Marijuana Business Magazine - January 2017

January 2018 • Marijuana Business Magazine • 75 Don’t Ignore Canada Whether you’re con- sidering the Canadian market or simply look- ing for new ideas or metrics to apply to your business, you should watch the goings-on as the nation legalizes recreational cannabis this summer. Some key areas to consider, according to Miles Light, founding partner of Marijuana Policy Group (MPG), a Colorado firm that provides analysis, investment and policy advice to private and government clients: • Retail: Entrepreneurs will find plenty of business opportunities in retail. But those opportunities will vary greatly by province.That’s because each province is tasked with coming up with its own distribution and retail model, and some are more business friendly than others. Investors will find retail opportunities in Alberta,Manitoba, Newfoundland and British Columbia.They will be shut out in Ontario, Quebec and New Brunswick — which together account for almost two-thirds of Canada’s population. • Supply Versus Demand: Estimates of annual demand for recreational cannabis currently average 600 metric tons per year, but MPG found that actual demand will be much higher. A higher rate of consumption means revenue forecasts should be adjusted upward. It does not, however, mean there will be a bigger shortage. Light doubts it will take long for supply to meet demand. As in other markets, the key segment is 18- to 24-year-olds. By contrast, the fastest-growing segment in Colorado is seniors (over 60 years old), which could carry over to Canada. Another key seg- ment in the rec market will be males, who will account for about double the number of female users. • Medical Consumption: The market for MMJ will continue to be a significant force in the Canadian market. “Heavy users,” which Light defined as almost everyday use, consume most of the overall cannabis. Almost 40% of medical patients are “near daily” users compared with about 20% of recrea- tional consumers. Canada had over 200,000 medical marijuana patients as of mid-2017, the latest public data available, and that is sure to grow. As of late 2017, at least two major Canadian pharmacy chains had struck deals to sell MMJ to patients. ◆ Roger Fillion, Kristen Nichols, Omar Sacirbey, Bart Schaneman, Kelly Schmeer and John Schroyer contributed to this report. Take a Chance on Microdosing Microdosing can be a powerful tool for edibles makers that want to tap a new and growing customer demo- graphic, according to Jordan Tishler, president and chief medical officer at Inhale MD, a Boston medical practice specializing in cannabis therapeutics. Microdosing is exactly what it sounds like: Con- sumers seeking the hard-to-define “wellness” benefits ingest relatively small amounts of infused cannabis products containing, say, 1-2 milligrams of THC as opposed to the more common industry standard of 10 milligrams. These consumers are a burgeoning customer base for the cannabis industry and often include highly educated and wealthy purchasers.They are looking mostly for reliability in their infused products and usually are happy with one of the primary side benefits of microdoses: They don’t come with unwanted side-effects such as intoxication or extra calories from, say, brownies or chocolates. Daily microdose use,Tishler noted, can lead to daily consumption and potentially bigger sales figures for companies willing to explore this new niche. Be Organized in Planning Your Exit If you’re the owner or top executive of a marijuana busi- ness, leaving the company isn’t just an emotional decision. It’s also a strategic challenge. If done incorrectly, you could leave potential successors and employees in a tough spot, said Darren Weiss, general counsel for Maryland-based Verano Brands, a multi- state cannabis operator and manufacturer of infused products. The foundation to a good exit is recognizing the different types of strategies – including selling to a bigger company or passing the company on to a family member or friend – and identifying which one is best for you and the company. You want your company to continue to thrive. Another key factor is being well organized so your business is attractive to potential suitors. What buyer, for example, wouldn’t be deterred by a company’s inability to provide documents – articles of organization, financials, shareholder agreements, etc. – or other information in a timely and organized fashion? Owners seeking an exit should also seek to maximize the com- pany’s value, which Weiss said is simply done by increasing earn- ings and reducing risks. Ways to increase earnings include cutting discretionary expenses, systematizing business practices, instituting employee incentive programs and reducing owner compensation. Ways to reduce risk include making sure key employees stay on after you leave so that the company’s management remains stable. 8 9 10