After a tough year for most cannabis operators, attendees at MJBizCon 2023 said they aren’t banking on sweeping legislative reform such as the rescheduling of marijuana to grow their businesses in the coming year.
Rather, they are hoping for more incremental policy changes, such as SAFER Banking and new opportunities to open in emerging state markets.
They’re also shifting their attitudes away from viewing fellow operators as competition and instead looking to partner with them to find synergies.
“The best days are to come,” said Jesse Channon, chief commercial officer at New York-based multistate operator The Cannabist Co., formerly known as Columbia Care.
“There’s going to be a rising-tide-lifts-all-boats moment. I believe in that. If you don’t believe in that, you shouldn’t be in the industry.”
Federal reform = industry health
Tim Swail, the executive vice president of sales at Boveda, said even though the Minnesota-based business is an ancillary operation, the passage of SAFER Banking and its implications would be a huge boost to its clients – and, thus, would also benefit the company.
Boveda manufactures humidity-control packets for cannabis flower.
SAFER Banking or the rescheduling of marijuana – the latter would mean the industry would no longer be subject to the punitive Section 280E of the IRS tax code -would be a huge relief to Boveda’s clients, cannabis cultivators.
“Having them become healthier would be very beneficial and a growth catalyst for our particular segment that we’re in,” Swail said.
“Since we’re a packaging additive to their packaging, sometimes cost becomes an issue.”
Elmar Mair, co-founder and CEO of cultivation robotics and artificial intelligence company Neatleaf, said his California-headquartered business has grown in the past year because cash-strapped companies have been looking to cut costs and automate some aspects of their production processes.
If marijuana were rescheduled, Mair said, his clients would have better access to capital – and, as a result, would invest more in cultivation facilities.
“That would mean more growth, more facilities,” Mair said. “And that obviously helps a lot.”
Local market growth opportunities
The Cannabist Co.’s Channon said he’s looking forward to new state markets opening up.
“Our growth catalyst is all about accessibility,” Channon said.
“As we become accessible to more consumers, more consumers will access our products, which is the exponential growth opportunity, right?”
Ohio’s recent vote to legalize adult use is a great example, Channon said, and he’s keeping a close eye on New York’s evolving recreational market.
“I don’t know what level of access in New York exists for us over the next 30 months,” Channon said.
“But I can tell you it’s more access, which means it’s good for us.”
Fazle Quazi, founder and CEO of Boulderlamp (BLI) – a Colorado-based company that produces an LED grow light system that kills mold and yeast without the negative impacts of working under UV lights – said he’s also anticipating the growth of state markets.
Colorado cannabis cultivators can take advantage of electricity rebates and invest in new lighting systems, which means Quazi is able to demonstrate to them the benefits of replacing their old lighting rigs with his MoonWalker-branded grow lights.
The challenge, he said, is spreading the word.
Though there have been plenty of research studies showing that food producers and sellers can benefit from the lights, Quazi said, it would be a game changer if he could engage researchers at Colorado State University or elsewhere how effective his lighting system can be in cannabis grows.
“We have to prove that what we are saying about MoonWalker is true,” he said.
Community-building and partnerships
It’s been a very tough two years for Hawthorne Gardening Co., the cannabis subsidiary of Ohio-based lawn and garden titan Scotts Miracle-Gro.
Over the past 18 months, Hawthorne has laid off roughly 1,000 people, according to Chris Hagedorn, the company’s executive vice president and division president.
Hawthorne’s sales dropped by 40% in the quarter ending July 30, according to Scotts’ August earnings report, which drove down the parent company’s total sales by 6%.
Scotts Chair and CEO Jim Hagedorn said that rather than continue waiting for federal marijuana legalization – which the company initially thought would already have happened – Hawthorne’s strategy now is to build partnerships with cultivators, producers and other struggling cannabis companies.
“We’re talking about Ellis Island – like the huddled masses. We’re going to build a colony of every company that’s not worth s***,” Jim Hagedorn said, referring to the low stock prices in the cannabis industry.
“We’re going to build a completely integrated pot business.”
California-based legacy brand THC Design attended MJBizCon as a company for the first time this year with a similar perspective.
“Our biggest goal here is to start to network with a lot of our peers,” THC Design President Marlon Coburn said. “It’s obviously been a tough few years for the industry in general.
“It’s good to see how many ancillary businesses are here to support the industry.” (Full Story)