Top 3 Decisions of Successful Cannabis Start-Ups
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The cannabis start-up is a place where dreams are born. A place where exuberance pulses through the bloodstream, fueling visions of world domination. It’s a place where the new and the old, the novice and the experienced, the tried and the true have all taken their shot. And most of them have failed.
Many others are waiting for the right moment when they come off the sidelines and show the rest how it’s done. Many equate cannabis to a “gold rush” for all these reasons and more. Not the least of which is the notion that this emerging industry is a lot of fun to be a part of. The parties are sensational. What’s not to love?
The problem lies in this funny thing called reality. It has a way of biting you in the ass. When the money runs out, and the litigation begins, all that exuberance becomes something much different. It becomes a nightmare.
As a strategic advisor to the cannabis industry, my job is to make sure this does not happen to you. Get these three vital decisions right and you will be closer to world domination than to being sued.
1. Set accurate expectations for investors
If you show investors a hockey stick and proceed to give them something that looks like a dead duck, they will understandably be angry. It’s far better to show something realistic and fail to close the funding than to show something fabricated and take the money.
Keep distilling your vision until it’s both realistic and attractive. Investors appreciate visibility and honesty about potential risks. When the going gets tough, they’ll be more likely to hang in there, and may even give more resources to overcome the rough patch.
2. Maintain vision and focus
Grand vision and great ideas are easier to come by than people who can actually execute. We’ve seen some multi-state operators lose hundreds of millions of dollars, and other MSOs that are already profitable. Focus is usually the root cause of those with success.
When founders stray too far from the core competency of the business, the mission and resources of the organization get diluted increasing risk and causing tension with investors. Watch out for shiny objects, there are many of them in cannabis.
3. Create a strong company culture with integrated community connection
At Harborside, we gave resources to the community even before we opened our doors, donating to the renovation of the Fox Theatre in the City of Oakland. On the first day of our operations, we gave our staff a free gram of medicine at the end of every shift. It was a small gesture we could afford at the time. We paid them far above minimum wage and tried to offer generous benefits. More importantly, we cared for our team on a daily basis, just as we cared for our customers.
It was about creating a feeling inside the shop and the offices that were mission-driven, and one of hope and healing. We invested in giving people a meaningful relationship to their job and, as a result, everyone brought their “A-game” every day. This gave us an edge in a highly constrained ecosystem that moves at breakneck speeds with numerous interdependencies that need to be managed 24/7. In my experience, a strong culture is the only way to keep up.
The cannabis industry is littered with some spectacular shipwrecks and failures, none of which are good for any of us. Just as a high tide lifts all boats, a low tide can do the opposite. Making good decisions is what separates the winners from those who may fail. Good advice is often the difference between supersizing your high or feeling very, very low. This is particularly important in constrained capital environments, not to mention tax and legal frameworks that further constraint.
Making good decisions is always easier when getting advice from someone who has already been there and done that. This may allow your business to contribute to the high tide lifting us all up.