Debra BorchardtLast week, many top leaders in cannabis converged on Miami for the Benzinga investor conference. Listening to the panels of experts in numerous sessions that focused on business, it would be easy to pull a muscle in one’s neck from the whipsaws of commentary and advice.
There was real talk about how bad things are in the industry followed by optimism for the future of the industry.
(Full disclosure: This editrix was a panel moderator for the event.)
How Bad Is It?
Some of the most sobering comments from panelists highlighted how, for some cannabis companies, equity currently has no value. Instead of talking about acquisitions, buyers are skipping over the companies and going straight to the lenders.
These conversations involve negotiating pennies on the dollar, and there are no talks of cash or even all-stock deals. A toxic combination of high-interest rate loans and high taxation has squeezed the green out of the green rush.
The discussion started to become almost a competition of who could top the next “Things are so bad…” comments.
One session highlighted that things were so bad some Canadian companies were applying to be able to sell cocaine to pharmacists and hospitals.
A panelist in another session told the audience to skip paying the IRS because the fines for not paying taxes were much less that the damage if you didn’t pay your lender. Now granted, telling an audience that’s in a federally illegal industry to do something illegal isn’t shocking to everyone, except that this is an industry that wants to be seen as legit.
How Sweet It Is
While one room was saying how bad things were, the other room was equally enthusiastic about the future of cannabis. Despite the drama at Twitter, the company sent two representatives to talk about advertising campaigns for cannabis companies that has generated great results. For example, Trulieve saw a 214% increase in web traffic after a Twitter campaign.
Uber was equally excited about the cannabis industry and delivery. It can’t bring the service to the United States, but its experiment in Canada is going well.
There was additional buzz about Maryland’s upcoming adult-use sales on July 1. It’s not an especially big market, but every new state is worth cheering about. There is also building anticipation for Pennsylvania’s move to legal adult-use sales. The early medical participants are just trying to hold on for that day.
There was also lots of interest in TerrAscend’s potential listing on the Toronto Stock Exchange. Jason Wild, chairman of TerrAscend, said that he believed many MSOs were watching from the sideline because if the TSX was comfortable with the risks, it opens up the company to a new pool of European institutional investors.
The move requires some restructuring, and it isn’t certain whether many more companies can take that path. Wild said, “If this goes off without a hitch, we will probably see more.”
If so, that would be sweet indeed.
At the end of the day, most people passionate about the industry are willing to suffer the slings and arrows of outrageous fortune.
Aye, there’s the rub of cannabis.
