A Place to Reconnect, Reflect, and Project
It was a time of reflection, reconnection, and projection for the 27,000 people who gathered at the 10th annual MJBizCon event in Las Vegas in October. For many, this event is referred to as a industry family reunion since it is the one time of year where everybody is under the same roof. Even with the savvy MJBiz app to help navigate through the massive exhibit floor and plan your agenda, there wasn’t enough time to get to everything. Regardless, this event allowed us to celebrate the achievements, address the challenges, and discuss how to move forward in this industry.
The main event featured more than 1,000 exhibitors occupying 250,000 square feet of space to showcase their innovative products and services to a wide array of attendees. Additionally, Hall of Flowers, a cannabis industry B2B show, partnered with MJBiz to bring a new element and experience for cannabis retailers and brand communities for networking and procurement.
Looking back five to eight years, it was typical to find expos like this filled with cultivation-dominated vendors and the floor filled with growers. While there were 159 marijuana cultivation products and service-based vendors, right behind it were 105 packaging, labeling, and supply vendors, 66 dispensary products and services, 62 facility design and components, 53 software and technology, and 43 extraction equipment vendors.
Other vendor categories not present at past shows were banking/payment processing, private equity/investment, real estate/insurance, and other compliance-related businesses. Attendees ranged from C-Suite executives, manufacturers, researchers, small/large cultivators, investors, celebrities representing their brands, consultants, to new market entrants.
A Growing Industry
There’s never been a more exciting time for the cannabis industry than right now. With more states legalizing, the market continues to show growth and expansion for existing and new businesses in the legal cannabis space. It became obvious that the cannabis industry has finally crossed over into a new realm as 29 states allowed cannabis businesses to remain open during the pandemic in 2020 when almost everything else was closed. Or that more states have legalized cannabis since the last election than the last three years combined.
Chris Walsh, CEO of MJBiz, addressed these things in his State of the Industry Predictions along with other highlights and trends for the year to come. In 2020, U.S. cannabis retail sales were estimated at about $20 billion and will be around $32 billion in 2022 according to MJBiz Daily. In the next four years alone, as new markets get established and begin to mature, sales are projected to reach more than $45 billion which would place cannabis over other leading industries such as craft beer and the National Football League.
For mature markets like Colorado, Washington, and Oregon there has been a dip in revenue as can be expected. To avoid this and being pigeon-holed in a single state, there are many companies that have structured themselves as multi-state operators. While having presence in multiple states not only allows for a brand to build presence and gain market share across the country, it is also advantageous since these companies can maintain and share intellectual property, processes, resources, etc. One of the leading MSOs is Curaleaf, currently operating in 23 states with Green Thumb Industries, Verano, Trulieve, and Cresco Labs following behind.
These conglomerates did not happen overnight and have often gone through a series of mergers and acquisitions, joint ventures, and other business transitions to get to where there are. With limited licenses available in each state, is there enough space to keep a level playing field for everyone?
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Cannabis industry consultant and strategic advisor Andrew DeAngelo led the panel discussion that examined whether cannabis culture can co-exist with big business. The panel included co-chief operating officer Jennifer Drake from Ayr Wellness; Swami Chaitanya, co-founder of Swami Select; Vladimir Bautista, co-founder of Happy Munkey; Wanda James, founder/CEO of Simply Pure; and Joe Bayern, Curaleaf’s CEO.
Whether a company is a David or Goliath, the message was clear in that there needs to be collaborative efforts from everyone in order to move forward while maintaining the integrity of the industry’s culture and respect for those who have made sacrifices that paved the way for the opportunities that exist today. Drake stated that there was a distinct difference in those who have been previously operating versus new state markets coming on board that have a clear path outlined for new entrants and legacy operators, while Baustista voiced how the two aspects of cannabis culture and big business should not be pinned against each other and should be thought of as allies rather than enemies.
Bayern acknowledged he was the underdog on the panel but felt there is a general misunderstanding on the outlook of Big Cannabis, at least as it pertains to Curaleaf. He reminded the audience that Curaleaf started out as a single location dispensary in New Jersey that was built around dispensing medical cannabis to help cancer patients from ground up and that even today, they still embrace a mission-based culture. “We are here to help improve the lives of our consumers everyday through advocacy and education around cannabis,” Bayern says.
The Curaleaf CEO went on further to point out that the industry needs to focus on the commonalities rather than the differences, supporting what Baustista said earlier, “the narrative and words matter.” Curaleaf has already implemented three programs targeted towards mentoring entrepreneurs trying to get into the cannabis industry, partnering with legacy entrepreneurs, minority, and female business owners and towards those who have minor criminal records due to marijuana possession.
“We have a unique opportunity and responsibility as an industry to be inclusive, as we build our businesses, to build this sector as we build our companies and to give back in the form of corporate responsibility, diversity, and inclusion in our workforces,” Drake added. Which raises the question: how effective will inclusion be in an industry that is so explicitly excluded? How successful will social-equity programs be when there is an issue of social inequality?
Equity and Inclusion
Equal opportunity is not the same as equal access. Clearly, as the data shows, there is a decline in women and minorities in the space. Wanda James unleashed the pink elephant and called out companies that say they have made these things a priority. “There’s not a company in the industry right now that can show that diversity has been a focus of what they’ve done. There is not a company in cannabis right now that can show where their board of directors . . . where their company is focused on diversity and women.”
She further mentioned what was not mentioned in the recap of 2020 — the worldwide protest over George Floyd and the Black Lives Matter movement. But when James called out for the African Americans in the audience to raise their hand to acknowledge the impact of the Black Lives Matter movement, there was sparse applause concurrent with awkward silence. It was as if these issues were fine out there in the world, but not here in the industry. It will be interesting to see how things develop moving forward and if the results will improve by the end of this year.
Federal Legalization on the Horizon
As far as federal legalization goes, it isn’t something that is likely to happen just yet. Saphira Galoob, executive director at the National Cannabis Roundtable, reviewed the current leading bills in Congress that include The Cannabis Administration and Opportunity Act (CAOA), The Marijuana Opportunity Reinvestment and Expungement Act (MORE), and The Secure and Fair Enforcement Act (SAFE Bank Act) of 2021.
While we wait and see how these unfold, best-selling author Michael Brubeck of Tipping the Scale, urges businesses to be proactive and implement things now rather than later to prepare for the transition such as acting if legalization is already here and putting best practices into action for manufacturing and quality assurance. President/CEO Steven Hawkins of the U.S. Cannabis Council encouraged business owners to be engaged and participate with local and state government, advocacy groups, and industry associations if they want to see the results they want. An example he gave was taxation and how federal legalization would affect businesses. What would something like this look like and how would it impact businesses? Having discussions with state officials on what the transition of something like this would roll out would be useful in preparing ahead of time. “The economics of our industry are going to be far more influential to members of Congress than anything else,” stated Galoob. Balancing aspects of business viability, integrity of state programs, social equity, and criminal justice, as well as showing that the cannabis economy is robust is the best way to get lawmakers’ attention.
While the industry continues to grow and morph, people will have to adapt as there will be a lot of moving parts. Some of the states to watch for on the medical front include Mississippi, Kansas, South Carolina, North Carolina, Wyoming, Nebraska, and Idaho.
Recreational market states to keep an eye on include Rhode Island, Maryland, Delaware, Oklahoma, Ohio, Pennsylvania, Missouri, North Dakota, and Arkansas. As the industry experiences growth and maturation, one can only hope that the people and entities within it do as well. There are many options when it comes to examining and learning from other industries and even more opportunities to learn from each other if we can focus on commonalities that will unite and produce solutions rather than the differences that cause fragmentation and segregation.
MJBizCon 2022 is set for November 15-18th at the Las Vegas Convention Center.
