Marijuana Business Executives Offer Advice In A Time Of Political Uncertainty
Forbes/January 23, 2019
President Trump voiced support for medical marijuana and states’ rights during his campaign, but Jeff Sessions, his pick for Attorney General, has opposed legalization, and will have the power to enforce the federal drug laws that could send people to prison. This political uncertainty adds a new level of risk to entrepreneurs who already operate in an evolving landscape that requires flexibility and creativity.
If it’s allowed to evolve, the legal cannabis market just in California, could top $4.5B in sales within 3-5 years of the first recreational shops opening there, and over $7B nationwide, according to analysis by Marijuana Business Daily.
The most important protection a company can undertake of course, is to painstakingly comply with state laws and regulations. Beyond that, here, industry executives weigh in on how marijuana entrepreneurs can protect themselves and their businesses in this ambiguous climate.
Michael Bologna, CEO of Green Lion Partners, a Denver-based business strategy firm focused on early stage development in the cannabis industry advises companies to find synergies:
“Companies should focus on aligning their vision with other companies and products that are complementary and allow them to remain agile within the industry’s changing framework to increase the likelihood of mutual success. Examples of these partnerships may be software and data sharing, co-branding products, or joint ventures for vertical integration.”
Frank Lane, President of CFN Media, a creative agency and media network in the industry advises industry companies to diversify to spread the risk, and keep meticulous records:
“First, diversification into ancillary businesses via equity investments creates less reliance on a single activity without distracting from the core business. Second, it’s important for companies to properly – or even excessively – document their transactions to create an audit trail and meet state and federal (banking) requirements.”
Nate Bradley, Executive Director of the California Cannabis Industry Association, an advocacy group supporting California’s cannabis industry and medical space on local, state and national levels tells cannabusinesses to proceed conservatively, especially in marketing:
“One of the biggest things people can do is be conservative in their branding. Products that give people the impression that they are being marketed to children will bring you a lot of unwanted attention from the government.”
Shauntel Ludwig, Director of Sales and Marketing for DaVinci Vaporizer, a dry herb vaporizer company based in Nevada, cautions companies to understand advertising laws.
“We’ve always marketed our line of vaporizers for aromatherapy use for legal herbs only. This allows the products to legally be sold in all 50 states without restriction.
To back up this up, we do sell herbs online as well as publish content including videos and an aromatherapy guide on how to use these herbs and what ailments are affected. Is this our core user base? Absolutely not. 99% of our customers use our vaporizers for cannabis consumption, but the federal government forces our hand on this so we are not considered paraphernalia. Don’t get me wrong though, vaping wild lettuce has some crazy effects!”
Seth Yakatan, CEO of Kalytera, a company developing synthetic CBD compounds focused on different diseases including Osteoporosis, Prader-Willi Syndrome, and Obesity says follow the letter of the law, expand to related businesses and if possible, do as his company has done:
“Turn to synthetic cannabinoids or small molecule derivatives, which could allow for similar results for medical patients and less overall risk for business owners given the federal illegality of cannabis.”