Cannabis confidential: inside the exciting (and sometimes scary) world of cannabis startups

Launching a business is daunting. The line that separates “work time” from “personal time” disintegrates almost immediately, and the logistical challenges of hiring and managing the right employees – and making money all the while – can stress even the coolest of cucumbers.

Imagine then, launching a business that focuses on marijuana, a highly regulated commodity in legal markets, and a product still frequently associated with grey and black markets. Then imagine pitching your cannabis business idea to a panel of judges, including Dragons’ Den’s W. Brett Wilson and Tweed founder Chuck Rifici, at the largest cannabis expo in Canada.

The pressure for the 2017 Lift Pitch at the Lift Expo in Toronto (May 26 – 28) is, as they say, on.

This year, startup businesses in the cannabis space will have the opportunity to pitch their cannabis startup ideas to a panel of judges for a chance to win up to $20,000 in prizes, including advertising from Lift, a booth at the 2018 Expo, legal services from Bennett Jones LLP, free onboarding consultation from Stoic Advisory and potential financial investment from the judges.

Being an entrepreneur in this space takes brains, tenacity and a ton of planning and research. In anticipation of the pitch contest, we rounded up our own panel of experts, including Hugo Alves, a legal pioneer in Canada’s medical cannabis space and Aaron Salz, the first financial analyst in Canada to cover the industry – both will also serve as Lift Pitch judges. We also spoke to two cannabis business owners currently in the thick of it all, for some honest industry-insider advice.

Bennett Jones LLP’s Hugo Alves

Hugo Alves – Partner at Bennett Jones LLP and co-founder of the company’s cannabis industry practice

Describe what you do in a sentence or two.  

I provide strategic business and legal advice to a wide range of cannabis industry stakeholders and participants.

What advice do you have for new business owners entering the cannabis space?  

Understand that cannabis is a narcotic and controlled substance. It is subject to extensive and evolving regulation that has to be complied with. There are lots of great business ideas in other sectors that are simply not available when it comes to cannabis because of its status as a narcotic. Cannabis’s narcotic status will not change when the Cannabis Act is promulgated into law. So, before you spend a lot of time and resources on launching your startup, get some advice on the regulatory landscape and its applicability to your proposed venture.

What is the most nerve-wracking thing for business owners when launching a startup in the medical cannabis space?  

The amount of time that dealing with regulators takes. Startups are by their nature nimble and can pivot or innovate quickly. Regulators have to take a more cautious and measured approach, and they are not going to spring into action on an expedited basis just because you have a brilliant new idea. This only adds to the importance of ensuring that you understand the regulatory landscape BEFORE you get too far down the road with your business – so that you can understand the parameters within which you have to operate and pivot.

As a judge, what will you be looking for at this year’s Lift Pitch?

The same things that I would look for in any new venture. Is the idea disruptive or does it solve a widespread problem? Is the idea scalable and is the management team capable of executing on the idea?

Anything else we should know?  

Only that the number of applications received to pitch is a clear indication that the industry is growing exponentially and that smart, creative and passionate people are entering the industry in increasing numbers. All of that is great news for the industry as a whole! Really looking forward to this year’s event.

Mary’s Java’s Virginia Vidal

Virginia Vidal – CEO at Mary’s Java

Describe your business in a sentence or two.

Mary’s Java makes infused coffee and specialty drinks, providing an alternative to smoking, and a medication method that is easy and familiar for anyone.

What are some of the struggles you’ve faced this far?

Reliable retailers, limited advertising and the legal landscape of Canada. Grey areas during a transitional period make it difficult to function as a standard business in the public eye.

What’s the most nerve-wracking thing about launching a business in this space?

A few things: Security of investment into the industry. The money invested into the company now is being risked in hopes the company will prosper in the evolving legal landscape. The future of the company as it fits into a new legal landscape is being created and envisioned by a group of people detached from our community. And the relationships with retailers are often severed due to municipal intervention.

What’s the most rewarding?

We have people writing to us thanking us for offering discreet alternative ways to smoking. It’s also rewarding knowing that we’re helping patients across Canada by providing a simple and safe delivery method for a floral extract with strong healing effects.

How do companies like Lift help facilitate startup cannabis businesses, and can you give an example of how they’ve helped you?

Lift has provided a platform to voice companies’ stories, providing a space to network with professionals in the industry through the Lift Expo, and providing sponsorship opportunities for companies that typically would not be able to sponsor any other events due to current legal landscape of Canada.

What advice would you give to someone considering starting a business in the cannabis space?

Surround yourself with professionals who have run successful businesses, do not take on everything yourself. Use resources like lawyers and accountants, and regulate your business and follow all the applicable rules, because too many companies in this industry take shortcuts. Take advantage of the cash flow in this industry. And finally, join the Canadian Federation of Independent Business and take advantage of their business courses, because knowledge is power.

What kind of steps have you had to take to ensure your business meets federal regulation?

Adopting Health Canada protocols and standards for our factory floor operations, establishing strategic partnerships, creating a line of decaf beverages and shifting our advertising portals to address promotional avenues that are deemed acceptable.  

Chocolates from Shattered Sweets

Sweets* – Owner, operator and head chocolatier at Shattered Sweets

Describe your business in a sentence or two.

We started the business to address three issues we saw in the industry: one, bad tasting products; two, stale products; and three, ineffective products. We have addressed all of those issues and found that a huge segment of the population obviously saw the same issues as us.

Our main focus is on high-dose artisanal filled chocolates. All of our products are handmade and individually dosed with lab-tested THC distillate to ensure accuracy and consistency. We do not mix the distillate into a batch and hope we stirred it enough. We spend a lot of time and energy on the dosing procedure that ensures every single piece has the same dose every time.  

What are some of the struggles you’ve faced this far?

We struggled a bit when the Toronto Police starting raiding dispensaries and we found we no longer had an outlet for our products. We have since changed the business model and have found other distribution methods such as The Green Market Toronto, online dispensaries and wholesale orders.

What’s the most nerve-wracking thing about launching a business in this space?

The fact that it is technically illegal still causes me some anxiety. The uncertainty of the changing laws and the future viability of the business also cause some worry.

What’s the most rewarding?

The most rewarding thing about starting this business is helping patients to medicate for both medical and recreational reasons. It has been amazing meeting all the wonderful people in the community. We are super happy with the media attention and customer reviews we have been getting, so at the end of the day it all feels good.  

What advice would you give to someone considering starting a business in the cannabis space?

Make sure your product is high quality, and do something different that sets you apart. Every segment of the industry is saturated right now. Differentiate yourself somehow and find a niche that works for you–that has been my key to success.

Obtain the knowledge required to succeed, because education in all aspects of the business is essential. Know your product and the processes required to make your products, and also know the industry and the right people in the industry. Marketing, branding and packaging also play a huge role in success these days.

What kind of steps have you had to take to ensure your business meets federal regulation?

We have a trained chocolatier on staff and strictly adhere to food handling regulations. We work in a sanitary environment and have a very rigorous quality control procedure. We also require MMAR/ACMPR prescriptions for all mail orders and have warning labels on all of our products.

*Pseudonym used at entrepreneur’s request.

Stoic Advisory's Aaron Salz
Stoic Advisory’s Aaron Salz

Aaron Salz – Founder and CEO of Stoic Advisory Inc

Describe what you do in a sentence or two.

At Stoic we provide corporate finance expertise to companies in the global cannabis industry. We help our clients make decisions about their business with a capital markets and analyst lens, assisting in largely transaction-oriented work.

What advice do you have for new business owners entering the cannabis space?

Be nimble and ready to pivot at any time. This industry is rapidly evolving, and new (and existing) business owners need to be prepared for changing regulations, new competitive threats, and, at times, a volatile social dynamic as society overhauls its long-standing views on cannabis.   

What do you think is the most nerve-wracking thing for business owners when launching a startup in the medicinal cannabis space?

Regulations and sources of capital. The regulations are stringent, and the regulatory burden is high. Sources of capital for non-licensed producers are scarce, expensive, and still relatively hard to come by, especially for private businesses.

What will you be looking for at this year’s Lift Expo on the judging panel?

The next wave of cannabis entrepreneurs targeting less obvious aspects of the value-chain. Cannabis-oriented software and AI, automation and mechanization for growing, testing and compliance solutions, distribution plays, brand stories and defensible intellectual property around new and exciting consumption methods. I like businesses that can cross borders and penetrate current and emerging cannabis markets around the globe.

The Lift Pitch is part of the Toronto Lift Cannabis Expo, Canada’s largest cannabis trade show, taking place May 26 – 28 at the Metro Toronto Convention Centre. Only individuals with tickets to the Industry Day on May 26 will have the opportunity to watch the Lift Pitch competition live and witness W. Brett Wilson and cannabis industry pioneers Chuck Rifici, Hugo Alves and Aaron Salz dispense advice and prizes. Space is limited! Purchase tickets here.

The post Cannabis confidential: inside the exciting (and sometimes scary) world of cannabis startups appeared first on Lift News.

Source link