“Now Herbie, you can’t just run off like that when things get overwhelming” chides the Mentor. “If that’s what you plan to do, ditch the Vans and get some Nikes”.
“Sorry” says a chastened Herbie. “I’m ready now”.
“Industry Sectors” intones the Mentor. “Tell me, who makes more money, a grower or a dispensary? A testing lab or a warehouse? Don’t answer, but that is what I mean by “sectors”. All of those businesses are in the “cannabis industry”, yet they may face very different landscapes- the hills in my earlier examples. Which part of the industry do you want to be in? Which part are you prepared to be in? These are the questions you should answer before you invest your time and money. And you should be prepared to hire ‘talent’- executives, consultants, lawyers who know what they are doing.”
“So, let me describe it graphically, left to right, with the right-hand side being closer to the customer. A so-called “seed-to-smoke” progression of the industry:
And here are some examples of the types of companies you see in the different sectors:
That’s over 20 different types of companies, all in the “cannabis” industry. By the way, you should expand on this exercise yourself.
“How?” asks Herbie.
“Get a few of the respected industry trade magazines, like Northeast Leaf Magazine (@NELeafMag), Cannabis Business Times Magazine (@CBTMag) or Marijuana Business Daily (@MJBizDaily). There are others. Definitely read the articles. Then, at a separate time, go through the ads, one at a time. Ask yourself “what does this company do”. Go to their websites. Put that company in a table like the one above.
“Get a feel for the total industry. After that, the articles will make a lot more sense. And the things we have covered over the last few weeks will begin to become clear. Most important, do not rush this. Take a rainy Sunday and spend the whole day on it. Or two days. After all, you are going to spend a big portion of your life on and in this business.
“So let me summarize- a few things should be clear”, says the Mentor.
One- not everyone is making money in the “cannabis industry”. That was the subject of lesson 1.
Two- Markets evolve, and go through phases like “growth”, “saturation” and “shakeout”. This frequently has to do with the number of people who got in. And it is a reflection of simple Supply and Demand. It is not always pretty. That was the subject of lesson 2.
Three- Different markets go through these phases at different times, different rates and different durations, much like independent SUVs driving over the landscape. So the lessons you learn in one market may be only partially applicable to another market, and the timing will definitely be different. That was the subject of lesson 3.
And fourth- The industry has many sectors. Every sector of every geographic market may behave differently. That is what we covered today.
Wake up! Wake up! Don’t pass out on me now, Herbie!
“I’m good” says Herbie. “Are we done?”
One more thing, says the Mentor. I will give you a list of high-level questions, no pun intended, for you to ask your consultants. That’s who needs to pull all of this together for you. These are not easy questions to answer. It will take time, talent and money. Some consultants will simply not be up to this. So it’s not just you, Herbie. See you next week.