By Stanley H. Davis, founding principal at Standish Executive Search, LLC.
Cannabis businesses are complex enterprises. In addition to the evolving regulatory uncertainties, new businesses are challenged by the unsettled banking, taxation, and supply chain issues and the potential stigma that may test each new cannabis business owner. These tests tend to be less of a burden for businesses that are ancillary to those selling, processing or growing the core products – such as those providing equipment or services to the industry. But every new cannabis-related business will be questioned.
To begin, as with any business, the likelihood of success is dependent on providing a valued offering or solution, and on the pre-work done to understand the consumer, the competitive offerings and the local landscape. Cannabis businesses are subject to extreme scrutiny, obstacles to accessing capital, securing leases, getting essential permitting…and more.
As it addresses some begrudging acceptance and an increasing appetite for medical and recreational cannabis, this budding industry faces extraordinary leadership challenges. Evolving state by state, it’s already a multi-billion-dollar industry. While the family of cannabis businesses are further developed in some states, there is, as yet, an insufficient reservoir of seasoned leadership talent to sustain them and their expansion. For an enduring new business to address the opportunities and the obstacles, the effective deployment of strategy, capital and people will be dependent on great leadership.
See also: Viruses Aren't Going Anywhere, But Neither Is Medical Marijuana
So who is suited to actually build and run a business in the cannabis industry? Considering that tomorrow’s results will flow from today’s decisions, when is a favorable time in the business’s early life cycle to build a right organization structure and team?
At its conception, the cannabis business founder is often viewing an infant enterprise where the most valued assets may be excitement, anticipation, and the founder him/herself. Time brings the founder to recognize that he or she is not an expert in all things – relationship-building, legal, financial, commercial, technical, operational and strategic essentials. Some specialized help is needed. In the venture’s early years, survival demands the support of legal financial and community counsel, and the advice of industry veterans. At the very outset, a disciplined bookkeeper in the family or a salesperson from down the street may be marginally sufficient. But cannabis industry businesses are likely to change and grow rapidly. An enduring enterprise will rely on additional expertise and seasoned managers to handle the approaching challenges.
Key hires will complement the owner’s acumen. Regardless of their prior industry experience, candidates for the new business will have the right leadership and functional track record plus the strength of character to handle the fast pace, the regulation, and the unusual scrutiny – cultural, community and legal. They’ll be agile and committed enough to sustain in an industry where the path is unusually unclear, and the rules are continually shifting.
Unique as they are, the core leadership requirements for a cannabis business, are somewhat similar to other highly regulated, demanding and innovative business environments. Pharmaceutical and technology businesses are just two examples, as is the post-prohibition alcohol industry. While there are effective, successful leaders within the cannabis industry, this sector is still too young to have produced sufficient numbers of proven candidates. For now, supplementing industry talent with leaders from compatible sectors, who can bring the unique and transferable skills, is essential.
See also: Key Findings From A Women In Cannabis Study: It's All About Helping, Community And Empowerment
Regardless, to build out a sustainable cannabis business, the founder and early investors will be selecting leadership team members to manage their burgeoning young business. Some points to consider in that selection process:
- Don’t settle for talent that’s “good enough for now.” “Now” is temporary. Mediocre talent will generate mediocre results, and mediocrity will not be an asset, particularly with rapid growth and mushrooming competition at a time where regulators are exceptionally vigilant and where segments of the community may be inclined to play “gotcha.”
- Select leadership team members who will complement and extend your own skills and experience and stretch you to be the best business owner you’ll need to be.
- As your leadership team takes shape, assure that they also fit with you personally, with the culture you want to build, and with one another. The multiplier impact of a cohesive team, compared to a collection of individuals, is stunning.
- Assure that your talented new leaders are highly ethical, organizationally dedicated, goal-oriented, selfless enough to get the best from one another, and committed to hire others of equal talent.
- In your hiring, focus on each candidate’s relevant and quantifiable accomplishments, how they were achieved, and under what circumstances.
- Choose leaders of whom you’ll be proud. The value of your cannabis business, throughout its life, will be impacted by the caliber of your leaders. They’ll be evaluated by regulators and communities, and by prospective investors and bankers, not to mention suppliers and customers with whom you’d like to do business.
- At each stage of your company’s growth, be ready for both expected and unforeseen changes. For businesses that are succeeding, they often get bigger and more complex than the founder is prepared to manage. Map out potential changes and the essential transfers of responsibilities that may be needed. Build a supportive consensus with your internal team and your stakeholders.
- Prepare yourself for some difficult changes to your own job over time.
- Remember that for any evolution in business, acknowledging the need to change can be most difficult step. As these needs arise, if implementation comes too easily, you may have placated yourself with a simple adjustment rather than stepping up to the need for a real change.
The cannabis industry is relatively new, and to most of the U.S., very new. It presents a growing, attractive, exciting, even romantic draw. Yet like any successful business, for the venture to endure will depend on how well it develops and implements a solid strategy, and engages the right talent to lead it.
Noticias sobre cannabis en Español en El Planteo.
Lead image by Ilona Szentivanyi. Copyright: Benzinga.
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Stanley Davis is founding principal at Standish Executive Search, LLC. Standish secures the right leaders for businesses positioning for accelerated growth, change and succession. More at standishsearch.com.
The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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