to depend on the income that is derived from tourism- those people that are traveling to those specific states to enjoy that state’s liberties. As in any industry right now, we are experiencing a shortage of customers who would normally be shopping in the dispensaries. So the growth in use really balances out the missing dispensary, tourism-related customers. I think that as cannabis consumption becomes more available, many new consumers will follow. Right now, we are still in the growth stage.
In addition, the effects of coronavirus will bring about a brand new future which will be based on more electronic communication- people will be migrating from place to place, simply because they will realize there is no longer a physical connection to the infrastructure, working from home is as productive if not more productive. The direction was there, to begin with, it has just been expedited to move into a more virtual/distant education and workplace. A lot of people will begin to make their decisions based on expanding their geographical horizons. Who’s to say that they will not select to go to the states where using cannabis is legal? “
Has the Pandemic Stimulated Any New Product or Technological Developments?
It is very difficult to say what individual companies are doing right now. Currently, the industry as a whole, is aiming on recreating a smoking experience without inhalation, without smoking- so a fast-acting, expedited experience, controlled experience, all of these innovations have become important to the industry regardless of the COVID-19 pandemic and we will continue to see those innovations brought to market.
Serge Chistov is a cannabis industry expert and Chief Financial Partner with Honest Marijuana Co. Honest Marijuana has been a leader in cannabis innovation since it’s inception with an organic approach to the growth, production and packaging of cannabis, the launch of the first-ever organic, hemp wrapped, machine-rolled blunts; the invention of the now patented Nanobidiol Technology, and the first company to bring THC-O-Acetate technology and products to market. https://honestmarijuana.com/
Influencer Marketing & The Cannabis Industry
Influencer Marketing. A term we’ve been hearing more of over the past decade and will continue to in the years to come. With social media exploding and people utilizing this channel of communication and transforming it into a business, influencer marketing has become bigger than anyone could have foreseen. What is influencer marketing? How does it work? Is influencer marketing worth the large budget it demands? All questions businesses in every industry try to determine as influencer marketing continues to grow. We may not have all the answers just yet but keep reading…
We’re dissecting everything we do know about influencer marketing and even got some insight from the source, the influencers themselves! After this introduction and quick guide to social media influencer marketing keep coming back because we will have all the info and news for you. In every upcoming issue on our “Influencer Pages”, we will be highlighting this topic in all aspects. A section of the magazine that will showcase influencers and cover everything you need to know about social media influencer marketing in the cannabis industry and beyond.
Brands are estimated to spend up to $22 billion on influencer marketing in the next few years, yes BILLION. Maybe small compared to the $150 billion spent on advertising but remember, advertising dates back to the 1920s, where influencer marketing only began about 10 years ago. So, what is it? Influencer marketing is governed by the same idea as a celebrity endorsement. To put it simply, companies will partner with influencers in their industry, as a result, their brand awareness is increased. The immense value of social media influencers lies in the ever-rising popularity of social media platforms and the creative, visual content. Also, each influencer works to carefully curate their audience, almost like little families that interact daily. The influencers’ followers trust them, they know the platforms, and can create immediate returns for brands.
Reach vs. Niche. The crossroad you come to when deciding what kind of influencer is right for your company or campaign. Macro-influencers are those in the “reach” category, including those with very large followings 500k+ up to celebrities. Micro-influencers are those in the “niche” group, they have a smaller but targeted following and high engagement. The macro-influencers have huge fan bases and mass reach on social media. Imagine how many eyes your brand would have from one post on an influencer page with 20 million followers. Micro-influencers may not have as far of a reach, but they do have more genuine connections with their followers and a lot higher audience engagement. “We are more relatable to consumers because we are more similar to the average consumer compared to a celebrity buying Gucci,” Kirin of @sunshinespiffly (55.6k followers) told us. Both groups hold a ton of value but also have their pros and cons. Audience engagement is also a very big factor when it comes to influencer marketing. Which type of influencer is right for you can be determined according to your needs and budget.
These online creators have become so trusted that influencer marketing is now a vital part of businesses large and small. Alongside advertising, influencer marketing is becoming one of the heavy hitters when it comes to propelling a brand to success. When conducted effectively, influencer marketing can be one of the most valuable aspects of the business marketing sector. Brands are not only seeing direct return when working with influencers, but they are also creating relationships with individuals starting and leading trends in their industry. Even Kirin of @sunshinespliffy (55.6k followers) concurred telling us, “We (influencers) have such a strong pull on consumer trends, wants, and styles”. These influencers know the space and are experts in their industries. So do your research to find the best matches and the more authentic the better.
Influencer marketing in the cannabis space is a bit different from most mainstream industries. Due to the long, bumpy road of legalization, influencer marketing in the cannabis industry has probably gone through the most recent and drastic transitions. Before the start of legalization, social media and cannabis were enemies. Any social media including anything cannabis-related was highly regulated and prohibited leading to profiles being deleted and banned. Even in the transition, cannabis influencers and brands alike, still face some barriers while navigating social media marketing. For example, cannabis brands are unable to write off marketing expenses, so they do not have the same budget as brands in other industries. This directly affects cannabis influencers negatively as they have to adjust their rates lower than an influencer in most other industries. Bess of @imcannabess (94.1k followers) gives us more insight on the impact, “We can’t do paid google ad words or paid advertisements on social media, so influencer marketing helps us work around that”. Influencers and brands are working together to jump the hurdles and utilize cannabis social media marketing. Over the past 5 years, we’ve taken huge steps in the right direction to allow the cannabis industry to utilize the social media space just as any other industry would.
With total cannabis legalization on the horizon, more and more opportunities arise in the social media space. We are seeing dispensary tours, entertainment industry product placement, brand/product launch campaigns, large events, and almost everything other industries are doing with influencer marketing. Fewer cannabis profiles are being deleted and banned and there are even new platforms and technology that are pushing cannabis content to the forefront. Cannabis influencers can now show the cannabis world on social media and are driving growth. There are cannabis creative agencies, modeling agencies, marketing agencies, public relations agencies, and more. We even have celebs, like Rhianna, Wiz Khalifa, and Seth Rogan advocating and identifying with cannabis. It’s an exciting and powerful time for the cannabis industry. We only predict expansion in the cannabis social media industry and that’s another reason for our “Influencer Pages” section.
Is influencer marketing worth it and the expenses it comes with? The answer is yes absolutely! But only if you are using the tools and tricks to analyze so that you can determine the reach, effectiveness, and impact. Social media analytics and measurement tools such as engagement calculators can help measure the success influencer marketing has. As we said, do the research! Just like any other marketing tool, influencer marketing must be targeted, and quality is equally or more important than quantity. Being informed about the cannabis influencer marketing space is the best thing you can do to successfully utilize it.
This expansion is also giving cannabis influencers opportunities they did not have access to before. Some of these creators are starting businesses, creating events and even more. There are even award shows and festivals globally dedicated to cannabis and expanding. What started as wanting to share photography, hobbies, and favorite brands turned into something so much more for @imcannabess (94.1k followers), she tells us, “my page evolved by staying true to myself, all the things on my account are ME and the things I love combined with weed”. In upcoming stories, you can count on the best, most important content in the cannabis influencer industry. Next issue you’ll get the insider scoop on cannabis influencer Marley of @medicatedmarley (223k followers) a badass Las Vegas cannabis influencer, model, rapper, business owner and more. Stay tuned because you’re not going to want to miss her!
What’s Happening in the International CBD Marketplace
One of the hottest new markets domestically and internationally is the CBD market as both the U.S. and other world nations legalize hemp farming. One of the most sought after cannabinoids from hemp is cannabidiol aka CBD. CBD is an essential component of medical marijuana, and it is derived directly from the hemp plant, which is a marijuana plant having less than 0.3% Delta 9 THC.
After Congress passed the Farm Bill of 2018, the U.S. Government opened a path to the legalization of the hemp market and “all its derivatives.” So long as the hemp has a Delta-9 THC content of 0.3% or less, the derivatives from hemp are exempted from the U.S. Controlled Substances Act, which is the federal law criminalizing cannabis/marijuana generally. Individual States within the U.S. have started legalizing hemp, and a few states have expressly legalized CBD notwithstanding the FDA’s limitations on selling ingestible CBD products to consumers. Despite these challenges, North America is leading the global CBD market due to increasing consumer demand for CBD products. The overall market for CBD will be driven by high demand for CBD products because of consumer belief in the numerous claims about CBD’s health benefits. It is expected that many consumers/patients may ask their physicians for “off label” use of CBD, causing a rise in the global CBD pharmaceutical market, as more evidence proves the claims regarding CBD’s health benefits. It is presently believed that most consumers are waiting for regulators to determine the safe amount of use, and the proper marketing and labeling of CBD products for the over-the-counter consumer market. Because of growing consumer demand, we expect to see more American-based manufactures seeking legal pathways for CBD products to participate in both domestic and international markets.
CBD can be derived from marijuana, a controlled substance, or from the non-psychoactive hemp plant, which are both derived from the Cannabis L Sativa plant. Because of the higher costs and taxes associated with growing marijuana, it is much cheaper to extract CBD from hemp. While CBD is a component of psychoactive marijuana (one of hundreds), by itself, it does not cause a “high.” According to a report from the World Health Organization, “In humans, CBD exhibits no effects indicative of any abuse or dependence potential…. To date, there is no evidence of public health related problems associated with the use of pure CBD.”
A recent Harvard Medical School blog recently posted the following regarding the health benefits of CBD:
CBD has been touted for a wide variety of health issues, but the strongest scientific evidence is for its effectiveness in treating some of the cruelest childhood epilepsy syndromes, such as Dravet syndrome and Lennox-Gastaut syndrome (LGS), which typically don’t respond to antiseizure medications. In numerous studies, CBD was able to reduce the number of seizures, and in some cases it was able to stop them altogether. Videos of the effects of CBD on these children and their seizures are readily available on the Internet for viewing, and they are quite striking. Recently the FDA approved the first cannabis-derived medicine for these conditions, Epidiolex, which contains CBD. CBD is commonly used to address anxiety, and for patients who suffer through the misery of insomnia. Studies suggest that CBD may help with both falling asleep and staying asleep. CBD may offer an option for treating different types of chronic pain. A study from the European Journal of Pain showed, using an animal model, CBD applied on the skin could help lower pain and inflammation due to arthritis. Another study demonstrated the mechanism by which CBD inhibits inflammatory and neuropathic pain, two of the most difficult types of chronic pain to treat. More study in humans is needed in this area to substantiate the claims of CBD proponents about pain control.
There is also growing anecdotal evidence suggesting many health benefits from CBD beyond use as an FDA-approved, prescription anti-seizure medication. Accordingly, market analysts predict the CBD market will grow significantly in the near future.
One such analyst, Fior Markets, predicts that the global CBD market is expected to grow from USD 1,453.81 Million in 2018 to USD 17,345.80 Million by 2026 at a compounded annual growth rate of 36.3% during the forecast period 2019-2026. Adoption of various cannabis products, growing consumer spending on cannabis products, increasing usage of CBD in medical applications, and high R&D investments by the pharmaceutical industry, have all spurred the growth of the international market. Interestingly, Fior Market’s data showed that the therapeutic grade segment is dominating the market with a 59.90% market share in 2018. Fior further predicts the CBD market will keep growing in 2019. The therapeutic grade segment dominated the market apparently due to CBD’s claimed health benefits that help in the treatment of neuropsychiatric disorders. CBD is also being used to treat other chronic disorders, which is likely to further spur demand. Since CBD isolate does not have any synthetic ingredients or harmful contaminants, it is generally viewed as safe to consume, despite FDA warnings that consumption of significant amounts of CBD for extended periods may result in liver stress in humans.
Part of the expected growth of CBD are claims that CBD drugs have the potential to treat chronic disorders, such as fibromyalgia, irritable bowel syndrome, Crohn’s disease, and Parkinson’s disease. Some claim that CBD efficiently reduces pain, improves sleep, and reduces headache pain for people with fibromyalgia and migraines. Others claim it lessens irritation in persons suffering from irritable bowel syndrome. Regarding Parkinson’s disease, some claim CBD lessens the negative effects of this disease. If FDA-approved studies can support such claims, it is expected that the CBD market will grow exponentially and internationally. See https://www.fiormarkets.com/report/cannabidiol-cbd-market-by-product-food-grade-therapeutic-396106.html.
Regarding who some of the leading CBD product manufacturers are presently, we see Aurora Cannabis, Canopy Growth Corporation, CBD American Shaman, CV Sciences, Inc., Elixinol, Folium Biosciences, Gaia Botanicals LLC, IRIE CBD, Isodiol International Inc., NuLeaf Naturals, LLC, and Pharmahemp. These companies are adopting strategies such as product innovations, mergers & acquisitions, joint ventures, collaborations, and strategic partnerships to maintain their presence in the global CBD market. Some companies, like Elixicure in Southern California, have made the effort to get FDA over-the-counter approval for its CBD-based topical pain relief roll-on to ensure its expansion in the consumer market.
Regarding upcoming and growing CBD markets beyond the medical and consumer sectors, we see growing interest in CBD-based products for pets. In February of 2018, Marijuana Company of America (MCOA) launched its hempSMART Full Spectrum Pet Drops with a specially formulated product containing naturally occurring CBD, which is derived from a combination of hemp seed oil, a full spectrum hemp extract, fractionated coconut oil, and a rich bacon flavor. While the FDA has not yet approved CBD in pet food, many pet owners claim that CBD helps their dogs with arthritic pain. Part of the theory as to why dogs benefit from CBD is that dogs have more cannabinoid receptors in their brains than humans do. Studies are presently under way showing CBD’s health benefits in pets. See https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5109620/.
As more consumers look for natural, plant-based foods and medicines, consumer demand for hemp and naturally derived CBD also rises. CBD is being added to foods and beverages, pet products, and cosmetics in both the U.S. and throughout the world. Hemp not only produces CBD, but also provides fibers that can be effectively used in consumer goods from textiles to concrete. As more countries legalize hemp and CBD, both commercial and consumer consumption of hemp and CBD rises globally, making these markets expand exponentially. Accordingly, CBD’s market future is bright.
John Armstrong is a founding partner of Horwitz + Armstrong, a professional law corporation, practicing general business litigation and providing business legal advice in the cannabis and hemp industry. Mr. Armstrong graduated cum laude from Creighton University School of Law in 1996 where he was the Lead Articles Editor for the Creighton Law Review. He earned undergraduate degrees in English and Political Science from California State University Fullerton in 1993, where he was a member of the speech and debate team. Mr. Armstrong has been admitted to the California State Bar since 1996, and is admitted to the U.S. Northern, Eastern, Central, and Southern Federal District Courts for California, the U.S. Second, Ninth, and Tenth Circuit Court of Appeals, the Federal Circuit Court of Appeals, the U.S. Court of International Trade, the U.S. Court of Federal Claims, and to the United States Supreme Court.
Mr. Armstrong represents a significant number of clients in the cannabis industry, including growers, manufacturers, and distributors, assisting this growing industry in the areas of regulatory compliance, general litigation, intellectual property, and capital raises.
Global M&A for the Cannabis Markets
Driving Factors, Trends & Sample Transactions from 2019
S T O N E B R I G H T
Cannabis M&A Advisory
The fragmentation of the cannabis industry, resulting from the disparate regulatory environment in the United States and throughout the world, often forces operators to favor accretive acquisitions over organic growth. In just five years, the industry has transformed from cottage to skyscraper, producing many transactions valued at at $100 million or more. In this article, we analyze global factors and trends driving M&A activity for the industry, together with specific examples of transactions illustrating those factors and trends.
The global cannabis and hemp markets already operate at light speed. Mergers and acquisitions will continue to shape the face of the global cannabis markets over the next decade – a trend consistent with any nascent industry. Near-term consolidation will progress at every level from micro-cap to large-cap issuers, inevitably leading to mega-mergers after federal legalization occurs in the United States.
2018 M&A in Cannabis Topped $15 Billion USD
SEVEN GLOBAL TRENDS SHAPING THE M&A LANDSCAPE IN CANNABIS
- Boards and management teams face increased pressure from investors to perform.
- Large scale production assets need expansive sales channels creating vertical integration opportunities.
- Opportunities abound to leverage huge valuation gaps between private and public transactions.
- Otherwise restricted by the NYSE, NASDAQ, or TSX/TSX-Venture stock exchanges, large-cap issuers are getting creative to gain exposure to the US prior to federal legalization.
- Having made a few “bets” – Big Alcohol, Big Tobacco, and Big Pharma are just scratching the surface.
- Global stock exchanges will allow or expand their tolerance for cannabis-related listings – driven by continued legalization.
- Emergence of Special Purpose Acquisition Companies (SPACs) increase access to capital for M&A transactions.
HOW THE 7 TRENDS AFFECT M&A ACTIVITY
Boards and management teams face increased pressure from investors to perform. Put simply, buying operating companies provides a quantifiable increase to revenue, margins, and in many instances – profits. Licenses and/or licensed facilities create faster entry to (or expansion within) markets when compared to new applications. Companies can instantly leverage their existing brand and product portfolios through acquisitions. Further, acquirers often integrate proven management teams that have demonstrated success in this dynamic industry – which can save them years of pain and instability. Jared Younker, Chief Compliance officer of CREC Compliance, a leading licensing and consulting firm, estimates that “groups may spend well in excess of $300,000 on average and not secure an eventual license.” With license competitions increasing risk and cost, regulated operators have increasingly turned to an acquisition strategy to eliminate the risk of securing a license, while diversifying both geographically and frequently vertically along the supply chain.
- Curaleaf Holdings (CSE: CURA) announced in June 2019 that it agreed to acquire Glendale Greenhouse and Phytotherapeutics Management Services for a total value of $25.5M USD – with $22M USD in cash and $3.5M USD in stock1. This transaction provides Curaleaf with production and retail assets in Arizona – together with $7.4M USD in annual revenue.
- On October 8, 2019 – Cresco closed the acquisition of Gloucester Street Capital, LLC2 – providing the leading multi-state operator Cresco with one of only ten (10) vertically integrated licenses in New York State.
- In July 2019 – emerging MSO Jushi Holdings, Inc. expanded into Virginia through a $16M USD investment for a controlling 62% interest in Dalitso3, after agreeing to acquire various interests in Pennsylvania for $63M USD the month before.
Large scale production assets need expansive sales channels creating vertical integration opportunities. Operators who have built vast production infrastructure in hopes of selling their wares can instead acquire brands with existing demand. Alternatively, well-positioned brands with customer demand are acquiring production assets to secure reliable supply for their wanted products to ensure quality, consistency, and availability. Channels to the market can also be purchased to ensure off-take of production, such as producers of indoor flower acquiring retail or distributors.
- Cresco Labs (CSE: CL) agreed to buy Origin House (CSE: OH) for approximately $850M USD4, after originally buying a majority stake of SLO Cultivation in California – a large-scale greenhouse operation – and entering the California market with their brands. The transaction provides Cresco with definitive access to most dispensaries in California, while increasing the likelihood for offtake or sales of their raw materials produced by SLO Cultivation. The Origin House acquisition recently passed a mandated waiting period under United States anti-trust laws and is expected to be finalized in the coming months.5
- Cresco buys Gloucester Street Capital, LLC for $32.5M USD in cash and 13,466,667 Class F units – providing Cresco with one of only ten (10) vertically integrated licenses in New York State.6
- The pending acquisition of private company Curaleaf Partners, Inc. and the Select brand by Curaleaf Holdings, Inc. was followed by aggressive M&A to leverage the Curaleaf brands through the acquisition of production or vertically integrated assets across key markets in the United States. In addition to the Glendale Greenhouse and Phytotherapeutics Management Services deal in Arizona, Curaleaf also announced the closing of Acres Cannabis in Nevada on October 31, 2019 – providing the company with 269,000 square feet of cultivation and 3,200 square feet of processing in Nevada – with a dispensary acquisition in Las Vegas still pending. Curaleaf currently operates in 12 states with 49 dispensaries, 14 cultivation sties, and 13 processing sites to power the Curaleaf and Select brands.7
Opportunities abound to leverage huge valuation gaps between private and public transactions. In more stable and efficient capital markets within mature industries, valuation gaps between public and private issuers typically hover near 30% — with a public issuer achieving a 30% premium to valuation based upon the revenue or earnings of their target. Public cannabis companies still trade above 5X revenue (even after recent corrections in valuations), whereas private transactions often range from 1X to 2X revenues. With issuers raising capital or utilizing their stock as currency, acquisitions present immediate shareholder value over organic growth. Private companies may also favor share exchanges, granting shareholders liquidity as they spin privately held assets onto public company balance sheets.
- The aforementioned Curaleaf acquisition of Glendale Greenhouse and Phytotherapeutics Management Services featured a multiple of approximately 3.5X revenues – however, Curaleaf’s market cap as of October 20, 2019 was approximately $2.8B USD on an annual revenue run rate of $194M USD (based on their quarter ending June 30, 2019). That means Curaleaf traded at a revenue multiple approaching 14.5X, suggesting this transaction was a premium for the buyer compared to other industries… but a major win for Curaleaf shareholders based on this metric.
- Further, the Curaleaf transaction upon its initial acquisition terms valued the company at $950M USD on revenues of $117M USD for the prior year – or a multiple of more than 8X last-twelve-months revenue. Acquisitions with higher revenue, such as this one, or within limited license states, tend to drive higher valuations of private-to-public transactions. Interestingly, on October 30, 2019 – Curaleaf announced a restructuring of the original deal, reducing the minimum consideration by 42.5% and structuring additional payments as an earn-out. This tracks back to trend number 1: boards and management face increased pressure to perform. While some observers8 have suggested that this is a broader trend related to M&A, we estimate this restructuring is more closely related to falling sales attributed to the “vape crisis.” In any event, by mutually agreeing to change the terms, this transaction now has an increased chance of success to drive value for Curaleaf shareholders.9
Otherwise restricted by the NYSE, NASDAQ, or TSX/TSX-Venture stock exchanges – large-cap issuers are getting creative to gain exposure to the US markets prior to federal legalization. Capital just “finds a way.” Variations on the structures below will allow aggressive acquirers to pave their eventual way into the United States while tip-toeing around their respective exchange regulations.
- Canopy Growth, a leading Canadian operator with a global footprint, structured a deal to acquire Acreage Holdings in the future, a company with substantial United States operations – combining the two behemoths conditioned upon the federal government legalizing cannabis in the United States. The proposed $3.4B USD deal was approved by an estimated 99.05% of shareholders.10
- Canopy Rivers (TSX: RIV.V), an offshoot of Canopy Growth (NYSE: CGC, TSX: WEED) structured as a “venture capital investor” that is publicly listed, invested in TerrAscend (CSE: TER)11 – helping to drive a series of transactions with TerrAscend investing in or acquiring US-based, operating assets like those of Ilera Healthcare. Ilera gives TerrAscend one of the few vertically integrated licenses in Pennsylvania, and incredible top-line growth (from $8M USD in revenues in 2018 to a run-rate of $43M USD in 2019).12
- Cronos, a leading Canadian operator (NASDAQ: CRON) leverages its investment from Altria to acquire Redwood Holding Group13 – giving Cronos immediate scale for the hemp and CBD markets in the United States.
- Innovative Industrial Properties (NYSE: IIPR), a public REIT dedicated to cannabis, was an early pioneer as the first industry issuer to get NYSE approval, granting them exposure to the enhanced lease terms and cap rates of the cannabis industry while concurrently benefitting from a “big board” listing in the United States. Leveraging insider experience from the biotech industry – Innovative Industrial Properties gives operating companies a platform to divest real estate assets through a sale-leaseback structure, providing much-needed cash for growth or acquisitions to the operating company. As of October 30, 2019, Innovative Industrial Properties owned 38 properties in 13 states totaling 2.8 million rentable square feet (including approximately 903K square feet under development/redevelopment). Per the company, the average annual yield on these investments is 13.8% with an average remaining lease term of 15.6 years.14 Measuring this yield against the entire market, REITs average an 11.8% annual return.15 Look for other cannabis REITs to pop up on major exchanges that allow US institutions to play, driven by our first and fourth trends – management is under increased pressure to perform, and issuers are getting creative to gain exposure to US markets. Real estate is simply not the core business for an operating company seeking to expand market share with their products, but cannabis real estate offers a premium yield compared to other industries.
Big Alcohol, Big Tobacco, and Big Pharma are just scratching the surface. These industries feature market caps that completely dwarf the largest players in cannabis. The last two years have already seen Big Alcohol and Big Tobacco make initial bets. With Big Beer struggling to grow, and Big Tobacco facing a crisis to retain market share – particularly in light of the new vape crisis – the coming years will see more transactions in global markets where these players can easily transact in countries with federal legalization.
- Constellation Brands, Inc. (NYSE: STZ), owner of Corona and Robert Mondavi wines, made a $4B investment in Canopy Growth Corporation (NYSE: CGC, TSX: WEED) in 2018. Considering Canopy Growth Corporation also agreed to acquire Acreage Holdings (CSE: ACRG.U), and Constellation Brands, Inc. has a relatively easy path to own a majority of Canopy Growth – Constellation’s reach extends to both Canopy Growth and Acreage Holdings, providing Constellation with future consolidation opportunities to become what could become the largest cannabis company in the world.
- Also in 2018, Altria Group, Inc. (NYSE: MO), maker of Marlboro cigarettes, made a $1.8B investment for a 45% stake in Cronos Group Inc. (NASDAQ: CRON) – a company engaged in the production and sale of cannabis in federally legal jurisdictions.16 Expect Cronos to face increased pressure to creatively gain exposure to the US cannabis market, leveraging their NASDAQ listing and strong market cap – and positioning Altria for a future, majority stake (or outright acquisition/consolidation).
- Molson Coors (NYSE: TAP; TSX: TPX) took a controlling interest in a JV with HEXO (NYSE: HEXO) to develop cannabis-infused beverages17, while InvBev (NYSE: BUD) and Tilray (NASDAQ: TLRY) each committed to invest up to $50M USD into a JV dedicated to cannabinoid-infused beverages.
- Another Big Tobacco juggernaut – Imperial Brands (OTC: IMBBY) invested $123M CAD through a convertible debenture in Auxly Cannabis Group (TSX: XLY) to acquire a 19.9% interest – also granting them the exclusive partner rights for cannabis-related initiatives.
- While some observers believed that Big Pharma would stay on the sidelines until cannabis became federally legal in the United States – Novartis AG (NYSE: NVS) crushed that assumption by inking a global supply and distribution agreement for medical cannabis with Tilray (NASDAQ: TLRY) in December 2018. This expanded upon a previously inked deal between the parties. Novartis CEO Vas Narasimhan told the market that “cannabis is not a priority,”15 although this was the first major partnership (of what will inevitably be many) between a pharmaceutical company and a cannabis business.
Global stock exchanges will allow or expand their tolerance for cannabis-related listings – driven by continued legalization. The once fledgling Canadian Stock Exchange (CSE) is a thriving market with hundreds of issuers, known now by many as the “Cannabis Stock Exchange.” The trend of new stock markets or acceptance by large, existing stock markets will continue to invite M&A strategies because public capital leads to consolidation.
- Aequitas NEO Stock Exchange (“NEO”). Canada’s “next generation stock exchange, founded on the principles of fairness, liquidity, transparency, and efficiency” – the NEO benefits from an overrun and logjam on CSE listings in the cannabis industry. Listings from Columbia Care, Inc. (NEO: CCHW), Horizons US Marijuana Index ETF (NEO: HMUS), Halo Labs, Inc. (NEO: HALO), Jushi Holdings (NEO: JUSH.B), and several SPACs as detailed below are strong indications of NEO’s bright future in cannabis.
- London Stock Exchange (“LSE”). Cannaray, a British medical cannabis company, is planning to list “a £100M float”17, making it the biggest company on the LSE. While this transaction may be small by current standards established by Canada and the United States exchnages, this signals a broader trend of acceptance by yet another major global stock exchange. Medical cannabis in England is defined according to low-THC content, but if history is any indication, the LSE will likely expand acceptance of high-THC issuers as consumer and patient acceptance increases.
Emergence of SPACs increase access to capital for M&A transactions. A SPAC, or special purpose acquisition corporation/company, allows an issuer to raise capital before they identify a target to acquire. The leading investment bank in the cannabis industry in terms of total underwriting and transaction size, Cannacord Genuity, has been actively involved in creating and underwriting these vehicles through their affiliates. Using a SPAC solves the chicken-or-egg scenario of raising material blocks of capital first, then deploying it opportunistically. Funds are raised into a trust for a SPAC, an acquisition is identified, and a transaction is completed within 24 months with shareholder approval to conform to the various restrictions placed on a SPAC structure by regulators. Look for SPACs to increase as federal legalization occurs in the US, and as other capital markets globally increase acceptance of cannabis listings of all forms. This structure may become the preferred avenue for larger transactions as opposed to the tried-and-true reverse-takeover, or “RTO.”
- Cannacord Genuity Growth Corp. (formerly NEO: CGGC) agreed this year to merge with Columbia Care18 – a New York-based medical cannabis business. Prior to the agreement, the SPAC estimated Columbia Care’s value at $1.35B USD. The entity is now known as Columbia Care, Inc. (NEO: CCHW).
- Ayr Strategies, Inc. (NEO: AYR.A) was previously Cannabis Strategies Acquisition Corp. (NEO: CSA.A, CSA.WT, CSA.RT) prior to its qualifying transaction with Ayr Strategies, Inc. Ayr’s strategy is predicated upon M&A, targeting revenue of $750M CAD by 2020 according to early information from the company.19
- Mercer Park Brand Acquisition (NEO: BRND.U) raised $402.5M USD, and intends to focus on acquiring companies with an enterprise value between $300M USD and $800M USD.20
- Subversive Capital Acquisition Corp. (NEO: SVC.UN.U), was formed and capitalized to “identify, acquire, and…assist in the growth of a business in the cannabis industry.” It raised $575M USD in its IPO, making it the largest SPAC IPO in Canadian history.21 The company is now focused upon identifying and closing its qualifying transaction with a large war chest.
- Canaccord Genuity Growth II Corp. (NEO: CGGZ.UN) also completed its IPO in 2019, and is “targeting companies with an enterprise value between $50M and $250M.”22
THE FUTURE OF CANNABIS INVESTING IS SHAPED BY CURRENT M&A TRENDS
The days of irrational exuberance when cannabis was a novel investment are officially behind us. Increased activity in the M&A markets will invariably impact seed- and venture-stage companies seeking capital – as investors have more options than ever to add cannabis to their portfolio.
Once promising business opportunities featuring entrepreneurs who have little to no experience in the industry (or business, generally) will have reduced access to capital. Established executives, previously reticent to dip their toes in the once muddy waters, are becoming increasingly receptive to the global cannabis industry. Relationships of these executives will lead to even more access to capital and mainstream acceptance of cannabis – and the path of least resistance to scale in the global cannabis market for new entrants will be through aggressive M&A.
Expect consolidation to continue at every level of the market, preceded by more mega-mergers intended to create economies of scale (or to diversify and hedge against the loss of consumers). The Aurora Cannabis (NYSE: ACB) acquisition of MedReleaf in a deal valued at more than $2.5B USD 23 was only an indication of the future. Expect non-industry juggernauts to leverage their market cap and balance sheets to enter the industry through near-majority investments like those made in Canopy Growth by Constellation Brands or Cronos by Altria, only to be followed by outright absorption of those companies. SPACs will increase in size, leveraging the firepower and wisdom of investment banks like Canaccord Genuity.
When the United States federal government finally legalizes cannabis, expect the Goldman Sachs of the world to aid in massive consolidation by underwriting transactions that could shape the future of the United States economy – not completely unlike the industrial revolution.
Stonebright is an M&A advisory firm dedicated to the cannabis and hemp industry. The firm operates the cannabis practice for a leading, middle-market investment bank in the United States. Uniquely suited to closing premium-priced transactions, Stonebright utilizes senior resources and a proven process that has successfully closed more than 500 transactions across multiple industries with numerous awards – with sell-side and buy-side transaction experience ranging from $1M to $1B+ in enterprise value. For information on selling or buying companies in the industry, please contact us through www.Stonebright.com or via email: email@example.com
DISCLOSURES & DISCLAIMER
MB Partners LLC DBA Stonebright (the “Company”) is not a registered broker-dealer. The Company offers compliant M&A advisory pursuant to U.S. Securities and Exchange Commission (“SEC”) guidance according to certain criteria defined by the SEC which can be found here. None of the information presented in this article is intended to form the basis for any investment decision, and no specific recommendations are intended. Accordingly, this article does not constitute investment advice, counsel, or solicitation for investment in any security. This article, its contents, and citatinos do not constitute or form part of, and should not be construed as, any offer for sale or subscription of, or any invitation to offer to buy or subscribe for, any securities, nor should it or any part of it form the basis of or be relied on in any connection with, any contract or commitment whatsoever. The Company expressly disclaims any and all responsibility for any direct or consequential loss or damage of any kind whatsoever arising directly or indirectly from (i) reliance on any information contained within this article or others delivered from the Company, or documents attached thereto; (ii) any error, omission, or inaccuracy in any such information; or (iii) any action resulting therefrom. The Company makes no warranties nor representations concerning the information contained within this article – which is intended for informational purposes only. Neither Company nor its principals own positions in the companies referenced within this article, however, Company and its principals reserve the right to buy or sell shares in these companies at any time without notice.
Investing in U.S. Real Estate
Prepared for Global Cannabis Investor Magazine
Written by Rick Payne | Co-Founder of Cannabis Real Estate Consultants
Traditional Commercial Real Estate Market Trends in the United States
Trade war talks with China, the popularity of online shopping for American consumers, and the death of “big box” retailers has begun to transform the demand for various asset classes in the traditional investment markets.
Over the past decade the United States commercial real estate market has undergone a historical cycle that could be compared to a roller coaster ride. After the housing crisis and the economic meltdown that ensued shorty after in 2008 and the years to follow, the stabilization of the capital markets has been a slow, yet steady and consistent process that has resulted in what most investors and analysts would describe as a “healthy” market with strong growth. Although the current trends are vastly different than they were a decade ago and the market demands have undergone a complete transformation, there is a substantial amount of stability in certain commercial real estate asset classes
such as industrial, multifamily, central business district (“CBD”) office space, and even retail in certain instances.
The most stable asset class with the highest demand, lowest vacancy rates, most new construction, and stable growth is undoubtedly industrial. In 2019 it was estimated that roughly 88% of cap rates for industrial investments ranged on average anywhere from 4.6% to 8.0%. This can be attributed to the rising popularity of third-party logistics providers and other B2C businesses that are focused on home delivery to their customers such as Amazon. Even retailers that traditionally relied on large spaces for their operations such as Home Depot, Walmart, and Best Buy are all beginning to deploy some type of home delivery service to remain competitive.
“The most stable asset class … is undoubtedly industrial.”
Cannabis Real Estate as a New Asset Class
The unique operational requirements of cannabis businesses and complex government regulations related to zoning and land use for the cannabis industry have created an extraordinary opportunity for commercial real estate investors looking to capitalize on a thriving new industry.
Commercial cannabis operations have become as commonplace as Starbucks in certain parts of the United States. Considering the fact that there are now 33 medical marijuana states and 11 adult use marijuana states it is safe to say that the chances are that the majority of Americans have been exposed to the cannabis industry in their hometown or state one way or another. This is even more pronounced in states like California that have had an established and burgeoning medical cannabis system in place for over two decades since 1996.
As legalization has spread throughout the U.S., there have been a number of states, like California, that have opted to give local municipalities the authority to ban or regulate commercial cannabis activity within their city or county limits. For instance, the State of California has 482 cities and 58 counties for a total of 540 different municipalities. Each municipality has their own set of laws and there are still over more than half of the 482 cities in California that have outlawed dispensaries, deliveries, or any type of cannabis sales despite the recent state law, Proposition 64, which legalized recreational cannabis businesses.
To add insult to injury, cannabis is technically still federally illegal since it is considered a Schedule I Controlled Substance under the Controlled Substances Act. Because of its federal status many landlords in the past have been apprehensive about renting their property to cannabis businesses. It can often cause complications if there is a loan on the property. Typically, lenders will get what is referred to as a “rent roll” on a frequent basis from their borrowers. If a lender such as a bank discovers that one of the tenants in a building that they have a loan on is a cannabis business, they can typically call the loan “due” in which case the borrower has to pay off the entire balance immediately. As you can imagine, this is less than ideal and can often be reason enough for a property owner to decide against leasing their property out to any cannabis businesses.
Supply & Demand of Limited Real Estate
The complex framework and extreme lack of available cities to do business in have created a disproportionate supply and demand. There are substantially more businesses that are trying to get locations and become licensed than there are viable locations that are eligible for commercial cannabis businesses. This overwhelming demand and undersupply of inventory have created a brand new and highly valuable asset class within the commercial real estate market more commonly referred to as “cannabis real estate” nowadays.
“Cannabis Real Estate is any property that is eligible to obtain licenses to operate a cannabis business.”
There are several different verticals within the cannabis industry supply chain and corresponding types of real estate such as cultivation, manufacturing, distribution, testing, retail, delivery, and adult use on site consumption.
Cannabis Industry Supply Chain in California
Cultivation is either grown “outdoor”, “greenhouse”, or “indoor”. Vacant land is most common for outdoor and greenhouse cultivation operations while warehouses and industrial space with a substantial power supply is required for indoor cultivation. Manufacturing is also done in commercial kitchen facilities or industrial warehouse space and also often requires more power for all the equipment used in the operation. Distribution also requires warehouse space, but typically doesn’t require as much power and can often be ran from other types of less industrial space such as flex or even office space if that is all that is available.
Most of the production side of the supply chain such as nurseries, indoor cultivation, manufacturing, and distribution require industrial type real estate typically ranging from as small as 1,000 square feet to as large as 100,000 square feet plus.
The Retail Vertical and It’s Unique Value
Retail operations are by and large the most difficult to accommodate due to the lack of viable locations, but they are also the most in demand and the least in supply. Most retail businesses are required to be a certain distance from schools, daycares, and other types of “sensitive uses” that have been identified by the city or county that is regulating the cannabis activities.
“Most retail locations in California see hundreds or thousands of people per day and sell anywhere from $100,000 per month to upwards of $1,000,000 per month in sales.” Additionally, to prevent oversaturation and “clustering”, typically most jurisdictions require cannabis retail businesses to be at least 600ft to 1000ft away from each other. As a result, most cities or counties only have a couple or a few retail locations if they have any. The lack of abundant retail locations has caused the locations that are able to become licensed retailers to be very successful in terms of generating revenue. Most retail locations in California see hundreds or thousands of people per day and sell anywhere from $100,000 per month to upwards of $1,000,000 per month in sales
As a result of the success that many of these cannabis retailers have experienced (which from the landlord’s standpoint provides higher rent levels), there are now many landlords that are willing to take the risks associated with renting their property out to cannabis businesses.
Cannabis Real Estate Entitlement, Development, and Valuations
Since retail has appeared to emerge as the most stable vertical with consistent growth, real estate developers and other investment groups are realizing the amount of money that stands to be made from entitling properties and securing the necessary licenses to operate. They have also realized that they would prefer to get involved in the cannabis industry or at least investing in it through real estate instead of through actually “touching the plant”. Those involved have quickly learned that there are millions of dollars at stake for going through the development process and obtaining the necessary licenses to become operational. The cost of entitling a property for a proposed cannabis business can range anywhere from tens of thousands of dollars to over a million per location, and that is prior to doing any construction or tenant improvements. Frequently, even upon expenditure of these amounts, there is no guarantee that the applying party will secure the required license. Having said that, the value of a retail license in select markets can be upwards of ten million dollars or event substantially higher. Valuations of 1 to 2x gross revenues are certainly not unheard of presently.
Cannabis Real Estate “Comps” or Lack Thereof
The value of most cannabis businesses is very difficult to quantify since there are relatively very little “comps” or data on previous similar transactions. As an industry standard, most operational businesses are worth somewhere between a multiple of .5x to 2x of their annual gross revenuea . It’s difficult to base company valuations on the net profit or retained earnings since under IRS Tax Code 280E no cannabis business can deduct normal business expenses. As a result, most cannabis operators have to write off the majority of their expenses through the “Cost of Goods Sold” (“COGS”) since that is the only currently accepted type of deduction for cannabis businesses. This is not as much of an issue for cultivators or manufacturers since they can write off virtually everything that goes into their final product, but for retailers that are only able to write off the cost of the inventory that they are selling and this results in more difficulty and expense in operating.
Commercial Real Estate Service Providers
The most valuable type of asset in the cannabis real estate niche is an operational business that is generating revenue and has a “credit worthy tenant”. Given how new the cannabis industry is and how little time most businesses have been established it is very difficult to differentiate the good tenants from the bad ones. However, there are multiple publicly traded companies that have been born from the wave of legalization that has spread throughout the United States and even more private companies that are all competing against each other for the finite number of licenses available. In order to be able to help landlords vet interested parties looking to lease their property, several companies have been formed with the intention of providing asset management and advisory services to property owners and other investors in the cannabis industry. Our company, Cannabis Real Estate Consultants (www.cannabisrealestateconsultants.com) was formed with the intention of being able to assist our clients through various services such as technology, brokerage, compliance, government affairs, and other ancillary services as well.
“…Cannabis Real Estate Consultants was formed with the intention of being able to assist our clients through various services such as technology, brokerage, compliance, government affairs, and other ancillary services as well.”
Real Estate Investment Trusts (REIT) in Cannabis
In the past couple of years there are cannabis REIT’s that have been formed and are targeting various types of investments. We have seen some REIT’s in the cannabis industry aimed at only acquiring assets that are generating 12% to 15% cap rates and have a minimum value of $30mm. The management teams that have been assembled for these various companies are experienced real estate and investment professionals from other industries that have excelled in their space and see an opportunity in transitioning to the cannabis industry. Many analysts attribute the overwhelming success that many of these REIT’s have had to the transfer of professional talent from other industries that are extremely competitive and require talented and educated professionals. Consequently, there are more and more options that are becoming available for investors looking to get in on the green rush without actually touching the plant or really being “in the business”. As the industry continues to evolve and the inevitable legalization on the federal level takes place, there will be another surge in investment capital and equity searching the market for places to invest. The future is bright, and the winners stand to get in on the ground floor of a new era and one of the fastest growing industries in the world, all through real estate if they want, without ever touching one plant.
NUGL Money: The Public Cannabis Sector
Writers Credit: Larry Horwitz
In 2014 an index covering cannabis stocks was launched and it immediately shut down from the organic traffic spontaneously finding its way to the site. There were no real cannabis stocks, but the interest was strong and it continues to this very day.
Fast forward to 2019 and capital markets throughout the world now trade stocks in virtually every sector of the international cannabis industry, mid-tier underwriters provide analyst coverage and cannabis itself is now a recognized “sector” trading in unison in a somewhat predictable fashion contingent upon economic and political events.
At no time in the modern era has a previous criminal enterprise been legalized, capitalized, launched and then traded in the public securities markets. IT JUST DOES NOT HAPPEN! But it did.
To best develop a working model of cannabis capital markets, its instructive to examine how we arrived at our present circumstances and identify forces shaping the cannabis capital markets throughout the world. This allows some basic predictions for the future of the cannabis stock sector.
The International Capital Markets.
United States federal cannabis prohibition distorts which stock markets trade which stocks and as a result, price performance and market capitalizations then respond accordingly.
We are not kidding when we make the following statements:
- Companies with cannabis operations in the United States cannot trade on the NYSE or NASDAQ, but cannabis companies operating outside the United States have full access to these markets. So American companies do not have access to the American capital markets, but everyone else does!
- Companies with cannabis operations in the United States cannot trade in Australia (ASX) nor on the senior exchange in Canada, the Toronto Stock Exchange (TSX); again American companies do not have access to these trading platforms either, but the balance of the world does.
- So Companies with United States cannabis operations trade either on the OTC Bulletin Board (which is not even a stock exchange) or on the Canadian Stock Exchange (certainly the junior exchange in Canada relative to the TSX).
It is not unusual for companies to secure a joint (gotta love that word) listing, where for example a United States company might trade on the OTCBB and the CSE, but this does not change the fact that American companies are shunned by major stock exchanges throughout the world, including the exchanges in their own country. No one knows if or when this will change, but when it does no doubt it will fundamentally change the dynamic between the cannabis sector and the capital markets.
A Look Backward
November, 2014, remember that long ago date? This is when financial market professionals began to pay limited attention to cannabis as a trading sector. Viridian Capital (certainly one of the recognized leading observers of the space at that time), listed the following eight companies as the sector leaders:
- Mentor Capital: woops, they almost immediately took that one down when their numbers were challenged;
- Novus Acquisition & Development;
- Abattis Bioceuticals
- United Cannabis Corp.
- Cannabis Sativa, Inc.
- mCig, Inc.
- Greengro Technologies
- TerraTech Corp.
So here is where they are today:
- Novus has one employee and is trading at six cents.
- Abbattis is trading at two cents
- United Cannabis has 65 employees trading at 43 cents.
- Cannabis Sativa lost over $500,000 on gross revenues of $210,000 and is trading at $1.23 with a market cap of around $25m.
- MCig is trading at 3 cents with a market cap of $17m losing $3m on $3m in revenues.
- Greengro Technologies is no longer reporting but it still trades at one cent.
- TerraTech has lost 60% of its value in the last twelve months, with a $43m market cap trading at approximately 40 cents. It is certainly at the head of the 2014 class with $31m in revenues, but still operating at a substantial loss.
None of these companies would be mentioned as a leading cannabis stock today. So what happened? First the formation and then the subsequent invasion of the Northern Alliance.
The Northern Alliance Forms.
So unlike the United States, as all of us know, the country of Canada legalized cannabis throughout the country, putting its own “socialistic” spin with tightly controlled regulations and an oligopolistic approach to the industry (relative to the more free market, capitalist approach of the United States and other countries).
We use the term Northern Alliance because it has been a very well done partnership between the Canadian government and the industry, with the launch, support and continuation of what are now the largest, highest profile cannabis companies in the world. All of which occurred in the five years since November, 2014.
A number of companies moved quickly to take advantage of this government support and no doubt three leaders were Tilray, Aurora and Canopy. As the charts below illustrate, no doubt all of these companies have lot billions of dollars in market cap, but none of these companies are operating profitably with some continuing to lose substantial amounts. The “ball-park” metric is 20x gross revenues and that is a remarkable statement.
3 year Tilray ($2.5b market cap) $100m
3 year Aurora ($6.2b market cap) $300m plus in revenues
Canopy 3 years ($8.29b market cap) $300m revenues
3 year composite
5 year composite
The American Revolution
We characterize this phase as a revolution as it involves individual states legalizing recreational cannabis to the exclusion of the federal regulatory quagmire. So Colorado and Washington in 2012 and Alaska and Oregon in 2014 all went recreational, but did not move the proverbial needle in the capital markets whatsoever. The combined populations of these four states was half that of Canada and each state was its own isolated market assuring that American companies could not achieve the scale of the Canadian companies. And then California went recreational and everything changed.
So unlike 1776, this revolution started in California and it redefined the capital markets…for a period of time. Three major players, all of which exceeded the $1 billion market cap level were Med Men, Harvest and Acreage. While they are all not exclusive California operations, no doubt it was California recreational in 2016 that sent the movement of stock exhibited in the charts in motion.
Med Men two years
Harvest Health & Recreation, Inc. 3 years
Market cap: $891m
Acreage Holdings 3 year (ACRG.U:CNX)
‘DREAM’ Big In Vegas: WOW Organics Launch Party at MJBizCon Builds On The Magic of ‘Cannabis Wonderland’
Throwing an epic and memorable afterparty at MJBizCon is no small task. The combination of high-end expectations existing in Las Vegas, and those established by the hardworking and hard-partying annual BizCon crowd mean production and entertainment levels must be of the highest level for any company wanting to distinguish itself. After an extremely successful event debut last year, Dan Schmink of WOW Organics, a multi-state hemp extraction services and products company, knew he would have to go all out creatively to build on the success and momentum of ‘Cannabis Wonderland.’ His packed 2018 afterparty featured an immersive theme and a little bit of something for everyone attending. DREAM, his followup event this year on December 12th in Las Vegas, is just one example of how he is moving forward creatively and professionally in the cannabis industry.
I spoke to Dan about this years event, for which we are a media partner. About NUGL, he says “NUGL and I have a natural synergy! As a tech platform that aims to connect the cannabis industry, NUGL pairs well with WOW Organics’ inclusive business approach.”
(AUTHOR/EDITOR DISCLOSURE OF BIAS: I have worked with Dan in the past and like him very much)
Dan’s path into cannabis is a particularly interesting and inspirational one; a US Army veteran, it was the search for pain relief from combat injuries that led him to the plant and industry. “Before cannabis, I was in nursing school and working towards a career in the medical field.” Finding cannabis, however, changed his life course. “The effects were instant, my back pain disappeared, and I began researching as much as I could about this plant. To say it was life-changing to walk without pain is an understatement. Soon, I entered the cannabis industry on the ground floor as a budtender for a dispensary, helping to open it from day one.” Now he looks forward to similarly building his own company, WOW Organics, from the ground up. The DREAM event connects many of the dots that Dan incorporates into all of his work. “We’re focused on a data-driven, analytical approach to our brand’s development, so DREAM connected a lot of dots on the board.”
How are you building on or transcending the success of last years event?
“Last year’s event, ‘Cannabis Wonderland,’ was a resounding success. This year, the DREAM event is an interactive performance within our ‘Elemental Oasis of Gaia.’ For those who don’t know, Gaia is considered Mother Earth, the transcendent being that created all of existence from total chaos. The story of Gaia mirrors what the cannabis industry is going through right now – we’re creating a community from total chaos. This event, from the smallest details to the largest activations, is created to speak directly to the ideals we share. Done correctly, our guests will say ‘WOW!’ and feel that this event was made just for them.”
What, in your view, is distinct about this years BizCon, and how will that be reflected in your event?
“I consider MJ BizCon the current ‘Super Bowl’ of our industry. Each year, they step up their presentation and quality of attendees. WOW Organics is doing the same at DREAM for the afterparty scene. Our team pores over every detail to ensure that anything and everything you’d expect to have at a professional, high-end afterparty, is there. That means ample space heaters, a quick check-in line, coat check, food and drinks aplenty, and enough entertainment that you can start a conversation with anyone.”
Which BizCon attendees NEED to be at DREAM?
“Our guest list includes some very well known personalities within our community and a full roster of owners/founders, investors, community advocates, and genuinely good people. We design our event for all types of attendees. Anyone that wants to be at the best of the best, should attend DREAM.”
Besides throwing what he expects to be the best afterparty of the year, Dan’s overall mission for MJBizCon is to launch WOW Organics to the public and highlight their community sponsors and service. As a longstanding member of the Veteran advocate community. DREAM is a natural progression in his personal mission to help Veterans.
Who is WOW Organics?“Our goal is to act as a champion for selfless service. Our first goal is to help 500,00 Veterans through low-cost, no-cost, and charitable giveback programs. We do this by empowering our Veteran and Women-led teams to provide hemp products and services across the globe.” WOW Organics is putting people first. You can meet the full WOW Organics team at DREAM in Las Vegas this December 12th during MJ BizCon week.
Cresta: Executive Level Staffing Experience For The Cannabis Industry
CRESTA Management Services has been providing executive-level staffing services since its inception, and founder and CEO Josh Rothman saw an opportunity to incorporate his 15 years of experience when the tide of cannabis legalization began to sweep across North America. CRESTA responded by becoming one of the first established staffing agencies to pivot to supporting a fast-growing yet under-served market in need of experienced professionals. From offices in California and New York, CRESTA now builds high-performing teams for cannabis companies across the US. A particular focus of late has been the need for executive-level talent, especially as more executives from other industries transition to cannabis, or start considering it as access and revenue grow across the country.
The movement of workers of all levels that are considering changing jobs or fields parallels the boom in the automobile industry in the 1920s, the steel industry in the 1940s, and the dot com explosion of the 1990s; the cannabis industry is exciting, refreshing, and profitable. According to a recent Glassdoor study, job openings in the cannabis industry are increasing rapidly. In December 2018 alone, there were 1,512 job openings in the US, a 76 percent increase over the same period in the previous year. The same study found that available roles in the cannabis industry are highly diverse, and require an array of skills and backgrounds. From marketing and retail to research and agriculture, the cannabis industry is opening opportunities for very profitable ventures. Last year, Arizona brought in $406 million from medical cannabis. For recreational use, California brought in $2.75 billion and Colorado, $1.56 billion. The latest statistics show that a small, regulated cannabis dispensary business can average about $3 million in revenue per year.
The potential for profit is enormous, and allows employers to offer more options and higher salaries to potential job candidates. According to a study conducted by the Marijuana Policy Group, in 2015, over 18,000 full-time jobs were created in Colorado in the cannabis sector. While many cannabis industry jobs pay about $15 per hour for entry-level work, bud trimmers or collectors of harvest, other higher level, and higher-paying jobs are emerging. For example, a Greenhouse Production Manager can earn around $70,000 and a Director of Cultivation up to $100,000. Servicing top tier cannabis companies and well-funded startups, CRESTA directs much of its focus on finding the most elite seasoned professionals for its clients, including former executives from companies like ____ have all been placed into cannabis companies by CRESTA.
In an often volatile economic and regulatory landscape, CRESTA makes lasting connections that serve the needs of all parties, with over 15 recruiters incorporating their CEOs’ “relationships-first” approach. Before founding CRESTA, Josh served as Managing Partner and Director of Human Resource at HR Outsourcing and Recruiting companies. He has used that experience in building a robust array of the top ‘C-Level’ talent – CEOs, CFOs, and other chief executives – that are crucial to guiding and developing the fledgling legal cannabis industry into the market force prognosticators expect it can become. Bringing their decade-plus of experience and longstanding corporate relationships into the cannabis space, CRESTA has a unique advantage when it comes to executive placement for companies ready to grow apace with the market.
Cannabis Sales in a Time of Turmoil; Welcome to the Most Wonderful Time of the Year
Canna-Curious by Cleopatra Cohen
Times have been tough for our industry this last year, and I have seen an immense amount of suffering, like many brands, and products I once loved have disappeared. My email blasts are coming back with 30% bounce back rates, and the headlines are full of licensing violations, stock degradation, and financial loss around the Cannabis nation. I recently attended the NCIA Conference, and learned a staggering statistic; 80% of California Cannabis Sales and it’s subsequent revenue is currently in the Traditional Market, leaving just 20% of revenue to the Recreational Marketplace. The giants we looked up to, who started leading the charge, have fallen under attack, and have retreated to the drawing board for re-evaluation and re-positioning. I ask myself – what happened?
Basically, the California Cannabis industry has crapped the bed. The legislation came to clean up, but they took the crappy sheets and tried to flush them down the toilet, resulting in severe backpressure. The backed-up pipes and pressure resulted in blown-out bottom lines and flooded the traditional marketplace…with a bunch of crap. Because crap rolls downhill, everyone, including ancillary companies, has suffered from this. Think about it… If 80% of revenue is coming from traditional market sales, then why would brands spend money advertising in the recreational market? This month alone, over 400 licensed dispensaries were fined for backdoor sales, and most of the revenue paid in taxes is being spent on enforcement.
Last year in the industry, regarding revenue-analytics reported the highest-grossing week in cannabis sales to be the week before Thanksgiving, continuing to thrive through the last week of the year. I can imagine this trend will continue due to the “season of giving” and seasonal emotional lulls that always seem to result from shorter days and longer nights. Black Friday is known as such because it is when most retail stores go from being in the “red” to turning a profit and coming into the “black.” Green Friday is a new phenomenon, and I encourage EVERYONE in the market to participate, but also to gain an understanding of these economic waves. If you are operating in the recreational market, how you are taking advantage of these few weeks that could potentially bring you out of the red and into the “green”? Acting on this timing may help you meet crucial sales goals that investors are looking for.
Why Media & Advertising Is so Important:
Psychology experts report that you need to see a brand logo 21 times before you are familiarized and begin to trust their reputation. MedMen became as big as they are because they had aggressive marketing tactics that familiarized the public with their name and branding. From the billboards and city bus stops to their digital imprint, and in basic conversation, I end up thinking about MedMen on average of 3 times per day. They have successfully imprinted themselves in the minds of their local demographic in just one week, with a combination of guerrilla and mainstream marketing. Now, MedMen has also been under scrutiny for allegations of squandering away funds, and not adhering to federal guidelines regarding advertising, resulting in huge tax payouts & penalties. This reflected a loss in their overall company value, and they most definitely came in undervaluation and had to take aggressive loans just to stay afloat. While I do not recommend trying to write off your marketing spend on federal taxes (because of 280-E), I can give you a few tips to help you find a better way to reach your audience without breaking the bank this holiday season.
Throwing Spaghetti at the Wall: Stop It, Your Momma Raised You Better Than That!
One Marketing tactic that you should not subscribe to: “Throw spaghetti at the wall, and see what sticks.”
On average, brands should be spending about 3-4% of their gross monthly revenue on marketing. Some brands are conditioned to think that marketing is some pricey, mystical phenomenon that does not result in their desired ROI (return on investment) or is completely out of reach for their “small brand.” This is 100% false, and to be honest, the fate of your brand depends on how well you market it. Anyone can develop a product, and most companies have that before they have a solid plan on what to do with it. If no one knows about your product…then what? Sure, you may have relationships with tons of retailers, but they too want to know how you are marketing your brand so it actually moves off their shelf. Marketing is emotional intelligence, combined with statistical data. One of the secrets to marketing your brand effectively is creating a story – or a caption – that speaks to your audience. You can wow them with fancy colors and expensive packaging that feel ergonomically good, but in the end- the packaging is tossed out, and the consumer is left with one thing: The memory of how they felt.
If I am feeling sad, I want something uplifting and easy. If I am ready to paint the town, I might want something more extreme. If I am broke but I need the medicine, I want something cheap and effective. I am left with emotion at the end, and to gauge whether or not re-purchase the product, based on that feeling I am left with after I consumed the product. Figuring out who your customer is, and how to speak to them, is something you can also discover if you market with the right media company, that will share the tracked data they retrieve to help you laser focus in on your target demographic. An easy way to blow your marketing budget and get really discouraged is to metaphorically “throw spaghetti at the wall, just to see what sticks.” Be specific with your marketing budget, audience, and goals!
Guerilla Marketing + Viral Marketing + Mainstream Media = Integrated Marketing Strategy – With Profitable Results.
Guerilla and Viral Marketing both utilize mainstream media as a platform for development and exposure. Viral can be more cost-efficient than Guerilla Marketing – and both can reach consumers in memorable ways that translate to higher sales numbers. Understanding and applying these strategies in your marketing campaigns can provide distinct competitive advantages that can help you grow your brand and achieve your financial goals. All marketing uses some type of mainstream platform to reach your desired target demographic.
Using imagination and ingenuity, this style of marketing breaks conventional rules and can be much more affordable for smaller marketing budgets. Guerrilla marketing is the art of non-traditional marketing tactics – backed by science – to bypass traditional outlets and reach your target. The term “Guerilla” comes from none other than the likes of Che Guevara, made famous by his book “Guerilla Warfare,” where he describes new rules of engagement to outsmart opposing forces. For Example:
The power of “word of mouth” and “the referral” is a great example of Viral Marketing to reach your audience through your friends and contacts. We have all seen viral videos, memes, and campaigns, but the mystery is in how to get a piece of content to go viral. The key to this type of result is a mixture of timing and mainstream platforms. Your content will never go viral unless you utilize the right media platform, at the right time. For example, The best time to post an intended viral holiday campaign is before November 25th, 2019. NUGL Media provides a great platform for cannabis products and information, but it may not be the best platform for “Home Improvement” content.
Most cannabis brands are limited to the states in which their license resides, and sometimes even more hyper-local borders. For instance – the city of Los Angeles has approximately 100 to 150 licensed dispensaries at any given time. If your brand resides in 50% of those dispensaries, you are going to want to target customers that are within a few miles of the dispensaries where your product is located. If you distribute through delivery services, you may want to focus on the greater Los Angeles metropolitan area vs. hyperlocal efforts. Marketing campaigns also need to be implemented with timing and structure. For instance, if you want the best results, you should start advertising at least 90 days prior to your target time to reach your marketing goals. If you are running a Valentine’s Day sale, you’ll want to begin your marketing efforts in mainstream media no later than January 1st – with a small lead-in – and a powerful marketing push starting Feb 1st. This will subconsciously imprint your brand in the minds of your consumers, and your catchy campaign messages will be so familiar that consumers cannot resist your brand as a purchase option. Once purchased, they will share that message with their friends, who, in turn, share it with more people, fueling the cycle of exponential growth.
“DON’T HAVE A MARKETING BUDGET? THROW AN EVENT”- Richard Branson
Nothing sells your product better than the opportunity to get face-to-face with your consumers and retailers. Experiential marketing is one of the MOST effective tools that marketers have. Unfortunately, due to sampling laws, brands are no longer able to sample their products on-site, but they can utilize clever event planners and organizers, to purchase the products for their own personal use, and have them on-site for their event attendees to try out. I express to every brand I come across to get involved with their local event companies and team up with them to collaborate and create culture, community, and loyalty to your brand.
Integrated Marketing Strategy:
Warner Brothers created a successful integrated marketing campaign, creating fake news, fake political campaign websites for Harvey Dent, providing fans with shareable campaign posters, and other tools to create hype around its release of “The Dark Knight” in 2008. Using guerrilla, viral, and experiential marketing techniques to create marketing campaigns can leverage the power of the local and mainstream audience’s attention. Your job is to tell the story of your brand – or the story that you want your brand to tell. Understanding your audience, timing, and utilizing mainstream media platforms is crucial to your brands’ marketing success. With strict marketing and advertising laws, Cannabis brands can still achieve their desired results without breaking the bank, by just using these techniques.
With all of the current challenges this burgeoning new industry faces, we need to pull together now more than ever if we want to survive in a legitimate, thriving marketplace. WE have to create the change we wish to see — and get a hose to clean up all this crap!!
Stay tuned each week for more Canna-Curious topics, and tips for the canna-curious at heart.
Why Invest In Cannabis?
By: Steve Monaco, Chief Investment Officer at Wrazel
Intelligent investors and professional asset managers are always looking for new opportunities to diversify their portfolios and mitigate their risk exposure to traditional investment assets like stocks and bonds – typically accomplished with alternative assets. Alternative investments refer to a broad range of investment assets that are “non-correlated” to the price- movement and volatility of stocks and bonds.
Hedge-funds, real estate, franchises, private company stock and franchises are examples of alternative investments. Cannabis is an example of a newly emerging alternative asset class that all accredited investors should have some exposure to as part of a well-diversified portfolio.
Cannabidiol or CBD or Hemp is LEGAL and classified as therapeutic – so it’s free from the stigma attached to THC and marijuana.
Hemp is a unique plant with over 25,000 diverse uses worldwide! Hemp intersects more markets and industries globally than any other crop in the agricultural economy.
In fact, cannabis touches so many verticals that investors can focus their attention on which verticals are the best fit for their portfolios and investment goals.
Diversified Investors can have investments in virtually every aspect of the agricultural spectrum known as “seed to sale” knowing that it’s all investable.
? From genetic-level seed breeding
? to hemp cultivation, harvesting and drying
? to the process of distillation and extraction
? to thousands of CBD based products, cosmetics,
? to Real Estate opportunities that include investing in facilities and land for grow operations
? to “quality and consistency” testing facilities –
? to grow hardware and technology –
? to thousands of Pharma related applications –
? to virtual unlimited Culinary applications – way beyond edibles.
Ultimately, given the diversity of investment opportunities in the cannabis industry – the challenge for investors and their advisors is about finding which vertical(s) provide the “best fit” for their portfolios!
Wrazel is an online platform focused on cannabis businesses that helps investors, entrepreneurs, and cannabis business owners work together. As part of our efforts to facilitate deals and create business relationships in the cannabis space, we have monthly investor events. This week, we will be in Burbank, CA.
This event is a great opportunity to grow your network, meet Cannabis professionals, and learn about new and exciting opportunities in the industry.
If you are an investor, you can attend this event for free. This is one of the perks of being an accredited investor on the Wrazel Marketplace. Click here to see if you are eligible.
Hall of Flowers Season 3: A Curated Collection of Cannabis Business
Hall of Flowers launched ‘Season 3’ of it’s wildly popular business-to-business cannabis trade show this September 18th. Launched in 2018, the event is produced by a team responsible for producing some of the largest and most popular fashion industry trade shows, including ‘Agenda?‘, and the curation and attention to detail they’ve brought from their fashion experience manifests throughout.
The production commenced again at the Sonoma County Fairgrounds – the site of many larger events, including the annual Sonoma County Fair, which drew over 125,000 people this year, as well as many large cannabis industry shows and festivals. Hall of Flowers presents a much more intimate setting for direct business to business cannabis sales and networking, with about 6,000 industry attendees over the two days.
NUGL was on hand for the business action and festivities, and in between learning about exciting new products and innovations within the industry, meeting and connecting with some of the most creative and innovative minds and personalities in cannabis, and of course enjoying some of their creations and innovations, we also managed to talk to some folks about their products, work and experience at Hall of Flowers.
It seemed like everyone at the event stopped in at the Sonoma Pacific Outdoor Lounge. A big and welcoming tented area in a prime location with plenty of comfortable seats in the shade, it was impossible to miss, and difficult to pass up on two straight warm and sunny days. A dazzling floral arrangement by ?California Sister? featuring carnations, magnolias, and of course, cannabis made it that much easier to oblige the welcoming vibe. Once settled onto one of their many sofas, one could enjoy a regular stream of prerolls, dabs, accessories and swag from brands like Zkittles, ?Medicine Box?, and Big Sur Extracts, with help from their dispensary partner Heritage Mendicino, who facilitated the sampling.
Brit June, Director of Brand Relations for Sonoma Pacific, told us that a successful multifaceted production like the lounge that she helped to create is reflective of the ethos and mentality of Hall of Flowers as a whole. “The experience from the fashion show world, and implementing that into cannabis curates something that’s pretty special and doesn’t really exist in terms of that structure and attention to detail. It seems they have a criteria they’re trying to meet, not just internally, but in terms of progressing and directing the community while creating an environment thats super-friendly and very experiential”.
Another of the uniquely enjoyable experiences was Hall A, which ?featured a group of ‘arena booths’, where brands got the chance to operate a pop up shop style experience and exhibit. Showcasers included industry stalwarts like Lowell Farms and ?Rebel Coast? Winery, whose cannabis infused non-alcoholic beverages (?enjoyed ?by 2 Chainz) pair nicely with their non-infused, alcoholic Sunday Funday Sauvignon Blanc.
The trippiest booth in Hall A surely belonged to Pluto Extracts, whose pop-up featured an outer space inspiration and aesthetic that went right down to the NASA suits the brand reps were rocking. The thousand or so who lined up for a chance to check out their extracts and interplanetary display were inspired by the aesthetic design of the Hanu Stone vape carts they’ve launched their first extract pod with (rated for ‘space flight’ on the package, which is an accurate description of how far we blasted off). Co-founder Lincoln Barnett III was actually one of the first several employees of Hall of Flowers before they launched, and curated the initial 80 brands of the 2017 opening season. After participating in the first two iterations, he took a step back from direct production involvement to launch the Pluto cannabis experience. When he and co-founder Michael Garganese Jr. launched their brand, they conceived of Pluto with its position as the farthest planet (or ‘?planet?’) from the earth, as what they call a ‘scenic balcony from which to observe time and space’. “We’re really focused on the visuals and art behind our world, and how we can continually adapt and manipulate that to create experiences, both digitally and in person.” Barnett says. He has been working in the cannabis space since 2009, and his journey so far has taken him from learning to cultivate in his garage in Orange County to working with some of the biggest talents in cannabis, and now all the way to Pluto. Pluto’s immediate plans are to continue to collaborate with the best growers and extractors they can find, and help fill the growing niche market for top shelf extracts created by specific artists and farms.
There were numerous inspiring socially beneficial innovations and brands, such as Brother David’s, a not for profit farm whose mission and structure their representatives Les and Bobcat likened to ?Newman’s Own?, and which was founded by Dr. Bronners Soap Company CEO David Bronner, a longtime supporter of cannabis, psychedelics and ?other cool things?. Brother David’s mission and commitment, according to their website, is that ‘all profits from Brother David’s go toward protecting the land, lives, and communities of our cannabis family — promoting small-scale family farms practicing regenerative organic agriculture, and fighting a system that unjustly criminalizes cannabis.’
The halls and grounds were filled with all manner of tasty and interesting treats and experiences. Cold Lagunitas HiFi Hops – a non-alcoholic ‘beer’ infused with 5-10 milligrams of Absolute Extracts were available, and the thirsty crowd kept them serving nonstop. Vacation, a new brand partnership between Green Street, Sublime with Rome, and Dirty Heads gained a lot of attention and at least one very happy and lucky customer with a $50,000 cash raffle. If you were wandering around the grounds on day 2, you may have even bumped into cannabis entrepreneur/consumer and actor/producer Seth Rogen (you probably didn’t, there were people around him. But still. ?Seth Rogen? was there!!). Award-winning chefs Mike Magliano and The Franks curated a culinary experience on-site called Pantry, and a Speaker Series hosted panels from Shep Gordon, Jim Jones, Coltrane Curtis, Bong Appetit’s Vanessa Lavorato, Miss Grass’ Kate Miller, and Van der Pop’s April Pride.
At the end of the two hazy days, Hall of Flowers showed once again how and why it’s one of the most engaging, enjoyable and buzzworthy industry events. This year marked the first time that the second day was open to the general public, so even more cannabis consumers, enthusiasts and aspiring entrepreneurs can stay tuned and look forward to experiencing Season 4.
Our Work Towards Social Equity Comes Full-Circle At NCIA San Jose
A note from the editor: Joseph Chicas is an exceptional advocate and all-around person that we are excited to announce as a contributor for NUGL Magazine. He offers insight into the complex legalities of the cannabis industry and has deep knowledge of the labyrinthian hurdles facing business owners today.
I’m very excited to join the NUGL team and lead our efforts to inform readers about political and policy news affecting our industry.
NUGL is undergoing rapid transformations as we embark on our journey to help people find compliant cannabis products and connect the industry.
An Unexpected Journey Towards Fighting For Economic Justice And Equity
My own journey to this moment has not been a linear one. As a graduate of UCLA and USC, I never thought I’d find myself this deep in the cannabis industry. College was a fun time for consumption but the notion that cannabis would be a legit, thriving legal industry, was incomprehensible to me.
Reflecting back on my 10 years working for civic, academic and non-profit organizations, I realize that I’ve always worked at the intersection of cannabis and social justice throughout my career. Many of the families and communities I’ve worked with, especially in South Los Angeles, have been devasted by cannabis prohibition and the so-called “War on Drugs.”
With recreational cannabis legalization in California entering its second year, I’m most passionate about and interested in the potential to create economic opportunities that promise to reverse the negatives effects of the War on Drugs. The notion that millions of families across the U.S. have been devasted for an offense which is now legal and highly profitable leaves open a space for us to achieve economic justice.
My passion also extends to groups that we’ve left behind, especially our veteran community. As a former staff member for Mayor Eric Garcetti, I led our efforts to create the Office of Veterans Affairs, which to-date has resulted in over 10,000 veterans connecting with employers and over 12, 000 homeless veterans receiving housing. We’ve had to take on these efforts in large part because of the immense trauma our veterans face while serving overseas and their inability to access healthier alternatives to damaging opioids, such as medical cannabis.
In the time since leaving LA City Hall, I’ve gradually expanded my role in the cannabis industry and have focused on ensuring that consumers have access to safe, compliant and medically effective cannabis products. However, I understand that the road here is not easy. In California, a hodgepodge of legislation coupled with complex, ever-changing regulations makes it difficult for companies aiming to transition into the legal market. Understanding and adapting to the policy landscape is essential for survival. I hope to bring my policy and political perspectives to NUGL readers in order to add value to everyone’s individual mission in the cannabis industry.
As a co-founder and Executive Director of Cannabis Advising Partners, I’ve had the honor of working alongside a strong team of compliance experts led by CEO Gasper Guarrasi. Together, we’ve secured over 100 cannabis licenses for our clients in all licensing platforms.
While still at CAP, I hope to curate policy and political content for NUGL readers that serves as a real-time “report from the field.” Day in day out we walk our clients through the hurdles of our modern-day licensing and compliance issues, which essentially means our clients (and I am sure some of you) are building the plane as they are flying it.
Through this content, I hope to make the ride less bumpy, more enjoyable and even offer up some tips to help you ground your plane, or recalibrate to prepare for another liftoff.
Making connections in the industry is the first step towards educating yourself as a consumer or business owner. A great place to start is by looking at cannabis industry events and NCIA San Jose, held from July23-25th, happened to be one of the largest in California. Here’s a look at what you can learn just by showing up.
Coming Full-Circle At NCIA San Jose
For NUGL and thousands of other attendees, NCIA offered an opportunity to connect with old friends and new — all while learning about current trends in the industry and generating new business. Ultimately, the setting offered an opportunity for us to continue building community.
If you attended NCIA conferences prior to 2016, this year’s conference most assuredly offered a sharp contrast. In the past, the showroom was full of dispensaries and products. Fast forward to 2019 and it’s a whole new environment. The exhibit hall is now rampant with extraction equipment, manufacturing technology, and ancillary service providers.
Workshops featured leaders of multi-state operators, investors, regulators, and industry leaders sharing real-world examples of the challenges and opportunities they confront every day.
Attendees also heard from the former CEO of Canopy Growth, Bill Linton, who was recently ousted, despite taking that company through rapid growth and emerging as an industry leader. His candid reflections on what transpired and what the industry future holds was an unprecedented performance at NCIA. This seismic shift in the industry was definitely a sign of things to come.
The industry is clearly maturing before our very eyes. The introduction of the Canna Vest component within NCIA also demonstrates where things are heading. Investors and MSO’s packed the rooms and exchanged vital information everyone should hear.
Investor interest in the space is clearly on the rise, but the investment community is becoming savvier as it evaluates real versus perceived opportunities in the cannabis industry. As their interest in the industry rises, investors are looking intently at the makeup of teams and evaluating how companies adapt to regulatory environments, how they meet consumer demands, how they weather exponential growth in competition as well as many other key variables. A company’s ability to scale operations across multiple states and adapt to complex regulations is clearly an edge that investors are seeking in a prospective partner. Multi-state operators have secured the majority of investments in the space and are looking to acquire licensing and real estate assets across the nation — especially vertically integrated operations.
Aside from business investment, NCIA attendees were offered a healthy dose of information relating to other areas, from improving human resources to compliance. In the latter case, attendees had the opportunity to hear directly from the Chief of the Bureau of Cannabis Control (BCC), Lori Ajax. Ms. Ajax was joined by other state counterparts and Cat Packer, Executive Director of the LA City Department of Cannabis Regulation.
In her remarks, Ms. Ajax announced the launch of BCC’s new educational campaign, #Weedwise which aims to educate consumers about purchasing licensed products and other health and safety tips. We are looking to incorporate some of these campaigns within NUGL media channels. More to come on this.
Ms. Ajax also reported, much to the delight of the crowd, that BCC is beefing up their enforcement efforts through partnerships with other state agencies. Together, they will conduct more widespread and consistent compliance checks throughout the state.
Ms. Packer also echoed similar efforts that are underway in Los Angeles, especially as a coordinated effort with the Mayor’s Office and LA City Council. She mentioned enforcement tools they are using such as partnering with the Department of Water and Power to shut off power, and beefing up penalties against property owners. To augment such efforts, LA has also created an enforcement task force led by Los Angeles mayor Eric Garcetti. She also stressed the importance of city-state coordination in ensuring that the consistency of ownership changes so that individuals, especially social equity partners, are not circumvented in the process. Ms. Ajax stated that this has become a key issue at BCC and they will have a team dedicated to mitigating such issues.
Further, Ms. Packer shared some good news regarding consumption licenses. She stated that in the next several months the city will be looking at and announcing new provisions to approve consumption licenses in LA City. In the meantime, Los Angeles is focused on Phase 3 licensing, which will allow for 250 new retail licenses under the social equity program – a program I truly believe in and which offers a historic opportunity for individuals most affected by the War on Drugs.
All and all, NCIA was an incredible experience — definitely a full-circle moment for myself and, undoubtedly, others in attendance. Seeing the industry organize and grow makes fill with pride —I couldn’t be happier to be a part of this community.
There’s so much more to reflect on from NCIA, but I welcome you to share your takes via our digital channels. We would love to hear your experiences and, more importantly, any vital lessons you’d love to share with our audience.
I look forward to sharing more with you and growing together as we collectively seek to expand access to this powerful plant.
UMD Offers Country’s First Medical Marijuana Master’s Program
BALTIMORE (WJZ) — As more states legalize cannabis for medical use, the University of Maryland School of Pharmacy is launching the nation’s first master’s program to train students about the science and policies of medical marijuana.
The two-year program, based at the Universities at Shady Grove in Rockville, is designed for health care practitioners, scientists, regulators, dispensary owners and industry professionals.
Classes will be primarily held online, with an in-person symposium held each semester.
The university said in a news release that students who complete the program will be better equipped to contribute to research and policy decisions related to cannabis.
Classes begin August 26; applications for the program are due August 15.
This article originally appeared on baltimore.cbslocal.com
CHP officers turned cannabis delivery drivers reclaim $257,000 from US government
Two former California Highway Patrol officers who went into the marijuana business after leaving the department have reclaimed $257,733 in cash that was seized from them during a traffic stop on Interstate 5 last year, their attorney said.
U.S. Customs and Border Protection returned the money to former CHP officers Rick Barry and Brian Clemann after they sued the state to contest their September 2018 arrest.
Barry and Clemann own Wild Rivers Transport, a Eureka-based cannabis-delivery company. They opened the Humboldt County business to move product and cash for licensed California recreational and medical marijuana companies..
The federal government’s decision to return cash they carried when a CHP officer pulled them over last year was first reported by the Del Norte Triplicate.
Barry and Clemann only spent a few hours in custody after the traffic stop, but officers seized a firearm and money they carried from sales of cannabis oil in Los Angeles County.
The state turned the cash over to U.S. Customs and Border Patrol. Federal prosecutors did not file forfeiture proceedings, which obligated the customs agency to return the money, Barry and Clemann’s attorney said.
“CHP believed, mistakenly, that by turning the legally-derived funds over to federal authorities, they could put the money out of legal reach and hobble California’s emerging cannabis industry,” attorney Matthew Kumin said in a written statement. “The case underscores that CHP’s efforts to shore up a failed and widely reviled drug policy is coming to an end.”
Kumin credits the prosecutors’ decision to a Ninth Circuit Court of Appeals ruling in 2016, U.S. v. McIntosh, that prohibits the U.S. government from prosecuting conduct protected by state medical marijuana laws.
“The case highlights what every licensed medical cannabis operator operating in any state that allows medical cannabis, must know: that they can now successfully challenge any federal forfeiture involving cash or medical cannabis seized by or turned over to federal authorities,” Kumin said.
The CHP declined to discuss the specifics of the traffic stop that led to the seizure of cash, but issued a statement in January that “in order to legally transport cannabis in California for commercial purposes, a person must possess the appropriate (Bureau of Cannabis Control) license and comply with the BCC administrative regulations.”
Clemann in January told The Sacramento Bee that he and his partner were careful to follow state laws.
“We make sure they’re a licensed company,” he said. “We do our research, then we transport from A to B.”
Clemann and Barry aren’t out of hot water yet.
Both men face two misdemeanor charges filed February 25 in Stanislaus County Superior Court stemming from the incident, each offense connected to possession of a loaded, concealed firearm. They both have a court hearing set for July 15.
This article originally appeared on sacbee.com
The Marijuana Industry Looks Like the Fastest-Growing Job Market in the Country
At a time when the rest of the labor market appears to be tightening up, the marijuana industry is just getting started when it comes to job creation, according to a recent report.
Pot manufacturers and distributors, on both the recreational and medicinal sides, saw massive job creation in 2018, with 64,389 new positions added to the rolls. That brings to 211,000 the number of jobs directly related to the industry, part of a total of 296,000 in all related areas combined, industry site Leafly said in a report it compiled with Whitney Economics.
The U.S. economy in total created about 2.7 million new jobs in 2018, according to the Bureau of Labor Statistics, which does not count cannabis-related hiring because the substance is still considered a Schedule 1 narcotic at the federal level.
Hiring slowed to a crawl in February, with payrolls growing by just 20,000. That came even though the BLS said there were 7.3 million job openings against just 6.3 million considered unemployed in December, the most recent month for which data were available.
“Amid the roiling debate over American jobs, the legal cannabis industry remains a substantial and unrecognized engine of grassroots job creation,” the report’s authors wrote. “In 2019, America’s cannabis industry is one of the nation’s greatest economic success stories. That success deserves to be recognized and celebrated.”
The document was written by Bruce Barcott, Leafly’s deputy editor, and Whitney Economics founder Beau Whitney.
Because there is no official count the report had to use some unconventional methods to estimate the jobs total. They utilized state data, industry surveys, information from operators, proprietary data and other economic formulas.
What they found was stunning: a 44 percent gain in the workforce for 2018 that came on top of a 21 percent increase the previous year.
At 211,000, the total number of jobs compares favorably to other more mainstream occupations: there were 131,430 chefs in the country, for instance, along with 65,760 aerospace engineers and 40,000 computer operators, according to the most recent BLS counts.
“US marijuana legalization is a rare example of disruption creating jobs rather than destroying them,” Nick Colas, co-founder of DataTrek Research, said in a note Thursday that highlighted some of the cannabis jobs data. “With the US labor market recently showing signs of weakness and fears of an eventual recession in the wings, this is one industry that might soften the blow of an economic downturn.”
Colas expects pot-related job creation to continue as more states legalize the substance. He called cannabis “the fastest-growing labor market in the U.S.”
In recent days, New Jersey officials unveiled a plan that would legalize marijuana and set up a taxation structure. New York also has plans underway to add to the roster of 10 states that already have gone the legalization route. Sen. Cory Booker, a New Jersey Democrat and presidential candidate for the 2020 election, introduced a bill a few weeks ago that would legalize marijuana nationally.
Along with the bottom-line gains, the industry’s growth also offers an alternative to the push for young Americans to get a college degree, which has led to an explosion of student loan debt that now totals nearly $1.6 trillion.
“Americans with a college degree are basically at full employment, but most Americans do not have those credentials and their participation rates are lower than the former,” Colas wrote. “The marijuana industry offers solid paying positions at all levels of experience and educational attainment.”
Colas cited Glassdoor data showing that median pay in the cannabis industry is 11 percent above the median U.S. salary of $52,863. “Budtenders,” the staff members who work directly with customers, generally earn $12 to $16 an hour, according to the site that allows current and former employees to review their workplaces and list typical salaries.
At the other end of the spectrum, cultivation and extraction directors and outside sales representatives can earn well into six figures.
This article originally appeared on CNBC
Here’s What Last Week’s FDA CBD Hearing Really Means for Cannabis Stocks
Ten hours of testimony, more than 100 individuals speaking, and still a lot of unanswered questions. That’s the quick overview of the public hearing held by the U.S. Food and Drug Administration (FDA) last Friday to get feedback on regulations for cannabidiol (CBD).
This public hearing included presentations from several representatives of companies with a lot of money riding on what the FDA ultimately decides. Those companies included Corbus Pharmaceuticals (NASDAQ: CRBP), CV Sciences (NASDAQOTH: CVSI), GW Pharmaceuticals (NASDAQ: GWPH), Medical Marijuana (NASDAQOTH: MJNA), and Zynerba Pharmaceuticals (NASDAQ: ZYNE).
But what does last week’s FDA hearing really mean for cannabis stocks like these and the many others that hope to profit from what could soon be a multibillion-dollar U.S. hemp CBD market? Here are three things you can expect.
1. More confusion and volatility for longer than anyone would prefer
I wrote in a preview of the FDA hearing last week that the status of CBD products in the U.S. was currently “clear as mud.” It isn’t any clearer after the hearing. But no one should have expected any different.
The public hearing on Friday was just the first step for the FDA in establishing regulations for CBD. In one sense, the hearing isn’t even over yet. The FDA will continue to accept public comments on the hearing through July 2, 2019. There’s a lot of work to be done to define regulations that will bring clarity to the U.S. CBD industry.
The good news is that the FDA appears to recognize the need for urgency. Dr. Amy Abernathy, the FDA’s principal deputy commissioner and acting CIO, who is leading a working group to explore how CBD products could be sold legally, tweeted on Friday that “given the rapid expansion of the market, timely clarification of the path forward is critical.”
The bad news, though, is that the FDA probably won’t move nearly as quickly as the industry would like. Abernathy’s tweet also stated, “But it’s our responsibility to ensure that the regulatory path is scientifically sound and in the interest of public health.” That comment implies that the agency has a lot of data to review before it’s ready to finalize CBD regulations.
Expect continued confusion for the U.S. CBD industry for the rest of this year and quite likely even longer. That confusion will probably translate to high levels of volatility for many CBD stocks.
2. Cannabis-focused biotechs seem likely to be protected
I think it was important that three top biotechs focused on the development of cannabinoid drugs were selected by the FDA to participate in the hearing. Corbus Pharmaceuticals vice president of pharmaceutical development and manufacturing Robert Discordia made oral comments. Alice Mead, vice president of U.S. professional relations for GW Pharmaceuticals’ subsidiary Greenwich Biosciences, and Ray Mannion, vice president of manufacturing for Zynerba Pharmaceuticals, delivered formal presentations with slides.
Mead represented the only company that has actually won FDA approval for a CBD product, prescription drug Epidiolex, which treats two rare forms of epilepsy. She noted that “the FDA approval process is the only way to answer important questions about a drug,” adding that “no one knew CBD was potentially toxic to the liver until we [GW Pharmaceuticals] conducted clinical and preclinical studies.”
I suspect that Mead’s point resonated with FDA officials. The FDA wants data to help guide decisions. And biopharmaceutical companies have the clinical studies underway that can give the agency the data it needs.
I also think that the FDA doesn’t want to do anything that would negatively impact the efforts of drugmakers that are researching cannabinoid drugs. My prediction is that whatever comes out of the agency’s regulatory guidelines for CBD, it will be to the liking of cannabis-focused biotechs like Corbus, GW, and Zynerba.
3. Tighter regulations could hit food and beverage products the most
Acting FDA Commissioner Ned Sharpless perhaps made the most important statement of the day on Friday. He said, “There are important reasons to generally prohibit putting drugs in the food supply,” adding that cannabis compounds such as CBD aren’t exceptions.
It seems probable that the FDA will take the hardest line on CBD products that are included in foods and beverages. The FDA will want to ensure that CBD is safe and at what levels.
Don’t be surprised if the agency first establishes regulations for other types of CBD products, for example, cosmetics and pet products, then later finalizes regulations for CBD foods and beverages. Canada, which legalized adult-use recreational marijuana last year, still hasn’t finalized its regulations for cannabis-infused foods and beverages.
All of this could especially impact the stocks of companies that are banking on hemp CBD foods and beverages. New Age Beverages (NASDAQ: NBEV) shares skyrocketed last year with the company introducing a line of CBD beverages. But its stock has dropped in recent days with the questions raised by the FDA hearing. Tilray‘s (NASDAQ: TLRY) purchase of leading hemp CBD food company Manitoba Harvest could also look iffy at least in the near term in light of the FDA’s concerns.
What should investors do?
Does the uncertainty about what the FDA might do regarding CBD mean that investors should stay away from CBD-related stocks? Not necessarily. Actually, the lingering questions could create a great buying opportunity.
I think the best stocks to buy are those of companies that don’t have most of their fortunes riding on CBD foods and beverages. The FDA seems to have a higher level of uneasiness with CBD foods and beverages than with other CBD products.
One thing to keep in mind is that you need to have a long-term perspective. There’s no way to know how long the FDA will take to establish CBD regulations.
This article originally appeared on Yahoo Finance.
Making Moves – Big Percy Brings NUGL to the People
Big Percy is a force in the music industry who built his career by bringing some of the most notorious gangsta rappers in the game to mainstream America. Now, he’s set his sights on his biggest challenge yet: bringing cannabis culture into popular consciousness.
Big Percy has never been one to shrink from a challenge. He’s a mover, a shaker, the one leading the pack. It’s just part of who he is, and it’s served him well: his influence and strategic vision have allowed him to position his clients in the hearts, minds, and lives of mainstream America.
It’s that kind of authenticity and interconnectedness is what Big Percy aims to bring to his work with NUGL. Cannabis and social media might seem like an offbeat combination, but to Big Percy, it’s right in time. “Cannabis is a way of life,” he says. “It’s a lifestyle. Every asset and every facet of the world, every sector of the world, has something to do with cannabis.”
He makes a good point: the history of cannabis use by humans can be traced back all the way to 8,000 BCE, on the Oki Islands near Japan. Since that time, cannabis (as both the familiar marijuana plant and newly-hyped hemp) has played an important role in societies all over the globe. The legal market for cannabis is new, but the plant itself is, in a way, older than some of our most cherished parts of our humanity, like complex societies or even written language.
Viewed through that lens, bringing cannabis into the mainstream doesn’t seem like such a tall order. In fact, to Big Percy, it’s a necessity. “Me, my team and everything else, we’ve always been a part of it, but now we’re really stepping into the forefront.”
NUGL is certainly a part of that plan, but it’s not the only aspect of Big Percy’s Plan. Ask him what he’s working on, and he’ll give you a list: “The CBD, the magazine line, NUGL, and some other good things” are in the works, and those are just the highlights. Big Percy has never been one for small thinking, and he doesn’t intend to start now.
His arrival on the NUGL Board of Directors may seem sudden from the outside – to be fair, it is his first board position – but in the context of Big Percy’s overall vision, it makes perfect sense. He explains his thought process behind teaming up with the brand: “NUGL was just a place I had to be, you know? It was on my table for a year and change now, being through BiggA.” That relationship allowed Big Percy an inside look at the nuts and bolts of NUGL as an up-and-coming disruptor of the cannabis and social media scenes.
“I watched what they were doing,” Big Percy says of that year and change NUGL spent on his radar before he came on board in earnest. “I watched how they moved. I liked the structure they had, and I liked the comfort level that they gave me to be myself and still do the other things that I was doing.” That independence is important to Big Percy and what he stands for.
If you ask Big Percy what he values, he’ll be straight with you. “Being a man of your word,” he says with gravity. “Always stepping to the forefront – fearless – and if you say you’re gonna do something, you must complete.”
That commitment to authenticity, tenacity, and unabashed boldness is a part of Bigg Percy at his core, and he aims to bring those values with him to his work with NUGL. It’s not a far reach: NUGL was founded for the purpose of serving the vibrant and diverse cannabis community, honoring the individuality of users while promoting collaboration and cooperation among businesses and consumers alike.
That’s a mission that Big Percy can get behind. To him, cannabis is already here for the long haul, and bringing it into mainstream focus is the next logical step in an increasingly friendly legal climate. The blossoming legal market has opened up new opportunities for innovation within the industry, and Big Percy believes consumers are hungry for the coming change.
For Big Percy, NUGL is about more than just launching an app or publishing a magazine. It’s an opportunity to challenge people’s preconceptions of what the cannabis community is capable of and what the place of cannabis within everyday life is. “Cannabis is here,” he says, “and it’s here to stay.” On what’s to come for Big Percy at NUGL, he has this to say: “Don’t watch me, watch the moves I make.”
Media Veteran Suing Facebook Over Cannabis Ban, Represented Pro Bono By NORML’s David Holland
Cancer survivor and CBD medical consumer Felicia Palmer is taking a swing at the anti-cannabis establishment.
According to documents procured exclusively, Ms. Palmer, founder of the longest-running hip-hop news website in the world, SOHH.com, and her new company, Cannaramic Media, Inc., are commencing federal, civil action against Facebook, Inc., the social media behemoth running Facebook and Instagram, after a series of ads intended to promote the company’s educational Cannaramic Online Summit were rejected on the platforms, and the company’s follower page was disabled temporarily.
Interestingly, the suit is very timely, as the paperwork was completed on Thursday May 18th, the same day as the White House announced it is monitoring censorship by Facebook, and asking people to submit their complaints directly to the administration using this form.
Litigation attorney, David C. Holland, Esq., who serves as the Executive Director for the New York chapter of national marijuana advocacy organization, NORML, is representing the plaintiffs, Ms. Palmer and Cannaramic, pro bono. The suit is still open to other interested co-plaintiffs.
‘A Pattern Of Censorship’
Talking about the issue, Ms. Palmer and Mr. Holland explained that they see a “pattern of censorship and suppression of information and content pertaining to legal uses of cannabis across Facebook’s platform as well as that of the popular social media app, Instagram, also owned by Facebook.”
This is what has been outlined in the formal complaint: It was not just Ms. Palmer and Cannaramic’s rights to transmit information that were violated, but also those of Facebook users who had voluntarily chosen to get the information from the page.
The plaintiffs will be demanding a jury trial.
As per the legal documents, Palmer and Cannaramic Media quoted “deceptive acts and practices, and New York common-law fraud” as the formal reasons behind the complaint. “Such practices engaged in by Facebook have resulted in economic loss, censorship, and prevention of the dissemination over the Facebook platform by Plaintiffs of critical information pertaining to cannabis and matters of public health, scientific research and governmental policy which are important to the national interest,” the complaint reads.
Felicia Palmer FELICIA PALMER
In short, the 17-page document details how the Facebook algorithm systematically removes, bans and limits not only the promotion, but also the sharing of information related to legal cannabis, the industry, legalization, social equity and medical uses of marijuana, even though the plant is now legal in 33 states, the District of Columbia, several U.S. territories, and dozens of countries around the world.
This censorship of Cannaramic-related ads and the blocking of their Facebook page took place after the plaintiffs were induced to spend money to boost their posts promoting the free online educational summit, Palmer assured.
Commenting on this matter, Mr. Holland said access to information on cannabis is “vital to millions of everyday people nationwide who are now or will soon be impacted by the growing movement toward cannabis as a useful and valuable resource in our society.
“When a private company like Facebook (our largest resource for communication) prohibits the flow of this type of information, it essentially amounts to a threat to the public health, social welfare and economic vitality of our communities,” Mr. Holland concluded.
Facebook Is The New Public Square
One might wonder if there any legal precedent to hold Facebook, a non-governmental organization, to similar standards as public officials and government agencies. Well, there is.
In 2017, the Supreme Court of the United States acknowledged, in Packingham v. North Carolina, that social media in general, and Facebook in particular, have arisen to hold a position comparable to that of the traditional public forum:
A fundamental principle of the First Amendment is that all persons have access to places where they can speak and listen, and then, after reflection, speak and listen once more. The Court has sought to protect the right to speak in this spatial context. A basic rule, for example, is that a street or a park is a quintessential forum for the exercise of First Amendment rights …. Even in the modern era, these places are still essential venues for public gatherings to celebrate some views, to protest others, or simply to learn and inquire. While in the past there may have been difficulty in identifying the most important places (in a spatial sense) for the exchange of views, today the answer is clear. It is cyberspace–the “vast democratic forums of the Internet” in general, … and social media in particular. Seven in ten American adults use at least one Internet social networking service …. One of the most popular of these sites is Facebook, the site used by petitioner leading to his conviction in this case. According to sources cited to the Court in this case, Facebook has 1.79 billion active users …. This is about three times the population of North America
The Cannaramic Online Summit is scheduled to broadcast between May 20 and May 24, and features more than two dozen experts including Dr. Raphael Mechoulam; Dr. Monica Taing of Doctors for The Reform of Cannabis Regulations, Roz McCarthy of Minorities for Medical Marijuana; multi-platinum artist RedMan; Melissa Moore of the Drug Policy Alliance; UFC Champion Frank “The Legend” Shamrock; former NHL lineman Riley Cote; and U.S. Army combat veteran José Belén – yes, the same one who sued Jeff Sessions over cannabis’ Schedule I status.
Disclosure: While I am one of the speakers of the Cannaramic Online Summit, I have received no compensation from the company, and only learned about the news after a series of ads the company intended to run were rejected on Facebook and Instagram. At the time of the writing of this article, I have no involvement in the court case, and don’t plan to receive any sort of compensation from Cannaramic in the foreseeable future.
This article origin v ally appeared on Forbes
7 Statistics Entrepreneurs Need to Know About Legal Cannabis and CBD
How fast is the stigma of cannabis fading? Consider the numbers: Cannabis, whether for medical use or recreationally by adults, is legal in 33 states, Washington, D.C. and the U.S. territories of Guam and Puerto Rico. An estimated 73 million Americans live in the 10 states that have legalized for adult use. A record-high 62 percent of Americans agree cannabis should be legalized.
2019 marks the start of the second year of legal adult cannabis in California, the world’s largest legal market, yet consumers and business owners still must overcome significant hurdles. Cannabis consumers want to support the legal market but high prices, whopping taxes and impeded access to legal cannabis drives them to thriving illicit market. California has done a good job of telling consumers that cannabis is legal but has a long way to go to make it easy to get safe, legal and affordable cannabis.
Several studies have shown that high taxes are the most common driver of illicit cannabis purchases. An Eaze Insights survey of cannabis consumers found that a 5 percent reduction in California taxes on cannabis could lure 23 percent of illicit market buyers into the legal market. States looking to legalize should learn from California’s experience.
Below are some key stats to know about the legal use of cannabis and where we are as a nation right now:
Age groups are diversifying
Image Credit: Eaze
As more states allow cannabis for adults, new demographics of consumers are discovering the legal marketplace. Baby Boomers are one of the fastest growing segments, increasing by 25 percent over the past year.
Women are making their mark.
Image Credit: Eaze
Female cannabis consumers nearly doubled over 2018, and CBD is driving a new demographic of consumers who are turning to CBD for wellness needs. The growth of women entering the market outpaced men and continued the trend of increasing female participation, now making up 38 percent of cannabis consumers.
Cannabis is a wellness alternative.
Image Credit: Eaze
Cannabis products are used for a variety of wellness applications: overall, 71 percent of consumers reported they reduced (53 percent) or stopped (18 percent) their over-the-counter (OTC) pain treatment, and 60 percent have reduced or stopped their alcohol consumption.
It has holidays throughout the year.
Image Credit: Eaze
Curious what the most popular cannabis holidays are? Hint: It’s not what you think! The day before Thanksgiving, or “Green Wednesday,” was the most popular holiday for cannabis consumption in 2018 with 4/20 coming in second. Two Jewish holidays fall in the top 10 holidays list, including Sukkot and Hanukkah.
Social justice and inclusion efforts are critical.
Leaders in the cannabis industry are ensuring that social justice programs and diversity and inclusion efforts are a key part of the next phase of growth. We don’t want to leave behind those who have been affected by the “War on Drugs” prior to legal adult use in some states. As part of these efforts, Eaze is partnered with Code for America on 4/20 this year in a first-of-its kind partnership to clear 250,000 criminal records through the nonprofit’s Clear My Record program.
Consumers across the U.S. can now access it.
Since the legalization of hemp-derived CBD via the Farm Bill earlier this year, we’re seeing the product sold in traditional brick and mortar stores like Sephora, CVS, and The Vitamin Shoppe and we only expect that to continue. According to research by NORML, , 15 states have specifically legalized CBD for therapeutic purposes
Women are the faces of CBD brands.
Eaze Wellness is an online marketplace that ships hemp-derived CBD to 41 states across the U.S. More than 75 percent of the brands on the platform are female-led or have a female founder, including Mary’s Medicinals, Kush Queen, Kana and Hora Skin Care.
Whether you’ve been enjoying cannabis and its benefits for years, or are newly canna-curious, it’s important to be educated about the history of the industry, where we are today and what to expect in the future.
This article originally appeared on Green Entrepreneur
Millennials Are Beginning Cannabis Careers Through Summer Internships
An increasing number of North American cannabis companies are reaching out to college students, offering summer internships as an opportunity to get their foot in the door in the growing industry.
Students now are being given opportunities that students only 5 years ago could have only dreamed of!
A Full Resume Required
Upon graduating from college, students can no longer rely on their college credentials to land a job; experience and evidence of engagement are becoming increasingly important for recruiters as they seek to fill entry- and mid-level spots in their growing companies.
Internships within the cannabis industry provide new graduates a professional advantage because they have received a baseline of business acumen, have learned how to engage in professional environments, and have been able to focus their studies to meet their desired career path.
Students who have engaged in an internship, a form of experiential learning, enter industry job ready, resulting in a new crop of graduate ready to take to the cannabis industry.
An Industry Growing at Exponential Speeds
Average salaries in the cannabis industry also increased over 16% from 2017 to 2018, and aren’t showing any signs of slowing down. To anyone about to enter the professional job market, these statistics look promising.
Cannabis internships are going to be the new norm across college campuses as more states and countries legalize cannabis, and more educational institutions recognize and embrace the wealth of opportunity available to their students within the cannabis industry.
Summer Internships Offered in 2019
The following North American cannabis companies are offering summer internships to college students in 2019:
- Springbig is located in Boca Raton, FL, and is a cannabis dispensary CRM and loyalty rewards software company. Growing like wildfire, Springbig is looking to hire interns in the following departments: marketing, client services, development, and sales.
- CannaSafe is California’s #1 accredited cannabis testing laboratory. Located in Los Angeles, CannaSafe is looking to hire lab technicians and assistants for the summer. As an added enticement to future recruits, a few of their interns from last summer are returning this year with full-time positions!
- LeafLink is the cannabis industry’s #1 wholesale e-commerce platform and is looking to hire both a Graphic Design intern and a Sales & Development intern for their New York, NY office.
- Green Thumb Industries (CSE: GTII) is a national cannabis consumer packaged goods company and retailer located in Chicago. They are looking to hire a full-time Corporate Sales intern for what they call a “cannabis career immersion” experience, offering an in-depth look into the inner-workings of one of the largest multi-state cannabis companies in the world.
- High There! is cannabis social network, directory, and community, that just relaunched their app in April. They are looking for undergraduate students that are eager to learn about marketing in the cannabis industry to join their Venice, CA team.
- Canadian Cannabis Chamber, which is focused on promoting cannabis businesses and enabling policies, is hiring a summer student to act as a Marketing Analyst at their Calgary, Alberta office
- Cronos Group, which sells cannabis at the federal level in Canada, is hiring an HR Intern to work within their Human Resources Offices in Toronto.
- Tilray, a cannabis licensed producer located in Nanaimo, British Columbia, is offering a Health, Safety and Environment Assistant summer internship
Students who complete internships demonstrate a record of employability in their chosen field, planning and purpose for their chosen career field or industry, and oftentimes find themselves in full-time positions with the companies for which they interned.
Brush up your resume, students, and take advantage of these incredible opportunities to ensure you’re job-ready within the growing cannabis industry.
This article originally appeared on Green Market Report.
Punch Edibles Looking to Operate but Stuck in Limbo as It Awaits License
BY JOHN TUDHOPE
Thirty years ago, buying cannabis was difficult, expensive and illegal. Buying cannabis in 2019 is somewhere between picking up a prescription from a pharmacy and buying beer from a liquor store. Join columnist John Tudhope each week as he visits cannabis companies in Los Angeles and discusses the budding industry.
The first time I purchased cannabis was in my high school parking lot from an older guy in my Boy Scouts troop. It was a chocolate cannabis edible, wrapped in green foil, and it immediately stunk up any room I brought it into.
More important than the ethics behind my 15-year-old self buying drugs at school is the fact that an edible was my segue into the cannabis world. Cannabis-infused edibles are a category of cannabis products that have expanded rapidly in California’s new legal market, in part because of their accessibility for those trying cannabis for the first time and the ease with which foods can be infused with cannabis.
I have seen the standard brownie and gummy edible options cascade into products ranging from granola to gourmet truffles to canned beverages. Edibles are less harmful and more discreet than traditional cannabis because you don’t have to smoke to feel the effects.
Almost any food can be infused with tetrahydrocannabinol and cannabidiol, more commonly known as THC and CBD. These two active ingredients in cannabis are responsible for a variety of effects which can range from a simple “buzz” to anti-inflammatory effects, and are becoming more quantifiable as scientific research on cannabis progresses.
I visited Punch Edibles’ industrial kitchen and extraction facility to see how these products are manufactured and how the market has changed since legalization. Their cannabis-infused chocolates and fruit snacks contain nine servings and include 90 milligrams total of THC or CBD. This is a standard-dose edible and is just under the legal limit of 100 milligrams per product. Their edible is straightforward, well-made and sold in small colored boxes the size of floss containers.
When I visited their facility in Canoga Park I saw a business that creates a solid edible, but is hamstrung by strict regulations and bureaucracy moving at a snail’s pace – a trend I have observed in cannabis businesses throughout LA.
The City of Los Angeles Department of Cannabis Regulation is LA’s permitting body for cannabis businesses. Though California voters approved cannabis legalization in 2016, three years later, many cannabis manufacturing businesses have yet to receive the required local permits in LA. This means that currently, only a small number of businesses are even eligible to be manufacturing legally, and Punch is not one of them.
Punch has been selling cannabis-infused chocolate bars since 2014, but has been forbidden from producing their products since Dec. 31, 2017. If you’re confused, as was I, this means that since legalization, businesses have come to face much harsher and more prohibitive regulations. Despite Punch’s home in a state-of-the-art extraction facility, they would be breaking the law if they continued making their edible chocolates and gummies, so they don’t. Instead they have a stockpile of products made before the ban and are focusing on improving the capacity of their industrial kitchen so they can compete when they are fully licensed.
Their 7,000-square-foot factory in the San Fernando Valley is at a standstill while they await permits. When I visited them, the preparation space was completely empty save for the seemingly untouched machines – it was a sight of unfulfilled potential.
Because LA has yet to issue manufacturing permits to businesses like Punch, the companies are in a state of limbo where they must spend hundreds of thousands of dollars to comply with strict regulations, but are not permitted to engage in any manufacturing activity. Andrew O’Donnell, the owner and founder of Punch, says the situation is costly and frustrating.
“What were they thinking? We have payroll, we have mortgages, we have all of these things. Were we just supposed to sit on our hands for nine months?” he said. “You need at least a million dollars.”
Though Punch seems to be surviving this less-than-ideal bureaucratic shutdown, my fear is that not all of LA’s cannabis edible manufacturers will be able to as well. O’Donnell said this situation is in fact hurting small businesses that are trying to be legally compliant.
“(The city) literally choked out all the small guys,” he said. “Not only the small guys, but the small guys that are trying to do it legally.”
Of course I would have liked to focus on the tastiness of a product, the kindness of the business owner or the enjoyable time I had walking through the factory, but unfortunately, above all, I felt a type of frustration. I felt the frustration of business owners who want to sell their product, comply with regulations and compete in the free market, but are currently stuck twiddling their thumbs and burning through cash while they wait for the city to give them a piece of paper.