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Canna-Business Evolution: Massive Changes are Accelerating the Industry

Change is not only coming, it’s already here. In case you’ve missed some key highlights recently while celebrating 4/20, consider this:

  • President Trump supports states’ right regarding marijuana
  • Chuck Schumer introduces legislation to remove cannabis from DEA list of controlled substances
  • FDA poised to approve first cannabis-based drug

canna-business evolution

Several months ago the cannabis industry feared a potentially serious setback when Attorney General Jeff Sessions rescinded Obama-era memos guiding federal policy regarding marijuana laws. Since that time, however, numerous changes have occurred that appear to send a very positive signal for the industry that could be a tipping point for growth and future investment. These indicators are not only related to shifts in future policies, but also set the stage for a massive series of business-related changes that will redefine the cannabis field as we know it.

One of the most significant changes occurred in early April when Sen. Cory Gardner (R – Colorado) had a phone call with President Trump. According to Gardner, “Since the campaign, President Trump has consistently supported states’ rights to decide for themselves how best to approach marijuana. Late Wednesday, I received a commitment from the President that the Department of Justice’s rescission of the Cole memo will not impact Colorado’s legal marijuana industry. Furthermore, President Trump has assured me that he will support a federalism-based legislative solution to fix this states’ rights issue once and for all.”

As everyone in the industry knows, the foundational problem regarding the cultivation, manufacturing and sale of cannabis within the U.S. is a function of federal law where the DEA has listed marijuana as a schedule 1 narcotic. For many years, cannabis supporters have petitioned to lower the classification schedule of cannabis. Earlier this year, Senator Chuck Schumer (D – New York) introduced legislation that would remove marijuana from the DEA list of controlled substances, decriminalize cannabis at a federal level, and shift the decisions related to the legalization and regulation of cannabis to the states.

We’re also witnessing a potentially major advancement within the Food and Drug Administration (FDA). Earlier this month in an advisory committee meeting, an FDA panel unanimously (13-0) supported U.K.-based GW Pharmaceuticals’ cannabis-based drug Epidiolex. Which, is a drug that has shown promise in treating epilepsy and seizure disorders. Having this on the docket for consideration is a significant step forward in changing the perception of marijuana as a recreational-only drug while also supporting necessary changes at the federal level to shift cannabis out of the aforementioned DEA schedule 1 listing.

Although we don’t have a crystal ball, these recent events are significant signals that support policy changes within the federal government that could once and for all alter the landscape of the canna-business environment. When this happens, the pace of acceleration will skyrocket. Institutional investors will significantly ramp up their interest in supporting the cultivation, manufacturing/processing, distribution, and retail sale of cannabis. Instead of $1 million to $5 million investments, we’re like to see $100+ million investments attempting to build the equivalent of the next Amazon or Wal-Mart for the marijuana industry.

For smaller businesses and those still remaining in the black/gray market, all of this begs several fundamental questions related to business value:

  • How will you operate efficiently?
  • How will you differentiate in a sustainable manner?
  • How will you scale your business to compete and retain market share?
  • How will you leverage data and insights to make better, faster business decisions?
  • How will you do each of these prior things and also appease state’s law by being compliance and avoiding fines/license revocation?

We’re optimistic about the future of cannabis-related businesses. Not only do we want to see a marketplace where businesses of all sizes can maximize their value for customers, we want to see them Flourish!

Topics: Cannabis business, Regulations, Cannabis industry, Seed-to-sale