COVID-19 has dealt a severe blow to small businesses across all industries and sectors. The markets are shut down, people staying at home, demand, and supply worsening by each day – all this has resulted in a gloomy scenario for businesses. But the cannabis business also has its assertions that have been largely untouched by the crisis. Designhill conducted a panel discussion where the panel of experts from the cannabis business tells us why and what the future holds for this industry.
Now a few weeks after the coronavirus outbreak, most businesses have realized that chances of a near-term recovery from the crisis are not bright. It may take many more months before the markets bounce back to normal. However, the cannabis business is amongst the exceptions of this trend, although the industry needs to take some precautions.
Cannabis has found its use in multiple drugs, which is the main reason for this business still booming in the coronavirus crisis. The Food and Drug Administration has already approved the use of some of the derivative compounds. Cannabis drugs approved are Marinol (THC), Syndros (THC), Cesamet (nabilone), and Epidiolex (cannabidiol). As far as non-prescription use of cannabis is concerned, the derivatives from industrial hemp are legally permitted in several states and federally approved.
Therefore, unlike the sagging demand for other products or services, the demand for cannabis is only going upward these days. This is mainly because cannabis has been categorized as having medicinal value. In the US, recreational marijuana use has been made legal in 11 states and 14 states have allowed its restricted use.
Experts’ Opinion On Cannabis Scenario
To know what the experts of the cannabis business and industry have to say about the present crisis, Designhill asked for their opinion. This leading creative marketplace recently invited a panel of three experts for the discussion. The renowned personalities were Javier Hasse, the Managing Director at Benzinga Cannabis, Krista Whitley, the founder of CBD Caring, and Max Simon, the CEO at Green Flower.
They covered most of the cannabis business, market, industry, and other aspects during the exclusive panel discussion. The panelists talked about the current challenges in this industry, how it is affected by the crisis, and what strategies it should adopt during the pandemic. They also discussed government policies and the future of this business.
If you’ve missed attending the panel discussion, we present the video and excerpts of the discussion in this post.
Have A Look At The Video
Here Is How The Experts See The Cannabis Business And Industry Coping With The COVID-19 Crisis
Designhill: How do you see COVID impacting the cannabis industry by large?
Krista: Well, I think cannabis businesses at every level, whether it’s cultivation or dispensary brand extraction, has to immediately go into a crisis mode. I don’t think any of us had ever prepared ourselves for the crisis. We prepared ourselves for a variety of regulatory concerns, but I don’t think anyone thought the world would stop for six weeks. In the long term, I think COVID will permanently change the way that businesses handle hygiene and safety precautions.
The cannabis industry is better prepared for the crisis
As far as the cannabis industry is concerned, the crisis has shown how nimble this industry is. Many cannabis businesses have been able to be very fluid and continue serving cannabis consumers whether it is adult-use or medical use throughout all of the legal markets in the United States.
Javier: I agree with Krista that the cannabis industry was somewhat better prepared for the coronavirus crisis than many others, especially traditional industries. This is because the cannabis industry has always been forced to react quickly, change, and adapt to ever-evolving regulations, contexts, and legal frameworks. So, while there has been an impact of the crisis on this industry, it has been somewhat lower than in many other industries.
In many ways, the crisis has driven the demand for cannabis up. The demand for cannabis legal markets since the start of the COVID-19 pandemic has skyrocketed by two to five times as per the business reports. This is a crazy increase in sales and demand whether it’s a crystal with physical products or Macs, for instance with web property.
Max: Consumers, government, investors, and employers in the cannabis industry has shown phenomenal interest in this industry. The societal implications of COVID are impacting everybody. In the cannabis industry, though, we are seeing a whole new wave of adoption.
For example, I run an educational company Green Flower, which has been intending to partner with colleges and universities to power their cannabis curriculums. And for years, it was a very slow process. But in the last 60 days, we’ve signed three University partnerships to power their cannabis curriculums. This is because schools all of a sudden are saying cannabis is deemed an essential business by our governments. It was seen as a way to help people with anxiety and cope with this. It is generating a ton of tax revenue and job opportunities.
So, all of a sudden, cannabis has been thrust into this extremely positive light. It will push federal legalization forward in the United States. Also, it will result in a boom in the industry from all the commercial sides as well.
Designhill: Do you see it’s around time to legalize cannabis across the nation and federally recognize it?
Max: I would be shocked if cannabis doesn’t get legalized in the next term. I think we are in a state of the world now where revenue, economy, jobs, and tax money should get our world back into some kind of form of operating shape. Here, the cannabis industry employs hundreds of thousands of people already. It generates hundreds of millions in tax revenues for states. It is a product that people demand. And it’s something that has been so restricted to this point and still had those benefits. So, I think that regardless of who gets elected, I would be stunned if we don’t see federal legalization come in this next term.
Krista: I agree. A unique thing about the cannabis community is that when there’s a win, it is huge. For example, Max got a deal with the three universities, which is the mainstream adoption of cannabis. The win for Max is a win for the entire industry and every single entrepreneur who has started at a grassroots level, the community of cannabis, and the people,
I was encouraged by Alan Cain and his team. They had more people who wanted to donate money to families working in the cannabis industry during the coronavirus pandemic. That’s a wonderful thing to be part of a community and industry, where leaders in every city from Seattle to Denver to New York, wanted to give back. They made sure that those cannabis employees were able to feed their families. I think that is really exciting and very reflective of the core values.
Designhill: Do you see it being legalized as soon as possible or it will still take time in the federal policies?
Javier: Of course we have to federally legalize. We have been saying this for a while that cannabis was deemed essential in the US and in different countries where cannabis is legal. A lot more politicians and policymakers are getting behind the cause. We are starting to talk about more complex financial instruments such as Cannabis municipal bonds and not just tax revenue.
We are seeing the impact of cannabis business on the economy and especially in tough times like these. The world seems to be legalizing cannabis, and many countries legalized it in one form or another in the last few years. But I am not sure when it comes to the United States.
I’m not sure if Trump will legalize it or whoever comes next will do it. It is a tough call. We thought that when we saw the first tax dollars in Colorado come in, it would be like a domino effect. But it wasn’t, and the same thing happened in Washington and Oregon and California, and Massachusetts and Illinois.
The fact remains that the federal government doesn’t want to take the risk associated with legalizing cannabis.
Designhill: At Designhill we have served more than 220 clients from the cannabis industry as a small business since 2016. And we see a lot of people asking us how to grow in it. What are the growth hacks? How do we go about it, because we just thought to help them with the logos we help them with creating the brand.
So, what are the strategies and growth hacks that you’d like to share with entrepreneurs in this industry?
Krista: I would say this time is one of the best opportunities to start your cannabis business. This is because of our fragmented state system for THC and because CBD has only recently is kind of mainstream in all 50 state legalization and acceptance. That’s really where the opportunity lies. That’s where you can be a single mom on your couch and have an idea and start in your kitchen.
I didn’t have the luxury of not worrying about profit. I had a light bill and two small children I needed to pay for food on the table and so I think the good news is there are more opportunities and resources for entrepreneurs and Designhill.
What I would have given in 2014 to have a logo and pick colors and design your website. I had to watch YouTube tutorials on how to build a WordPress site because I couldn’t afford that. And so I think that’s where the opportunity is. If you’re someone who’s been sitting on the sidelines and excited about this or if you’ve got a day job and you can have a side hustle, or you are sitting at home all day, a channel that energy into creating something new and innovative. But always keep profit top of mind profit.
Designhill: Max, would you like to share your secrets and strategies or growth hacks with us?
Max: The cannabis industry is remarkably complex. It is very important to learn and get educated about all the different sectors. There are many different facets of the cannabis industry cultivation, CBD retail, manufacturing, distribution, and then all the ancillary services. So, I’ve genuinely learned to understand the complexity of the cannabis industry. Green Flower is a good resource but beyond that, the most important hack in cannabis is to get laser narrow with your focus. You see all the opportunities in this whole landscape and all the things that could happen. Therefore, it is so easy to want to go after all that stuff.
Zero in on your target audience
Instead, you should zero in on your audiences and target customers. Find out what is your number one or number two sales channel. Also, know what is the strategy that you can focus on. People fail as they end up going very wide, and having all these different irons in the fire, and none of them gain a lot of traction. In cannabis, you should narrow down that focus to get traction.
So at Green Flower, we started to narrow our focus on higher education as one channel. And it took us a year and a half to gain that traction.
Designhill: What do you have to share about your experiences with them and you also being part of the industry? What are the key marketing strategies that are there in this industry, which have helped brands to progress?
Javier: There are two key points to note here. Education about this industry is key. But the successful entrepreneurs in the cannabis business were focused on their job. People are excited when getting into the cannabis industry and call it cannabis, it’s marijuana, it’s a weed, it’s the pot, it’s whatever. It is a cool product per se. A lot of people get into the industry from an ancillary side, which could be software information, services, or data, or even physical security, whatever you want to do. You get excited about the prospect of growing cannabis or making cash.
Do what you already know
If you want to grow cannabis or make cannabis products, go do that. But don’t try to be the entire supply chain because you can’t. I mean, most will not succeed in every sub-sector of the industry. So, I recommend you try and put some thought into what you know how to do already, and convert that skill into cannabis. So if you’re an accountant, maybe become a cannabis accountant, don’t become a designer.
If you’re a designer don’t try to extract oil because that’s probably in a chemical engineer’s job. The leveraging of a brand to get into as many verticals as possible will help only a few very well known brands. The rest will probably fail because they lack the resources, knowledge, time, and focus to succeed in every vertical.
Designhill: Is there any silver lining for the industry of the cannabis industry specifically because of this covert crisis?
Max: The first thing is that we are now recognized as essential businesses. One of the hurdles that cannabis faces all the time is stigma. The stigma that prevents us from getting bank accounts, loans, being recognized as legitimate businesses. The silver lining in this is being deemed essential and respected by governments and kind of celebrated as an industry that can operate.
Cannabis sales skyrocket
One of the inspiring things is how the cannabis community has come together to try to demonstrate that they are good for the community. Now a lot of these businesses can maintain operations succeeding. My local dispensary has friends who say that their sales are up by 500% this month. They have a whole wave of new business of people trying out the products and telling their friends and being respected as a legitimate business.
A long-fought battle in the cannabis industry was the legitimacy that has come to the industry all of a sudden from this crisis. We went from being kind of a fringe and they often call it a sin industry. Whereas, that’s an essential medicine and something that’s providing a great service to our communities. And I think the cannabis industry has celebrated that fact.
But when it comes to changing the future of the industry, note that a lot of people were very surprised that cannabis was not included in the US federal stimulus package. But I was not surprised. If the government deems it federally illegal, no essential status, we’ll make that difference.
Krista: I spent way too many hours working in this industry. So I think every inch we can get it. Max’s example of getting a deal with the three universities.is certainly the first tangible business. When I heard I couldn’t be happier for him. I hope it leads to 30 universities by the time this is done for their team because that is a win for all of us.
Legitimization of cannabis likely
Max: I think we’ve all spent a lot of time understanding government in the spectrum of the cannabis industry. And one of my conclusions is that the governments operate based on priority, on what they believe priorities are. So if I look at the state of the world right now, and I look at what the priorities of the government are going to be. Its public health and safety. But it’s going to be such an emphasis on the economy getting back going again.
So, I do believe that cannabis is now being deemed an essential business. This is then translating into the economic boom. Therefore, I feel more optimistic than I’ve ever been about the legalization of cannabis kicking into gear.
For five years, I thought the legalization is not going to happen. But I’ve completely flipped in the last few months and see what’s taking place. This is because the economic benefits that the cannabis industry provides and job creation is undeniable. And I think that the priority of the government to want to get the economy going again is going to tip this over the line.
Designhill: Do you agree that a lot of brands have been able to turn this adversity into an opportunity?
Krista: Absolutely. I would agree with Max in this regard. I think cannabis entrepreneurs for decades have been turning adversity into opportunity. And so certainly, you know, I think we’re continuing to do so.
Designhill: Has the years of being pushed by the government, no loans, and being on their own helped the industry to be prepared for situations like these?
Javier: We in the cannabis industry so used to reacting fast and adapting and being nimble has helped a lot. Reality is many cannabis businesses have been thriving in this situation. And I think it is a mixture of our capacity to change and adapt. It is one of the products that people love and need in times like these. People cannot stop medicating whether it’s adult or recreational use. There are a few things that help with anxiety as much as cannabis does. And I can tell you that firsthand.
Designhill: So what do you see in the marketing strategies post the overtime specifically for the industry?
Max: I again go back to that targeting. I feel like one of the things that the cannabis industry is struggling with is we’ve been everything to all people. And it’s partially because it’s one of those products that does appeal to all people. I’ve never in my life seen a product that an 18-year-old kid can be just as enthusiastic about as an 80-year-old grandmother. It is a very unique kind of offering.
But we’re also at a point now where to be successful, the marketing strategies need to be very pinpointed on who is the audience that you’re most looking to serve. And it’s a challenge. It is not an easy thing to do in the cannabis industry. This is because, inherently in your heart, this could help everybody or benefit everybody. But I think that we’re in an environment now where success needs to be inevitable.
We do that in cannabis by really narrowing down that focus. It is this audience, product, message, packaging, and channel that I am going after. So, I think there are a lot of opportunities because the audience is so wide. I have seen brands that have achieved a tremendous success that kind of locked in the market.
Kristi: I think the most successful brands have gained the most cult status and momentum because they understand that they are just going after lady folk. They want lady folk during their cycle every month where they want women who want to combat aging, or they want women over 60 who are dealing with pain. Those are the things that they’re looking at
They have a lot of clarity and focus on their message. So, everything that they communicate is from that perspective. And I think that’s the opportunity across the board for every brand, no matter where they are in their development, and what kind of opportunities they’re looking to take advantage of.
Designhill: Do you think brands are taking the niche way or capitalizing on the cannabis lead accepted by the audience across the country?
Krista: Cannabis is still accepted by everyone across the country.
Max: I think there is still a tremendous lack of acceptance. You do have a growing number of people who believe that cannabis is not harmful. This is the step in the right direction. But many people still have a stigma around it. I will say that we started in 2014 in educating people over cannabis and in 2020 it is a completely different world in terms of its acceptance. We are in the Designhill platform to market cannabis is indicative of the progress that has happened over the years regarding it. We are not done yet. There is still a long way to go.
Javier: Stigma remains one of the main drivers stopping cannabis from its adoption. Still, many people believe that cannabis is safer than alcohol. But despite this acceptance, they fail to adopt cannabis due to the stigma attached to it. Social stigma is stopping many from accepting cannabis while many others
Designhill: Now that the supply chain has been hit during the coronavirus crisis, how are cannabis brands coping with it in the US?
Max: I talked to a few dozen companies which are observing social distancing and still working. They are in an essential business so they are working. I have also heard of unusually low amounts of COVID cases in cannabis companies for some unusual reasons. But the challenges are there in terms of supply and that the whole world is disrupted due to the crisis.
Designhill: Do you think a hostile takeover is going to take place in the cannabis business after the lockdown period is over?
Javier: That is a very interesting question. I was not thinking about this perspective so far. But those cannabis companies which remain unaffected by the crisis may plan to take over others may be a possibility.
Max: Well, a hostile takeover is a public company term where stock exchange plays its role. In the cannabis industry, there are a very small number of companies. But what we are going to see is stressed assets and such companies running out of money. They are not getting the influx of investment right now as per their expectation. So, there could be a tremendous amount of consolidation in this industry and business.
Designhill: Post COVID period, what kind of skill sets do you think are in demand?
Max: There is an incredible demand for specialized talent in cannabis. This industry requires specialized knowledge to operate. For example, there is a huge demand for cannabis extraction talent while such the industry is lacking in such workers. Then, there are only very few knowledgeable cannabis salespersons. So, what can be done is that in whichever area of specialization you are working add to that your knowledge of cannabis. You are, then, a useful talent for this industry.
Designhill: Do you think remote working is possible in the cannabis industry?
Javier: Yes. Of course, you cannot grow or extract cannabis remotely. But companies are realizing that remote working is making them viable in terms of reduced cost structures. A lot of cannabis companies are hiring for remote functioning.
The coronavirus crisis has wreaked havoc on most small businesses but the cannabis business seems to be unaffected to a larger extent, say the experts. During discussing the cannabis business and industry scenario, the expert panelists Javier, Max, and Krista were hopeful for this industry. This is because cannabis is now considered an essential product for medicinal use and keeping away from stress. But they expressed the need to work out an effective marketing strategy during the present crisis.