By John Schroyer and Becky Olson
More than 2,100 cannabusiness executives and major investors have descended on Chicago for the national Spring Marijuana Business Conference & Expo. After a rousing keynote by Steven Levitt, co-author of the bestselling book Freakonomics, session topics ranged from new markets to testing and labeling. Five key highlights:
1. The Megalithic Californian Market
California is often cited as the Wild West of cannabis due to a lack of statewide regulations for its medical marijuana industry, and the feds have taken notice, according to Dr. Lakisha Jenkins, president of the California Cannabis Association. In a panel discussion on the state’s $1 billion marijuana market, Jenkins discussed the feedback she has received from federal lawmakers with regard to marijuana’s status at the federal level. “If there’s any hope for change on a federal level…all (federal) eyes are on California and whether they can get their regulations in order,” Jenkins said.
2. Retail Lessons From Starbucks
Charles Cain, a former vice president with Starbucks, delivered a lengthy analysis on how marijuana companies can emulate best practices from other retail successful chains. He noted that thousands of franchises have opened successfully in recent years, despite the fact that 59% of new retail shops go under within five years of opening. “Your industry is going to change pretty rapidly… My guess is the five-year failure rate is going to be similar to the average, or possibly a little bit worse, just because of the uncertainties you’re going to run into,” Cain said. He also estimated that it will probably cost most retail marijuana shops $1.5 million to open a brand-new store.
3. Native American Launches
A three-member panel agreed that it’s likely that at least one Native American tribe will likely open a medical cannabis dispensary later this year, most probably in Washington State. And other tribes are very actively exploring further business possibilities in other states, including California and Arizona, the panel said. There are tribes who are thinking long-term when it comes to cannabis business opportunities, so any company looking to partner with tribes should be envisioning a potential national partnership, said Jeff Doctor, of the National Indian Cannabis Coalition.
4. New Markets: Illinois, New York & Nevada
The emerging cannabis market in Illinois is not the Promised Land for entrepreneurs looking to make quick money, according to Adam Bierman of MedMen. In a discussion about tapping the big new markets of New York, Illinois, and Nevada, Bierman asserted that licenses in the land of Lincoln are “assets to be held for when recreational (use) comes to the state,” and will not provide short term opportunities to “print money.” With the first dispensaries not expected to be operational until late 2015 or early 2016, it remains to be seen whether his assessment should be counted as pessimism or foresight.
5. Testing & Labeling
Cannabis testing expert speakers agreed that variances in potency results can be generally considered a standard, and as a consequence, product labels that identify numerical potency can be viewed as inaccurate. Michelle Sexton, of PhytaLab, and Ken Snoke, of Emerald Scientific, both suggested a more scientifically accurate description of potency should be a range. In other words, cannabis strains should be labeled as having between 10 and 20% THC or CBD, instead of precisely 15%, depending on the testing result and the product. “I’ve seen big dollar decisions being made based on these numbers being absolute. And they’re not,” Snoke said.
John Schroyer can be reached at [email protected]
Becky Olson can be reached at [email protected]