Cannabis Private Investment Summit West Highlights

May 14, 2018 |

Earlier this month I participated in the third Cannabis Private Investment Summit WEST in Beverly Hills. This family office summit series highlights the industry’s top entrepreneurs, technology innovations, and investment opportunities, and hosts a bevy of industry experts, entrepreneurs, and government enforcement officials to discuss the critical risks and opportunities investors should consider. I was honored to participate, and appreciated the chance to meet so many reputable people in the industry.

I spent the day attending informative sessions on issues ranging from regulations to financing and also spoke as part of the investor round table moderated by Charles Finnie of ROTH Capital. In addition to myself, Matt Hawkins from Cresco Capital Partners and Adam Verner of Springhouse, also participated in an engaging discussion.

Here are some highlights from both the panel and the event overall:

Due Diligence is More Important than Ever

While most investors are familiar with the concept of due diligence around any early-stage investment, it’s of paramount importance when looking at cannabis investments. The guidance for investors? Spend time with the founders and operators, see how they are using their capital, evaluate the team overall and make sure the right people are in place. The people are actually one of the most important pieces of the puzzle right now – having good management, good operating teams, and people that know and own different segments of the business is crucial.

Brand Building is the Key to Long Term Success

One thing currently lacking in the cannabis industry is branding – as a whole the industry is just too new and people don’t yet care about the brands or the packaging or the “story” behind a company. And building a brand of any kind takes time, which is why so many of the brands on the market today will unfortunately peter out and be replaced by a new iteration of companies that will start to build that credibility and loyal customer base.

Some at the CPIS event saw celebrity branding as the key to this, and others felt while it was certainly fine to associate with big names, it might not provide the emotional connection necessary for many to establish brand loyalty. While the road to branding saw different points of view, there was one theme we all seemed to agree on: brands are the long-term value play.

To Some, Prohibition of Recreational Cannabis Does Have an Upside

While this may seem contrary to everything that will keep the cannabis industry moving forward, it’s actually keeping a mass amount of capital from flooding the market, making it too frothy and thus challenging for anyone to see returns. This level of “prohibition” is also keeping some of the big players out – namely big tobacco, alcohol, and pharma companies – which some at the CPIS event felt will turn this industry into a conglomerate, quashing some of the small and mid size businesses that are scrappy and fighting for everything they have now. As an example, when you walk into a grocery store today, the majority of the items you see are actually owned by just a few mega corporations, making it hard for smaller brands to get traction. The current cannabis climate still offers a chance for smaller businesses to achieve success. So while prohibition isn’t something we want, it is preventing mass capital infusion, and allowing for smaller players to have a chance in the market.

I believe the cannabis industry has a bright future and a lot of upside, and I’d like to see us honor the past and use that to inform the future. By that I mean, interact with, and learn as much as possible, from those who have been growing and cultivating cannabis for a long time, in an artisanal manner. Those locally sourced perspectives have a lot to offer the industry as a whole as we move cannabis from the black market to the mainstream.

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