Cannabis company executives speak to the industry’s trying times
- May 1, 2020: Vol. 7, Number 5

Cannabis company executives speak to the industry’s trying times

by contributing executives

The legalization of recreational and medical use of cannabis in Canada and several U.S. states has not created the expected demand, and oversupply of the crop has put pressure on both prices and the companies aiming to profit from the new industry. Marijuana stocks have been tumbling, with share prices of some of the biggest players falling as much as 70 percent — and that was before the COVID-19-inspired crash on Wall Street.

Some analysts, however, have deemed the recent plunge in pot stocks to be a buying opportunity for investors.

Future prospects for cannabis companies hinge, in part, on the creation of new revenue streams via more deals with beverage and tobacco companies, and the continuing trend of countries legalizing marijuana for medical and recreational uses. Growers are also pinning some hopes on the cultivation of hemp, the non-psychoactive fiber of the cannabis plant, extracted from the stem and used to make rope, building material, clothing, paper and other products.

Cannabis company executives, representing various branches of the business, have their own thoughts on the current issues facing their industry, as well as its future promise.


Jessica Bates, founder and CEO, Moon Mother Hemp

Which cannabis category or niche is showing the most promise over the next three or five years?

Within the cannabis sphere, I would say, without any doubt that CBD-based products are showing the most promise. Given the recent challenges of the coronavirus outbreak, I think we are going to see a shift away from unhealthy lifestyles and toward health consciousness and doing anything that boosts the immune system. We feel that people are going to start paying closer attention to what they are and are not putting in their bodies, and that also includes sometimes toxic pharmaceuticals. We believe that CBD is going to be chosen in lieu of some of the more traditional options, in terms of maintaining health and a robust immune system.


Sammy Dorf, co-founder and president, Verano Holdings

Cannabis is now legal for medical use in 33 states and recreational use in 10 states, yet the federal government still considers it a Schedule 1 drug. How injurious has this discrepancy — and uncertainty — been to cannabis companies and their investors?

Federal illegality effectively handcuffs the potential of any industry. The cannabis industry is so unique and impressive in that it has already shown so much promise while in the wake of federal illegality. Cannabis has demonstrated, in a short amount of time, that it can help improve quality of life, create employment opportunities across all skill levels, generate tax revenue, reduce crime, etc. Society as a whole pays the price for federal illegality, but it certainly creates extra complexity for us operators in the realm of banking, as just one example.


Michael Sassano, CEO of Solaris Farms, and chairman of Somai Pharmaceuticals

2019 was a challenging year for many businesses in the cannabis industry. Some predict this year could be worse. Do you concur? What is your 2020 forecast?

The industry faced a combination of hindrances in 2019, including high state taxes, burdensome state regulations, federal ambiguity and poor management. Nevertheless, cannabis sales have been increasing at a predictably high rate as companies work more effectively within set frameworks. Legal cannabis growers have found it difficult to be profitable without state assistance in reducing underground market players as this diverts market share away from business and tax dollars from the government. However, companies are keeping an eye on profitability while applying pressure to governments to make access to consumers easier and more affordable, and sales are trending upward. The United States and worldwide trend of legal sales will only improve, since we are far from reaching new demographics or the top level of legal and pharmaceutical sales.


Jeffrey Zucker, co-founder and president, Green Lion Partners

Stock prices of large companies such as Canopy Growth and Cronos Group have fallen by more than 65 percent since their earlier highs in 2019. What is driving the plunge? What could help change the course?

The plunge in cannabis stocks can largely be attributed to overregulation that has held back companies from thriving while also propping up the illicit market. We are starting to see Canadian and U.S. state officials realize the situation, and many are beginning to reform their policies. Additionally, in many states, licensing processes are arduous, lengthy and often unpredictable. Continued reform and improvement of policies and procedures is of paramount importance for the industry to truly succeed, especially improvement based on data gathered thus far versus what specific license-holders or legislators prefer.


Cody Ziering, co-founder, PAQcase

Cannabis is a highly regulated industry, meaning many factors, including fees and tax rates, are beyond the control of company executives. Does this work for or against the interests of cannabis companies, and in what ways?

Regulation is a blessing in a few respects and a curse for most of the rest for the cannabis industry. Regulation creates a set of standards that helps keep cannabis consistent and safe. However, regulations are usually created by those with little to no knowledge or experience with cannabis. This often leads to overregulation or laws that don’t make sense for the industry. Because of regulation, large markets like all of Canada, California and Colorado cannot sanitize and reuse packaging, which causes a tremendous amount of unnecessary waste. From my experience, regulators often require over-the-top restrictions that hinder innovation and impose excessive taxes that quell company growth, and a forced plant tag/tracking/tax system that seemed like a scheme designed by the Cosa Nostra itself. As with automobiles and alcohol, cannabis product standards should be required and tested for safe use — and that’s it. The economics of the market and its consumers will figure the rest out. Products that are well received and generate significant sales will survive and the rest will not.

For reprint and licensing requests for this article, Click Here.

Forgot your username or password?