August 2018

FROM THE CEO'S DESK ¬ t seems not a day goes by in the cannabis industry without an announcement of a merger, a strategic partnership or a collaboration between organizations. These new agreements intersect industry niches, cross international borders, combine P&Ls and unite key execu- tives in new ventures. They are the hallmark of an industry experiencing explosive growth and striving to capture outsized opportunities. Or are they? Are the opportunities truly so compelling that all these partnerships are valid, long-term agreements that capture significant value otherwise lost? In many cases, I suspect, this M&A activity is fueled by something else: FOMO, or fear of missing out. When “partner- ship” is the name of the game, entrepreneurs and companies that have not joined the party can catch the fever, so to speak. If everyone else is doing it, what do they know that I don’t? There is a well-known economic phenomenon called the “winner’s curse.” The theory goes that the winner of a competitive auction typically overpays, driven by the fear of losing the bid. When spurred by other bidders, rational thought can be sideswiped by a convincing internal monologue that it will all be worth it once the deal is won. We are seeing some version of the “winner’s curse” at work in some of these partnerships. To be sure, many are sound and logical agreements, founded on strong synergies and a clear road map to making 1+1=3. Others may well have a hidden method to their madness, which is obscured to those of us not privy to the conversations in the boardroom. It’s still the early days of the cannabis industry, after all; most companies remain destined to go through several evolutions before we clearly understand their ultimate, mature state. Yet, while that sorting-out process continues, how do you distinguish partnership exuberance from solid decisions? More important, how do you ensure your company doesn’t fall into the FOMO trap? Focus on the things your organization does exceptionally well and that provide a strategic competitive advantage. When that goal is accomplished more efficiently and effectively via partnership with a trusted entity, then go for it! Otherwise, keep in mind that with all the opportunity, it would be easy to keep grabbing for straws and be convinced you are going to miss out if you don’t act fast. From there, it’s so very easy to talk yourself into a partnership that may not make sense. Whatever you’re doing, be sure you’re staying true to your core and those things that support your brand. Don’t grab at opportunities simply because of FOMO. That is the path that leads to distraction – and potential disaster. Cassandra Farrington President & CEO, MJBizDaily Partnership FOMO 8 • Marijuana Business Magazine • August 2018