California cannabis market a challenge, but it’s not all doom and gloom

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Experts agree the California recreational marijuana market is extremely challenging because of high tax rates, huge illicit production and consumption as well as an uncertain economy amid the coronavirus pandemic.

But while much of this is unfair to legal marijuana business owners, one also must keep things in perspective: California is a new market with “brand-new baby regulations,” cannabis attorney Katy Young said Tuesday during the MJBizConNEXT Direct virtual conference.

“It’s a challenging environment, it’s difficult to make money, but it’s not impossible to turn a profit,” Young said. “Everyone is learning as we go along …. I do see the market improving over time as regulations mature.”

Young’s comments came during a panel discussion titled, “Key Market Insights to Embrace the Future. Searching for Stability: Surviving in California’s Cannabis Market.”

Ideally, of course, tax rates would be slashed, all municipalities would be required to allow rec sales and the illicit market would be squeezed out by statewide access to safe, high-quality and competitively priced products.

But, in the absence of major reforms in California, the experts hit on a number of key points in the search for stability in the market:

  • Young, managing partner of Ad Astra Law Group: A big enough war chest to survive the ups and downs. She also advised having a litigation budget.
  • Robert Hunt, principal of Linneae Holdings, a private equity firm: Manage your entire supply chain. Picking your vendors and suppliers is critical, he said. And “cash flow is king.”
  • Avis Bulbulyan, CEO of Siva Enterprises, a cannabis business development and consulting firm: Understand the line of business you’re in and your position in the supply chain – and understand the needs of others in the supply chain.
  • Virgil Grant, founder and CEO of California Cannabis West Coast, a Los Angeles-based marijuana operator: To plant your roots and grow a robust business, you need to understand the industry you’re operating in, plus the culture and people you’re servicing.

– Jeff Smith