June 6, 2018

Corporate Investment in Cannabis: A Different Perspective

June 6, 2018
There are many components to consider when investing in the ever emerging and expanding cannabis industry.

As legalization of cannabis takes root across the country, individual states are addressing the issue of corporate investment and consolidation differently. The cannabis industry was largely built on the backs of small businesses, many of which started out in the black market, suffered through criminalization, fought tooth and nail for legalization and finally built the loyal and dedicated market share we now have. One would be hard-pressed to not see the injustice of allowing the very community that initiated the market we have now to be squashed under the corporate steamrollers so many of us have been fighting against. Yet, consolidation is an important component of building a vibrant, healthy and sustainable marketplace.

Standardization and consistency are the greatest hedge we have against the ups and downs of this nascent industry, and as we have seen lately, we can continue to expect a volatile environment for some years to come. While corporations have their drawbacks, they additionally have valuable contributions to make, starting with the resources to begin implementing consistent standards, therefore laying the groundwork for the rest of the industry to follow suit. As each new state comes on line, they are attempting to address standards through a variety of lenses. One thing we can expect is that when federal legalization occurs, standards at cultivation facilities will be imposed if not already adopted. Without their existence, we run the risk of having unsafe and unsustainable environments. Here in Oregon, we see headline after headline spotlighting the uphill battle of an industry that just months ago was nothing less than the promised land, and many are suggesting that California will not be far behind. Colorado and Washington have suffered their bumps as well, and this has left many looking for answers. Stories are often more complex than their headlines and industries are more complex than their stars. Building an industry is a multifaceted process that rarely rests solely on the product that an industry represents. It is an economy unto itself with many necessary players, all of whom are critical to its success.

While a singular narrative has dominated cannabis since its inception, the benefits of others are starting to emerge. The industry of cannabis is not exclusively about the end product, and while much visibility has come from the excitement of the availability of this once illegal plant, if we move our focus just a few steps to the left we may be able to shed some light on some of the struggles many business owners are now facing. We may even be able to find some opportunity to help push us over the hump. One of the most exciting things this industry brings to the table is so much uncharted territory. For those in the thick of it, “exciting” may be replaced with “terrifying,” however, uncharted territory means the opportunity to draw the map. As states crafted their rules of legalization, one thing was clear: one of their primary concerns was how to handle the product once it was on the market. Shaping public opinion and demonstrating to a wavering federal government that the industry could be responsible was top priority. While we heavily regulated the tracking and distribution of cannabis products, little attention was paid to the actual process and systems of production. Energy grids were suddenly under strain with power companies desperately trying to keep up with this new demand. Agricultural land was quickly being bought up before communities had an opportunity to develop, or even understand, the infrastructure that would be required to handle the industrial aspect of the industry. In urban environments, the cost of warehouse space went through the roof as availability plummeted, and very quickly both entrepreneurs and public agencies were swimming in a sea of the unknown. Undoubtedly, this puts a strain on the industry and all those affiliated with it. It also is exactly where we should have landed, and exactly what offers up the next phase of development and opportunity as we move ahead.

This is the next narrative. This is the beginning of the chorus of voices needed to bring us into the next set of benchmarks for the legal cannabis market. Infrastructure, while admittedly far less sexy than that slim new vape pen, is what comes next. While we are in the midst of a shift towards consolidation, we are also looking at a shift in some influential voices bringing pressure on the drive towards federal legalization. We have in front of us the perfect storm, and part of our success will depend upon how well we build our infrastructure. While the messaging around industry responsibility has primarily been seated in distribution and consumption, we can only strengthen that message if we bring in safe, clean and efficient production alongside it. Working toward setting industry standards in this area not only sets the stage for producers to be FDA-ready, it can also have significant impact on stabilizing the market and ensuring a strong voice from industry founders. Though many of us view corporate entrance as negative, there are significant benefits that come with the scale, knowledge and cash corporations bring with them. These things bring baselines and with that comes consistency which, in this infant industry, many are still struggling with. They bring infrastructure and the ability to withstand trial and error, and perhaps most importantly, they bring the ability to expand the market share through notoriety and public awareness.

Author Bio:Anya Gordon is the CEO of GroTec Builders, an agriculture company that specializes in constructing and maintaining cannabis grow sites with the highest standards in safety and sustainability. Learn more atwww.grotecbuilders.com.


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