4 Essential Ways To Manage Your Cannabis Business During The COVID-19 Crisis
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Without a doubt, this is a scary time for the entire world. We’re in the middle of a generation-defining pandemic that has shut down our global society and crashed financial markets like never no one has ever experienced before. As a mom without childcare and the volunteer board chair of our local district hospital, I’m running on overdrive to ensure the health and safety of my family and my community.
But let’s be honest—in the cannabis business we were already in a Category 5 hurricane before the coronavirus crisis hit. Cannabis stocks had crashed and investor capital had dried up, causing major waves of uncertainty for the past few months. Add to this the cash crunch, the choke on the number of retail outlets to sell products in California, and the overly burdensome taxes, and we’ve been navigating some incredibly challenging roads.
Strangely and somewhat unexpectedly, the effects of COVID-19 on our industry have served as a moment of blue sky above. Local governments have deemed cannabis as an essential service, allowing us to operate to keep products in the hands of customers. Sales are currently surging as consumers have an all-time demand for products. To many in our industry, most of whom are die-hard realists, this is akin to the eye of this storm - and the only way out is through the other side. So how do we brace for what’s ahead?
Here are some tips that I have learned from some of the most admired leaders in and out of the cannabis industry about how to handle the COVID-19 crisis. I have taken these to heart and implemented them in my company, and in the ongoing theme of “we can only get through this together,” it felt paramount to share.
1. Be transparent
Make sure you are communicating with everyone in your ecosystem about the current state of your business and your current needs. Your employees want to know if they have a job, or how their job may change given the CDC recommendations. Your investors want to know how your cash position may or may not impact your business plans. Your customers want to know if it’s still safe to use your products, or where they can safely purchase your products. There is no such thing as over-communication during a crisis like this, so make the effort and put in the time to communicate with your ecosystem. You will be rewarded with customer, employee, and investor loyalty.
2. Designate a crisis leader and create a crisis management plan
Whether you're a team of three or a team of 300, as a leader it is critical to designate a point person for the crisis. This person should be responsible for pulling together a crisis management plan, asking key questions like: What happens if your packaging employee, or even your CEO, gets sick? How do you ensure you are following all requirement rules and regulations?
Have a succession plan for each team member - top to bottom - so you know how the business will continue to operate if a critical team member is not available. Also, create a decision tree so key business decisions can continue to be made, even if key team members fall out due to illness or for unforeseen circumstances are not available. Finally, charge your crisis leader with ensuring a consistent flow of information for communication purposes. You cannot overthink the scenarios in planning. You can, however, struggle to adjust on the fly.
3. Hope for the best, but plan for the worst-case scenario with your cash
Every investor out there will tell you to assume that no more investment dollars are available for the foreseeable future. It’s critical to plan now for your cash needs down the road.
If your company is the equivalent of a car that runs out of gas in the middle of the road, there is no tow truck available right now to pull you to the next gas station to fill you up. Save your gas and get granular on financials: Determine where you can reduce spending on any non-essential elements and save as much cash as possible. The future is unknown, so plan as if no more additional capital is available for your business from investors, and figure out how to get to Dec 31, 2020 on cash flow. There are some great tools available on LinkedIn right now if you need some help doing cash flow forecasting.
4. Use and share your network
The time has never been more critical to lean into your network. Most cannabis companies today are understaffed and leaders are already doing multiple jobs. Your network can help you streamline your efforts. For example, someone you know probably can share with you the process to properly furlough your employees. Someone you know can also introduce you to new revenue opportunities with new partners or retailers. These discussions may also create new partnership opportunities to share resources so you can reduce costs.
Don’t be hesitant to ask your network for what you need. Equally, be sure you are helping your peers and ecosystem now more than ever. No one wants to be friends with someone who only “takes” for themselves, and doesn’t provide value in return. More than ever, people want to support people, and we have ample time in front of our computer and on the phones to send those emails or take those calls.
While we may be in the sunshine and blue sky today due to being deemed essential with surging orders, the second half of the storm is still ahead for the cannabis industry.
But the sun will eventually come out. Some of the largest and most impactful companies of our generation like Uber, Airbnb, Slack, and WhatsApp were founded during the great recession of 2008. By taking the time to plan for and focus on surviving to the end of 2020, today’s companies in the cannabis industry have the opportunity to become tomorrow's unicorns of this unprecedented time.
Related: Cannabis Companies Donate Masks, Gloves, And Hand Sanitizer To Health Care Workers During Coronavirus Pandemic