A few months back, Phyto Partners’ team attended the Canaccord Genuity Investment Conference in New York City. The level of interest from companies exploring how to enter the space and investors looking for the next big idea continues to grow with over 1,000 attendees and 100 presenting companies. Two of the largest takeaways we gathered from this full-day conference were – one, no one has the fool-proof way to be successful in this industry and two, regardless of how long-term the cannabis play is, everyone is excited about the momentum that’s building.
But after hours of presentations and one-on-one meetings, the biggest of the three takeaways was clearly that we are very early in the game and that there’s many ways to succeed in the industry. It was also apparent to me that almost everyone is still trying to figure it all out and that there was still ALOT to learn and understand about the industry, the plant itself, and how the industry will develop.
As we listened to corporate presentations and spoke to companies in the industry, we were able to get an understanding of the different strategies and parts of the value chain that present opportunities. A common theme, regardless of the business, was that Cannabis will be commoditized and margins will compress over time.
Thought leaders in the US cannabis industry such as Harvest, Acreage, Curaleaf, iAnthus, Green Thumb Industries, and SLANG all explained their strategy and mission. Each of these companies has a slightly different way of expanding and controlling the value chain. Harvest and Curaleaf similarly expand their reach through acquisition of retail and cultivation licenses and brands throughout the US, which keeps its cost of goods expense lower than players that are not vertically integrated. SLANG, on the other hand, is acquiring a portfolio of brands without going after production or retail licenses. It plans to become the Kraft or Yum Foods of the cannabis industry. There are many different strategies in the same industry that appear to be bringing success, and to bring in my second point, it’s very, very exciting.
Another overarching theme was US legalization, how and when that will play out. Lots of discussion about recent Congressional legislative efforts like the FARM Bill and the STATES Act being implemented and how that would change things. Most agreed that when and IF Federal laws change in favor of Cannabis legalization and normalization, the industry participants would benefit in many important ways and that Canadian LP’s would begin to acquire US MSO’s in an effort to grab marketshare in the US – the market everyone believes will be the largest and most vibrant Cannabis market.
With that thought… where do we go from here? I pose this question to you, the reader, because I certainly don’t have the answer. This nascent industry’s roads are being built as the industry grows. So as we explore these roads together, like with these MSO’s, I do believe there will be more than one route to get to the same ultimate destination- federal legalization.
