Top Traits of Successful Cannabis Entrepreneurs
It’s here, the next boon economy for the United States - cannabis. Whether it’s for medical, nutritional, recreational, agricultural or industrial purposes, cannabis is being legalized rapidly in the United States and across the globe. The first domino has fallen, and now everyone is rushing to participate in, or stop, the next inevitable chain of events: the emergence of an industry that has been prohibited for almost 80 years. I am going to assume the inevitable. The inevitable will be achieved by successful cannabis businesses ran by entrepreneurs that have critical skill-sets and traits to take businesses, and the industry, to the next level.
Still in its infancy, the cannabis industry is experiencing its next stage of growth. It is a startup industry and comes with a unique set of issues because it is emerging from the black market. Like all startups, of which nearly 90% fail, cannabis businesses face tremendous hurdles that no other industry struggles with. Issues like the lack of access to banking and loans, the inability to write off expenses involved in the sale of cannabis and the hesitation of many investors, are keeping cannabis businesses from realizing their full potential. Then there are the horror stories, such as businesses becoming involved in reverse mergers and other complicated financial deals that unfortunately have fallen apart, leaving new entrepreneurs broke and having to start from ground zero.
Having worked in multiple startup environments in multiple emerging industries, first starting in the .com and government contracting worlds, and then moving to the cannabis industry, first as an activist, and then as business executive and policy advisor, I have seen many businesses succeed and fail. There are common threads that lead to failures to launch in multiple business settings, such as bad planning and execution, lack of funding and poor management, however, in addition to bad business practices, an entrepreneur not having the right traits, can also keep a startup from successfully launching.
2016 is going to see a new evolution and maturing of the industry with more people coming over from other more established industries, and it is important for current businesses to stay relevant as newer more sophisticated players enter the game. The following are traits that are paramount for an entrepreneur to achieve success in the cannabis industry:
True Grit: Running a cannabis startup in a startup industry is like sailing uncharted waters fraught with a lot of unknowns and high risks, and is not for the faint hearted. Besides being federally illegal, there are a multitude of other hurdles that cannabis businesses must overcome, including hostility from lawmakers, law enforcement, prohibitionists, and even the industry itself.
Energy: It’s called the green rush for a reason! Hold on fast if you intend on being a part of this fast growing industry and be prepared for long days. We are already into a very busy year for the cannabis industry as more states seek to peak mode and now is the time to catch the wave and keep up. Find healthy ways to keep yourself going because long hours a part of this game.
Ambition: The rawer the better, but it must be balanced with ethics and integrity. Some businesses make it far without either, but the world in general is changing to hold leaders more accountable, and with growing transparency in a highly connected world, unethical leaders get called-out quickly and topple fast. With that said, without ambition, this industry, well actually any industry, would not exist. Ambition requires the unencumbered desire for success, which is obviously a good thing for ensuring a successful business. Make sure your staff is full of healthy ambition as well. Giving them upward mobility and a sense of ownership will foster that ambition, keep yours ignited, and contribute to the success of your organization.
Resilience: Also known as bounce-back, this one of the most critical factors to success in the cannabis industry. A startup in a startup industry is a roller coaster, to say the least, and you must be able to bounce back quickly from disappointment. There is simply no time for sulking or wallowing in self-pity. Realize that valuable lessons come out of a downturn and let that be your focus while also remembering that a new day brings new opportunities for success.
Perseverance: The ability to push through challenges and set-backs, and the more prepared you are for them, the better chance you will have at success in the cannabis industry. The challenges and set-back can be enormous. Whether its letters from the DEA to your landlords, costly new regulations, crop failures, lawsuits, or any of the other multitude of things that can happen, you must push through. This is why licensing requirements and barrier to entry is so high. Many states require adequate capitalization and access to millions of dollars in liquid assets.
Vision: This is a brand new industry, and while it follows the same economic rules as other industries, this is the chance to let your mind flow and create something new. Many cannabis businesses are socially conscious and run their businesses using the tenets of corporate social responsibility, setting new examples of how businesses can give back to communities, and these businesses are gaining notoriety and awards for their actions, as well as licenses in highly competitive states.
Patience: Don’t rush into anything, whether it’s a financial deal, that fancy new extraction machine or scaling your business too quickly. Do your research on people wanting to invest in your business, as well as to the different investment vehicles available. There are many wolves looking to take advantage of naive and eager entrepreneurs, and are usually fast talkers and will rush you off a cliff if you don’t take the time to research and think things through. Scaling too quickly will exhaust your resources before you have adequately launched your product or service.
Attention to Quality: This applies to products and services. Arguably, the cannabis industry’s first black eye is the recent pesticides violations. Many businesses were busted using unapproved pesticides and possibly poisoning people, resulting in product recalls and the destruction of crops and products. Many businesses lost millions of dollars, and it could have been prevented with more investments in the beginning to create operational best practices and standardization to ensure the best possible environment to encourage strong and healthy plants. On the retail side, a clean and well-appointed shop with a highly–trained and attentive staff will give consumers confidence that they are shopping at a place that places value on quality.
Attention to Detail: This falls into the realm of compliance for licensed cannabis touching businesses. So many well intentioned businesses have had to close shop because they were not following regulations to the letter. Unfortunately, until all of the reefer madness finally subsides, cannabis is going to be regulated like plutonium. Make sure your team is up to date on all regulations on a regular basis, and invest in hiring a compliance manager or retaining the services of compliance specialists to audit your facility and test your employees. It’s cheaper than a $100,000 fine, or losing your license.
Ethics and Integrity: This is an industry emerging from the black market and it is very important to maintain public trust. Many people have realized that the dangers of cannabis have been exaggerated, and that the drug war is an epic failure, however, there are still those who see cannabis as harmful as heroin and businesses must operate with full consideration of all community members and their fears, and operate in a manner that promotes public safety. Paying attention to social corporate responsibility and also being honest will help win hearts and minds as the industry legitimizes and leave businesses less vulnerable to attacks from disgruntled cannabis consumers, employees or community members at-large.
Flexibility: Open-minded leadership is important in today’s business setting, especially in the cannabis industry. Cannabis businesses, especially on the retail side, operate as lateral organizations with employees assuming multiple roles and interacting directly with management. On the manufacturing side, rigid managing may stifle valuable ideas from your staff. Running a startup is a startup industry requires leaders to be open to suggestions from all staff members, and in fact would benefit from encouraging it. Too much flexibility can be detrimental though. Many startups pivot, or change direction, whether trying a new strategy or changing products, to achieve growth. But, but too many changes can be detrimental, and contributes to the reason why nearly 90% of startups fail.
There is so much more to running a cannabis business, and this just covers the most critical skill-sets and traits needed to launch a successful startup in a startup industry. Business practices such as a well put-together team, branding, and developing best-practices, just to name a few, are also important factors for success. Business practices are only a part of running a successful organization though. Honing the aforementioned skills and traits are the first and most critical steps to take when launching a cannabis business, and encompass a very significant part of the foundation of success to take your business to the next level, the level of success, in the new and fast-growing cannabis industry.