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ACG’s June webinar, “The Cannabis World from a Business Perspective,” covered some of the ins and outs of getting into the businesses – legally.
Interested in the next big thing? Then, it may be time to get interested in marijuana.
With 33 states having approved the sale of medical marijuana and 11 having OK’d recreational use, the industry is estimated to be on a trajectory towards $31.1 billion by 2024. Some polls show that up to 94 percent of Americans think marijuana should be approved across the board for recreational use.
In Missouri alone, the medical marijuana industry is projected at $17 million this year and up to $280 million by 2025. More than 62 percent of Missourians think that recreational use should be legal.
So, how to start? ACG’s June webinar, “The Cannabis World from a Business Perspective,” covered some of the ins and outs of getting into the businesses – legally. The conversation featured Erica Brune, president and owner of Lever 1, talking about human resources issues related to marijuana use in employees and Ed Schmults, CEO of Calyx Peak, a start-up marijuana product company based in Nevada that is expanding into Missouri. The discussion was moderated by Kris Kappel, a partner at Husch Blackwell.
Schmults’ background is corporate finance with companies such as Patagonia, FAO Schwartz, Red Envelope and REI. His interest in cannabis started with a headhunter conversation when he left his last corporate gig in 2018. The more he learned, the more passionate he became. He was also more and more convinced that the industry was worth his investment.
That’s not to say it’s an easy business to enter. There are still a wide range of rules and regulations surrounding cannabis that can be difficult to maneuver. Traditional capital is tricky to obtain, thanks to the fact that cannabis isn’t yet legal according to the federal government. Calyx Peak raised its funding through friends and family.
“It’s difficult to get a bank loan,” Schmults said. “That’s a federal problem. When the banks can be included it will be big.”
Another problem to solve regards the product itself. Growing marijuana isn’t like growing corn or soybeans. These are plants, not a crop, he said. Consistency is difficult achieve and maintain.
“We have 58 different testing criteria for each batch to pass,” Schmults said.
It’s also a difficult market because the product can’t be transported across state lines and each state has different packaging rules for each of the company’s products.
Brune was able to talk to attendees about human resources and legal issues surrounding employee usage of marijuana, regardless of the business. Several challenges face businesses: Owners and managers may have safety concerns if heavy equipment or transportation are a part of their companies; there are concerns around usage by employees on off hours, particularly when it is legal in adjoining states; even states where it is still illegal may issue medical marijuana exemptions.
Brune said she tells the clients that the best way to approach the issue is to have a written policy plan in place that can fall under a drugs and alcohol category. She also counsels businesses to consider not testing for marijuana and to have a second chance policy in place if they do random testing (so if an employee travels to a nearby state such as Colorado where recreational use is legal, that employee isn’t penalized for legal, off-hours usage).
Jun 22 2020