Virtual Benzinga Cannabis Capital Conference Offers Sneak Peek At Pot Industry's Coronavirus Recovery

How will the cannabis landscape look after the coronavirus pandemic? What should businesses do to get there in one piece? How can investors help make the transition as smooth and profitable as possible?

These are some of the questions that a panel of expert investors will be discussing during the closing panel of the Virtual Benzinga Cannabis Capital Conference on June 1.

“The New Normal: Investor Perspectives & Preparing for Recovery” will be moderated by Tim Seymour, TV personality and chief investment officer of Seymour Asset Management and features: 

• Yoni Meyer, partner at Casa Verde Capital
• John Lykouretzos, CEO of FocusGrowth Capital Partners
• Matthew Nordgren, CEO and founder of ARCADIAN Fund
• Roderick Stephan, partner at Altitude Investment Management
• Matt Hawkins, CEO, founder and managing partner at Entourage Effect Capital

A Look At ‘The New Normal’ For Cannabis 

Hawkins told Benzinga that the regulatory flexibility that benefited cannabis companies during the outbreak will lead to other adjustments by legalstates, including tax reform.

“Curbside pickup and relaxed delivery restrictions have been extremely beneficial to customers and retailers during the pandemic,” the Entourage Effect Capital CEO said. 

While dispensaries have been able to keep their doors open, they have to contend with a new retail reality: reduced traffic and an intense focus on sanitation, said Casa Verde Capital's Meyer.

The retail experience will be quite different in the post-pandemic world, he said. 

“Retail shopping will be less comfortable and less efficient; in that vein, many brands will have to re-think marketing strategies, which have historically emphasized in-store promotions and budtender training.”

New Opportunities, Challenges In Cannabis

The times can bring many opportunities to the cannabis industry as an emerging sector, said Arcadian's Nordgren. 

“Pivoting and innovating is all a part of the process. This is very well-timed for an industry on the verge of breaking out in the consumer category.” 

Panel moderator Seymour said the new normal for cannabis is profitability. 

"Looking at companies who have survived and thrived ... enough of the obvious lack of capital access for the market. Large and small companies in the industry have put out tremendous numbers in May even after supposedly pulling forward sales into COVID-19."

For states like Michigan and Illinois, where recreational cannabis came online recently, wholesale prices may be coming down after a big demand surge for high-end flower products, he said. 

Meyer said the pandemic is helping accelerate some shifts in consumer purchasing habits.

He gave the example of online ordering platforms as a sector within the industry that has seen tremendous growth, largely driven by people trying to avoid in-person shopping.

"There is a clear opportunity for well-capitalized, operationally-sound businesses to capture market share from less nimble competitors." 

For Hawkins, the opportunities that will arise include further tamping down of the illicit market and potential advancement to full federal legalization due to an increased need for revenue at the federal level.

Access to capital will continue to be a challenge for the industry, in the CEO's view. 

Advice For Cannabis Investors, Businesses

ARCADIAN’s Nordgren said business leaders should pay close attention to data.

Observing the economic numbers from the industry and real consumer behavior patterns can support strategies that will lead to a higher probability of success, he said. 

“Do not get blinded by the shiny object in your path. Stick to fundamentals and the rest will take care of itself.”  

Hawkins said that for investors, cannabis is one of the few growth industries in play. He advised businesses to monitor cash positions closely and acquire assets when possible in order to build scale.

Meyer said companies "need to be very cash-conscious and assume they no longer have a financing backstop." 

For him, right-sized businesses will be able to grab share by focusing on operations and meeting customer expectations while their competitors struggle to keep pace with the changing landscape. Flexibility and creativity are the keys to success.