Given that cannabis is a federally illegal substance, it doesn’t come as a large shock that securing funding, placing advertisements, and reaping tax benefits can serve as difficult tasks for business owners in the space. The financial component of the U.S. cannabis industry, while increasingly well-funded and sought after for its myriad high-quality investment opportunities, continues to develop while federal, state, and local governments continuously adapt their approach to regulating the plant.
Here’s what cannabis industry experts have to say about the financial side of things:
Chris Bunka, CEO of Lexaria Bioscience Corp. (LXRP), a global leader in the production of edible cannabinoid consumer products with patents pending and granted in over 40 countries:
“Online shopping was just a dream twenty years ago, but in 2016, Americans spent nearly $400 billion online. New industries foster almost unimaginable new opportunities, and the newly legal cannabis industry is spurring innovation, billions in new tax revenue, and tens of thousands of job opportunities. If we include potential medical and wellness benefits, there is no question in my mind that the business opportunities in legal cannabis can be bigger than they were in online commerce.”
Leslie Bocskor, President of Electrum Partners, an advisory services firm specializing in medical and recreational cannabis and ancillary businesses:
“One national trend to keep an eye on is the growth of canna-tourism in states that have legalized cannabis for recreational use versus those that have not legalized. For example, in Nevada, dispensary sales are projected to grow at an annual growth rate of 22% over the next five years, from approximately $290 million in 2017 to $772.3 million by 2022 (according to research from New Frontier). A significant portion of the increase is directly attributed to tourism. Standing still and watching potential tourism revenue go elsewhere will put additional pressure on non-legal states to reevaluate their stance on prohibition.”
Richard Huang, Co-Founder of Cloudious9, a high-tech vaporizer company that developed the first-ever vaporizer with a built-in water filtration system that allows the user to burn or vaporize their product:
“It’s no secret that good financial partners, from credit card processor to banks, are essential to the sustainability of any business remotely related to the cannabis space. On a more personal insight, I find advertising costs are disproportionately higher in this space as well, due to the lack of access to mainstream advertising channels such as Facebook and Google ads. The lack of access in these systems means that you lack the ad optimization tools and methodology essential to optimize your ad spending. This just means businesses have to rely much more on instincts and needing additional margin to survive in the sub-optimal advertising environment. This also acts as a barrier to entry for startups with limited advertising budgets. Therefore, I suggest new entrepreneurs in this area to be cautious in simply doing their business analysis based on a healthy margin while taking heed of the additional costs associated with doing business in this field.”
Norman Olson, Director of Marketing & Business Affairs at Hightech Extracts, an engineering company developing systems for the manufacturing of extract-based products:
“Much is written about the financial side of the marijuana business. A good business plan is essential, and like a football game, it’s about the mundane things- blocking and tackling. On the retail side, is your store as clean and well merchandised as a Target Store? On the accounting side, are you maximizing the cost of goods sold for Federal deductions?”
Jim Pakulis, President of Lifestyle Delivery Systems, a vertically integrated cannabis company advancing the science of cannabis while focusing on top line revenue growth and cash flow in California:
“California is at an inflection point. Beginning January 1st, 2018, the state of California will be enforcing licensing laws which may decrease the number of producers and dispensaries in the state, while at the same time, we’ll see a tremendous increase in demand as Adult-Use cannabis can be used by California’s 39 million residents and 251 million visitors each year.”
