Marijuana stigma receding among some big companies

cannabis partnership

By Omar Sacirbey

The giants of American business are getting more comfortable about partnering with marijuana-related companies, and they’re willing to go public about it.

In the course of a week, news broke that software giant Microsoft Corp. and Arrow Electronics, a Fortune 150 company, had teamed with marijuana-related businesses.

It may be the tip of the iceberg, as Corporate America angles to grab a share of the growing marijuana industry. That could mean partnership opportunities for established cannabis companies, as well as mergers and acquisitions.

“I believe we are going to see many more mainstream companies brave enough to explore getting into the cannabis industry, especially over the next 30 days,” said Tom Quigley, CEO of The Gluu, an online B2B marketplace in Tampa, Florida, which serves marijuana companies.

Quigley believes the changing attitudes within Corporate America are not random. Rather, they’re connected in large part to widespread speculation that the Drug Enforcement Administration may soon remove marijuana from Schedule 1, the federal government’s classification for “the most dangerous drugs.”

That could have major ramifications for those in the industry, especially when it comes to medical research and perhaps taxes and banking.

“This is something that a lot of major companies are watching,” Quigley said. “They realize there could be a big change, and they want to be involved as soon as they can.”

The latest corporate giant to take the plunge is Colorado-based Arrow, which manufactures and distributes electronic components and devices. It is teaming with MyDx, a San Diego maker of handheld chemical analyzers that allow consumers to check the potency of marijuana strains.

In a news release, MyDx announced last week it had struck a deal with Arrow under which the Fortune 150 company will help manufacture MyDx’s analyzers and provide other services as well as a line of credit.

The previous week, Los Angeles-based Kind Financial announced it was partnering with Microsoft to offer seed-to-sale tracking systems to government customers to keep tabs on marijuana commerce.

Both of these partnerships come at a time when more than half the states have approved medical marijuana programs and a number of states are weighing recreational MJ this fall, opening the door to additional cannabis revenues nationwide.

Within the marijuana industry, meanwhile, the specter of large corporations entering the business has stoked fears that a small number of corporate players will corner the market and drive out the smaller, more established businesses. Whatever the case, the involvement of large companies would change the face of the industry.

Corporate interest in cannabis

Corporate interest in cannabis isn’t new. The marijuana industry had been piquing corporate interest long before the DEA announced in April it would make a decision about whether or not it would change marijuana’s Schedule I status.

For example, several marijuana-related businesses said such relationships have existed for years now in the form of cannabis-related companies buying materials or using online platforms from mainstream companies. Before Arrow, MyDx used another company to manufacture its device, but didn’t tout the relationship.

Arrow warranted publicity because of its size, said Daniel Yazbeck, MyDx’s CEO. Arrow initially will produce 10,000 of the company’s analyzers, but could make more if there is demand, Yazbeck said.

Although Arrow did not try to stop MyDx from touting their relationship, the company wasn’t eager to publicize it either, Yazbeck said. “They’re approaching this cautiously. They’re happy to work with us, but they’re not going to come out and be vocal about their involvement with cannabis.”

Arrow did not issue a statement about the partnership and did not return calls seeking comment.

Quigley, the B2B CEO, noted that for more than a year he has been meeting people who work at major financial institutions like JP Morgan and Salomon Smith Barney at industry conference after-parties and other industry get-togethers. These Wall Street types are interested in getting into the cannabis industry, he said.

An important difference, Quigley noted, is that a year ago or so ago these people were coming to cannabis conferences out of their own personal interest. More recently, however, he thinks executives at financial institutions have been sending staffers to cannabis industry events to do some corporate reconnaissance.

“In the past, it was independents who were trying to fish on their own. But now I think more people are being sent by their supervisors,” Quigley said. JP Morgan and Salomon Smith Barney could not be immediately reached for comment.

Cannaphobia still exists

To be sure, corporate cannaphobia has not vanished. Social media giants such as Facebook and Instagram have shuttered cannabis-related accounts, and banks and insurance companies are shunning marijuana clients. Still, Microsoft and Arrow’s participation in the cannabis industry suggests that marijuana isn’t the radioactive subject it was only a few years ago.

“There is some movement on the stigma,” said Jeanne Sullivan, founder of Sullivan Adventures, a New York investment advisory firm following the cannabis industry. “The enlightened companies know how to seek the best-of-breed companies that are being built and formed today, opening the door for partnership, scale, revenue opportunities and (merger and acquisition) activity.”

She added: “Arrow’s home base is Colorado, so they know up close the economic opportunities that the cannabis industry is able to generate.”

While the MyDx-Arrow partnership symbolizes promise for the cannabis industry, it’s also good for MyDx.

Under the agreement, Arrow will manage MyDx’s supply chain, manufacture MyDx’s line of chemical analyzers, and provide the company credit that it can use for its products.

“It’s great for MyDx because they have a partner who can help them improve the quality of their devices, and scale up manufacturing for them,” said Quigley. “When you’re a small company and want to move to the next level, this is the kind of move you want to make.”

Sullivan believes that Microsoft and Arrow have broken new ground that will unleash more interest in the cannabis industry among mainstream businesses.

“These types of partnerships highlight the opportunities now and ahead for entrepreneurial companies serving the cannabis sector,” she said.

Omar Sacirbey can be reached at omars@mjbizmedia.com

4 comments on “Marijuana stigma receding among some big companies
  1. Lawrence D. Goodwin on

    Fascinating article, Omar. Please keep investigating this very deep rabbit hole. So far, over the past 20 years, the people or legislators in 25 of 50 states have voted in favor of medical and recreational commerce, recognizing the value of seedless female cannabis flowers—in open defiance of the 80-year federal “marihuana” ban. Let our leaders, political and corporate, not ever turn back this progress. And it’s only the beginning! There’s a lot more progress to make, especially for the benefit of America’s rural cannabis hemp farmers and small businesses everywhere. The basic raw materials of cannabis plants (the stalks’ strong fibers and pulp as well as the nutritious seeds from pollinated female flowers) are among the most valuable natural materials on Earth. That’s the whole truth. Corporate America, including major media companies that continue to pedal “marihuana” deception, have profited handsomely from cannabis prohibition. Just ask the big wig corporate synthetic pill pushers—whose most profitable medicines are often designed to mimic substances found naturally in opium poppy. Or the companies that laid off millions of expensive American factory workers then hired millions of cheap replacements in Asia or Latin America, destroying in the process America’s natural hemp textile industry. This federal-corporate tyranny waged against a few select plants and the eco-friendly commerce they generate—cannabis, coca and opium poppy—goes back more than 100 years, to the 1914 Harrison Narcotics Act. Pure tyranny exercised against free women and men is never conquered with ease.

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  2. Angela Lambert on

    In the late 60’s and 70’s just about used alcohol as the gateway drug and not marijuana. Now kids use medicine cabinets as gateway drugs. Marijuana can be used as medicine and recreationally with passing laws. I applaud the movement and am pleased to see corporate getting involved.

    Reply
  3. Angela on

    When big corporate America gets involved- there is a purpose. That purpose is to invest, support the people who’ve done all the trailblazing, risk-taking and sweat-equity – ONLY until those corporate companies have made them selves invaluable by digging deep into the small business community which made ALL of this evolving industry flourish. The next step after that is to control the industry through gouging their “partners” as time shows the highly lucrative profits it WILL generate. Big corporate America are Sharks, their purpose is to control and gain non-competition in the market place. Frankly, I pray and hope that the entrepreneurs who are getting contacted and vetted by these big companies are aware enough of the big corporate purpose. And that they act accordingly for the mom and pop, rural small business companies who DESERVE to fulfill this Right to be a part of the new industry. It sickens me to watch the free-for-all that is a thirsty corporate America scrambling for survival off the fruit of labor by the average American because they already trashed our economic system by rubbing shoulders within the banking industry essentially, f%#*ing every avenue of the American Dream for the entire working class.

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  4. De kompose on

    I was fired from my job because I was a patient. I lost everything. Now I’m on a mission to bring awareness about stigma against medical marijuana patients. We are not criminals we are people. Let me have my medicine.

    Reply

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