Recreational cannabis is now selling legally in California, and Canada is scheduled to open its national marijuana market later this year. The estimated 12B$ sales projection in North America translates to big opportunities for entrepreneurs and brands, with no clear favorites so far.
“There isn’t a legacy power structure,” said Mike Bologna, CEO of Dipstick Vapes, a vaporizer company. Each U.S. state brings its own individual opportunities because cannabis can’t cross state lines. Which brands, stores or strains will “win” is totally up for grabs he said.
The success of the Colorado and Washington cannabis markets and the lack of federal interference, has helped bring the idea of working with marijuana into the mainstream. “This year we will see the biggest influx yet of professionals from other industries jumping ship to join the legal cannabis industry,” predicted Leslie Bocskor, President of Electrum Partners, an advisory services firm specializing in cannabis and ancillary businesses. “This is a pivotal year,” he said. “In the future we will look back at 2018 as one of the major inflection points.”
The first entrepreneurs and companies to enter each market need to play by the rules, not just to make sure they don’t run afoul of the law, but also to establish a good reputation for the nascent industry said Jody Hall, founder of the Seattle edibles-maker GoodShip. The voting public needs to approve of how legal cannabis is being implemented she said, in order for the industry to grow.
As markets become established, a second generation of entrepreneurs will emerge quickly according to Wil Ralston, President of SinglePoint. His publicly-traded cannabis and technology holding company specializes in acquisitions of small to mid-sized companies with an emphasis on mobile technologies and emerging markets. “I believe we will start seeing more founders coming out of other cannabis companies that have been successful and branching out to start their own company,” he said.
Traditional investment banking and capital markets have been closed to cannabis companies, but with federal legalization in Canada, Nathaniel Gurien, CEO of FINCANN, predicts “a ‘gold-rush’ of access to capital and financing for cannabis enterprises, including “government partnership with private enterprise and banking.” His company makes compliant banking and payment solutions for the legal cannabis industry. Gurien also believes there will be a “fever of M&A activity” as cannabis businesses seek to consolidate their position in anticipation of eventual federal legalization in the United States.
Federal legalization in Canada is a double-edged sword for small business though, because it will attract large companies from the alcohol and tobacco industries to begin to invest in Canadian cannabis. If United States federal laws change, we’ll see the same happen in the U.S. market said Jeffrey Zucker, Co-Founder and President of Green Lion Partners, a Denver-based business strategy firm in the cannabis industry.
GreenWave Advisors which researches the cannabis industry says that could happen as early as 2021.