Licensed. Now what?
You get a license to grow, then to sell, now what? Respected industry magazine MJBiz highlighted the problem in their 2017 Factbook:
3 Business conditions are worsening for growers Though it’s still early days for the cannabis industry overall, the wholesale cultivation segment has already become saturated in large, mature markets like Colorado and Washington state. More growers entered the industry upon recreational legalization, and existing MMJ cultivators greatly expanded their operations. Despite rising adult-use sales, the increase in production proved even greater than demand – sending wholesale cannabis prices plummeting. Some cultivators that shelled out for expensive indoor facilities are finding that costs of production now exceed the market price per pound of cannabis. More than any other segment of the industry, wholesale cultivators that took our survey anticipate their financial conditions will worsen over the next 12 months. Investors appear to have taken notice as well, signaling their intentions to reign in investment activity within this segment of the industry.
Not good news for those without a suitable rejoinder to the investor question: "Now what?" Here is what institutional investors want to see: brand building efforts and creation of a "brand story": product development either in-house or through strategic partner; geographic development into markets at different stages of development; and build-out of a suitable executive team that includes individuals with both industry, finance, and marketing experience. Not all companies need to have all four in-place to thrive - the nature of companies in emerting market is that they are at different stages of their evolution. - but they must have credible plans that demonstrate that they have considered the requirements and are working on them.
posted...December 11, 2017