Hemp’s been legalized and CBD products are trending. States are pulling in hundreds of millions in tax revenues from legal cannabis sales. At the same time, Federal restrictions still keep business operators in legal limbo and bans on medical cannabis research means US companies are lagging companies in countries like Israel where those studies are legal.
Here, senior cannabis executives weigh in on what keeps them up at night and what they hope for in the coming year
Billions of Dollars and Still Few Banks to Put it In
Access to banking and financial services is the backbone of every company that operates in the United States, said Derek Peterson, chief executive of Terra Tech, a vertically integrated cannabis agriculture company based in California. However, most cannabis businesses still do not have access to basic bank accounts or other financial services like lines of credit, due to federal laws. “Ultimately this affects the entire supply chain and keeps a tremendous amount of the business in the gray market,” he said, “If we're ever to move this industry out of the Dark Ages banking is a top priority.”
Being an entrepreneur in the cannabis business in 2019 is like raising an adolescent child, said Marji Chimes, chief marketing offer for Coda Signature, a manufacturer of cannabis-infused edibles, topicals and concentrates located in Colorado. “Down deep, you profoundly believe in your offspring but on the surface, it is challenging to manage on a daily basis,” said Chimes. And with regulations changing every day, it feels a bit like managing an adolescent’s mood swings. “One minute you know what to expect,” she said, “and the next minute it is something totally different.”
The constantly changing regulatory environment us still a big problem agrees Peter Vogel, chief executive of LeafWire,a Linkedin-like platform with 6,000 members for the cannabis industry, headquartered in Denver. Because cannabis is still federally illegal, entrepreneurs never know if their bank accounts will be shut down or their payment processing accounts will be turned off with no notice, he said. On the marketing side it's more of the same. YouTube pages can get deleted, marketing campaigns turned off, and shipments between states can be held-up or confiscated said Vogel. “Until the federal laws change,” he said, ”entrepreneurs in cannabis face multiple extra hurdles that other businesses take for granted”
CBD Facts vs. Hype
The most challenging aspects of being an entrepreneur in the cannabis/CBD space in 2019 will be balancing CBD science vs. CBD hype, according to Eric Lerner, director of business development, at Jay Pharma an Ontario-based biopharmaceutical company focused on cancer care & Co-Founder of Tikun Olam global, an Israeli company brining 10 years of medical research and products to the US. The science shows promise but cautiously optimistic companies need to follow the evidence and not give the public any false hope or make any unsubstantiated claims. ”Conducting well-controlled, peer-reviewed, double-blinded studies on human patients is the gold standard for companies looking to differentiate themselves in the space,” said Lerner.
2019 also brings new possibilities as medical and recreational markets open and expand across the country. Peter Barsoom, chief executive and founder of 1906, a Denver-based edibles company predicts seniors with leisure time and disposable income will replace stoners as tastemakers. That’s just one of the opportunities Barsoom sees for 2019. He also predicts cannabis will become a top 5 political campaign agenda item and will be one of the single biggest drivers of turnout across all parties. “I don’t know another issue where 60%+ agree,” he said.
Barsoom makes fast-acting edibles and is betting that the growth of edibles and smokeless cannabis products will continue to outpace flower and smokables in 2019 and 2020. Within the category, Barsoom predicts consumers will choose low-dose products designed to address a specific need such as sleep, relaxation, increased energy, etc.
The 2019 cannabis industry is in a consolidation and expansion frenzy, according to George Archos, chief executive of Verano Holdings, a vertically integrated operator of licensed cannabis facilities, so growing in a smart way, efficiently and effectively, is critical. The market is complex though. For operators who want to do business in more than one state, “there are a plethora of licensing applications to be filed, in addition to meeting strict build out deadlines once you are awarded or acquire a license,” Archos said. It’s a logistical challenge to attract, train and retain experienced talent he said, while securing financing, establishing best practices and building physical facilities, all at the same time.
But with states announcing record-breaking 2018 cannabis sales, it’s an opportunity as well.