As Black Lives Matter and similar movements shift the national conversation toward advancing social justice, the cannabis industry is not above reproach. From its inception, the exorbitantly high legal and financial barriers to entry consistently have favored those with unfettered access to private capital. Until now, only a small handful of players have possessed both the financial backing and legal expertise to navigate an increasingly complex web of regulations and licensing fees. In a constantly shifting legal landscape, these sky-high hurdles have maintained an unjust and unfair status quo. Meanwhile, would-be entrepreneurs without adequate cash and connections are left with little recourse in the race to get in on the multibillion-dollar “green rush.”
The growing fight against racial injustice has highlighted the need for social equity across all industries, and cannabis is no exception. Media outlets have amplified the message, with a recent episode of Hasan Minhaj’s Patriot Act (Netflix) pinpointing the fact “states are building systems that are good for giant weed companies but bad for everyone else.” One easily could substitute “good for wealthy and well-connected elites.”
Thankfully, change is on the horizon, with the following encouraging industry trends laying a promising foundation for more equal access.
A new wave of cannabis companies offers outside-the-box, shared-use solutions that make equal access to entrepreneurship a very real possibility. Multi-tasking, membership-based workspaces like Orange County, California’s My Green Network provide customizable turnkey start-up options designed to drastically lower the costs of entry. Many of the founders are seasoned entrepreneurs with the necessary expertise in both business-building and legal regulations to help guide newcomers toward success.
Changing investment landscape
In late 2019, the industry saw major corporate moves to monopolize and dominate a blossoming cannabis market. License acquisition was the name of the game, and hundreds of millions of dollars were poured into large corporate entities. However, over the past six months, investors have seen many companies fail to meet expectations in the effort to rapidly expand without considering operating costs and logistics. No longer will “everything be successful because it’s cannabis”; instead, business owners must learn how to present their finances like in all other industries. In many ways, this change promises to make the industry a more mainstream prospect with possibilities for traditional financing that could open the playing field to more entry-level entrepreneurs.
Wider product range
As the variety of investment opportunities begins to broaden, so does the variety of products investors seek to finance. Flower and vapes have performed well in new markets, but as markets mature and cannabis becomes more widely accepted, non-smokable products—specifically edibles, beverages, and topicals—quickly are gaining mass appeal. In fact, BDSA’s 2019 review of the Colorado cannabis industry, one of the oldest legal markets in the United States, showed a 20-percent decrease in flower market share between 2014 and 2018. By 2022, analysts predict concentrates and other non-flower products will take 64 percent of the U.S. market. The rising demand for increasingly diverse options means nearly unlimited possibilities for entrepreneurs.
The rise of nanotechnology
Research into and development of nanotechnology plays a contributing role in the rising popularity of edibles, beverages, topicals, and concentrates. The science-backed approach to cannabis aims to reduce the molecular size of beneficial plant extracts (mainly CBD and THC) for faster, more complete absorption by the human body. Instead of waiting an hour or more, consumers will be able to feel healing effects within minutes of drinking or topically applying plant-based elements. What’s more, nano-CBD and -THC can be absorbed more efficiently through the skin, as opposed to today’s delivery methods, which render up to 95 percent of active molecules ineffective. Widespread access to more effective technology means greater opportunity for success across the board, empowering entrepreneurs to craft a broad range of better-quality products targeting a wider variety of market segments.
Much has happened since January to shift and shape the landscape of modern cannabis entrepreneurship: the onslaught of COVID-19 and the widespread legal recognition of cannabis as an “essential” good; a stock market crash that saw cannabis stocks practically undisturbed amidst full economic lockdown; and the death of George Floyd at the hands of police resulting in the rise of a sweeping racial justice movement that spotlights the need for change across all industries. These historical milestones served to empower and encourage businesses that seek to harness modern market trends in an effort to create fair and equal access for all.
Time will tell which have done so successfully.
As co-founder and chief legal officer at My Green Network, James Shih plays a key role in developing the company’s direction and ensuring every aspect of the business serves the needs of cannabis entrepreneurs. An attorney specializing in investment, compliance, and business law, he has advised high-net-worth individuals, private equity firms, developers, and executives in investments valuing more than $1 billion.