The coronavirus pandemic forced the marijuana industry to “grow up” and now provides a unique opportunity for companies to reevaluate their business strategies, including retail locations, a leading industry executive said Friday at MJBizCon 2020.
“It’s a tragic situation, but it’s exciting what it has brought to the cannabis space,” said Joe Caltabiano, founder of the JSC Fund, a cannabis investment company, and co-founder and former president of Illinois-based multistate operator Cresco Labs.
In a virtual session titled, “Preparing for Recovery: Lessons Learned to Move Forward Strategically,” Caltabiano said the pandemic has not only propelled revenues – many states declared marijuana businesses “essential” – but it has compelled the cannabis industry to:
- Manage supply-chain disruption.
- Redesign stores for better safety.
- Invest in technology to both improve customer communication as well as expedite ordering and check out.
“It really forced the industry to grow up,” Caltabiano said, noting the coronavirus pandemic “pushed the industry five years forward.”
But marijuana operators, he said, must constantly reevaluate their businesses and prepare for the next crisis or disruptive event. Caltabiano said that well could well be marijuana rescheduling, federal legalization or interstate commerce.
Federal marijuana reform, for example, “could be a positive for the country, but it might disrupt your business.”
So play out “what if” scenarios and determine if you’re missing any critical business components.
Caltabiano said Cresco, for example, initially didn’t have a retail arm and realized that was a component it needed.
He provided some practical tips for marijuana operators:
- Reevaluate retail locations. Many businesses probably selected less than ideal locations. This is an opportunity to potentially select real estate with better curbside and drive-thru capabilities and a more convenient location.
- Reevaluate who needs to be in the office and whether you can have more shared space and remote workers. Any money saved on office space goes to the bottom line or can be reinvested in other parts of the business.
- Reevaluate cultivation, processing and distribution. Industrial corridors might have made sense in the past, but that’s changing as municipalities recognize the industry drives revenue and brings in talent. If you are looking to expand, consider putting such operations closer to city centers, which also will help attract talent.
- Communicate with your investors regularly to maintain confidence and seek to expand your investor base. Don’t sugarcoat matters, but “talk about some of the positives that are coming from this current environment.” You’ll need that level of trust for the next funding round or capital opportunity.
- Constantly evaluate your talent and ensure everyone in in the right seat and that you’re set up for the next round of growth.
– Jeff Smith