Is business going to pot?

Is business going to pot?

December 10, 2017

In mid-November members of Louis Mamo and Company attended MJBizCon, the 2017 Marijuana Business Convention presented by Marijuana Business Daily magazine, representing one of our clients that are licensed marijuana growers.

More than 18,000 cannabis entrepreneurs, investors, and employees from a multitude of service and supply companies gathered at the Las Vegas Convention Center (LVCC) over a four day period to network and learn about the business, the opportunities and the challenges that lie ahead for, excuse the pun, a growing industry. 

Cannabis Oil Extractor

A machine that extracts oil from the cannabis plant was one of the many items displayed at MJBizCon.

While Nevada’s budding marijuana industry continues to establish itself, the U.S. industry as a whole continues to grow at a rapid pace. According to Chris Walsh, the founding editor and VP of Marijuana Business Daily, the legal U.S. cannabis industry currently generates $5-6 billion, and as impressive as that sounds, it is still in its infancy.

In Marijuana Business Daily’s newest report – “Marijuana Business Factbook 2017” – a 45% legal cannabis sales growth is projected for the U.S. in 2018 and a quadrupling of total U.S. sales between now and 2021 to approximately $17 billion is expected. Consistent annual growth in the 25% to 35% range is certainly something worth paying attention to.

But underlying this growth is the real catalyst: the consumers’ opinion of marijuana. In 1995, the year before California became the first state to legalize medicinal cannabis for compassionate use, only a quarter of the public wanted to see marijuana legalized nationally. By October 2017, according to Gallup’s latest poll, 64% of Americans now want to see marijuana legalized. That’s a major swing over just 22 years, and there appears to be enough support that lawmakers on Capitol Hill could feel pressure from their constituents to reschedule marijuana at the federal level.

The growth is certainly reflective of the people who attend these annual conventions. For example, MJBizCon has expanded each of its 5-years of existence, and this year moved from the Rio hotel to the LVCC. Next year MJBizCon, which is now the world’s largest cannabis industry trade show, is expected to draw more than 20,000 attendees. Event organizers have already locked in the LVCC for the next several years. 

In addition to the cannabis industry blooming, so are all of the businesses that support it. This year, for example, the sprawling expo featured 678 companies exhibiting everything from child-proof packaging to insurance and security to banking and financial services to marketing to compliance tracking to cultivation equipment.

“Everyone’s looking at business opportunities; looking to grow their companies, and wondering how they can get involved in this growth industry,” Walsh told a local Las Vegas TV reporter.

And then there are those cannabis companies that are publicly traded. In case you haven’t noticed, marijuana stocks continue to grow like a weed. A majority of those with a market cap of at least $200 million have had their share price double or triple over the trailing year as optimism surrounding legal marijuana grows. Some of the top-performing marijuana stocks are up 20% to 40% over the trailing month as rapidly rising sales figures have played a role in boosting investor confidence in cannabis stocks which have gained more than $1 billion in market value over the past few months according to The Motley Fool Web site.

Marijuana Growing Pod

A growing pod with it’s side removed is displayed at MJBizCon, allowing passersby to see the irrigation, ventilation and lighting systems working together.

But growing pains continue as industry representatives believe the federal government isn’t keeping up. Many of them think it may be on purpose. U.S. News and World Report Chief White House Correspondent Ken Walsh says it’s hard to say under the Trump administration.

“I think the most reasonable possibility is that they leave it the way it is now because of Jeff Sessions, the Attorney General, a fierce advocate of criminalizing marijuana,” Walsh told Fox News in a recent interview.

Because marijuana is still illegal at the federal level, the biggest government issue for the industry is banking.

“We can’t even pay our employees with the normal payroll checks. We have to have many layers and other ways of being very creative within the system,” Stuart Titus, President, CEO, Medical Marijuana Inc. told Marijuana Business Daily

Titus says the trend seems to be moving toward forming state banks, an idea Nevada and lawmakers from other states have floated before.

Another option is Bitcoin, especially for business-to-business transactions.

“It’s a very interesting safe and convenient way to exchange your commodity; your crash crop if you will, for payment,” Titus was quoted.

At the end of the day the marijuana industry will continue to grow and like all industries, there will be companies that flourish, companies that fail and investors who will do the same.