EXCLUSIVE: Cannabis Industry Optimization Takes Center Stage As Hyper Growth Slows

Cannabis is "not a one-year thing," it's a "multi-decade growth opportunity," Aaron Grey, head of consumer research at A.G.P./Alliance Global Partners, told a full room of attendees gathered at the Benzinga Cannabis Capital Conference on Tuesday in Miami Beach, Florida.

Grey was one of four panelists in a session hosted by Tim Seymour, portfolio manager of the Amplify Seymour Cannabis ETF CNBS, founder and CIO of Seymour Asset Management and commentator on CNBC's "Fast Money." The experts took a closer look at the 2023 outlook for the cannabis industry in terms of overcoming funding and legal hurdles.

Emily Paxhia, a managing director at Poseidon Investment Management, who joined Grey on the stage, said that despite oversupply issues the cannabis industry is currently facing and the fact that stocks have plunged over the past year, she is "a buyer."
Also taking part in the panel discussion were Dan Ahrens, managing director and chief operating officer of AdvisorShares Investments, and Camilo Lyon, chief investment officer of Curaleaf Holdings, Inc. CURLF.

Cannabis Is Here To Stay

"This [cannabis] is a consumer product category, a wellness category, it will be here to stay and it's one to watch," Paxhia said.

However, as a long-term investor in the space, she noted that the initial capital that entered the industry needed to be better allocated.

"There has been a ton of capital that flew into this industry," Paxhia said, adding that it "was wasted." Now she proposes a wiser approach as consumers are interested in cannabis now more than ever.

"Gen Z, cannabis native generation, entering the workforce [and they're] dedicated to this consumer product category that we're talking about here today that will continue to grow," she added.

To that end, AGP's Grey said that looking at the consumer data, cannabis is taking the spotlight, leaving alcohol and tobacco producers behind.

"This is an industry that has those age cohorts, it's going to continue to grow," he said, commenting on the recent surveys showing that Gen Zers seem to choose marijuana over booze purposely.

Curaleaf's Lyon seconded Grey. "There is appetite and continued substitution effects of people leaving alcohol and going into cannabis," he said.

Also Read: EXCLUSIVE: TYSON 2.0 Announces 5-Country Partnership At Benzinga Cannabis Capital Conference

It's All Part OF A Natural Cycle In Any Nacent Industry

Even though the demand is rising, the cannabis industry remains burdened by oversupply, which results in pricing pressure.

Lyon said the excess amount of supply is just part of a cycle that started with a hyper-growth phase.

"If you think back to really any cyclical industry, any consumer-driven industry, there's moments of access and growth and a contraction of that growth," he said, adding, "we're on the backside of those excess supplies."

Curaleaf is currently in the phase of optimization of assets accumulated over the years through mergers and acquisitions.

To that end, AdvisorShares' Ahrens said Curaleaf just made a profitable acquisition in Utah, along with having a burgeoning retail footprint in Connecticut. He also commented on the company's approach to pursuing opportunities on the state level since federal cannabis reform is stalling.

"Curaleaf wanted to have the biggest footprint, and they were aggressive [in pursuing] growth," he said. "Now, very easily, they've tightened belts. They're looking at smart acquisitions, they've exited a few markets."

In terms of federal reform, including banking reform and marijuana rescheduling, Ahrens said that once it happens, it will be "a domino effect," as the "first will lead to others."

Now Read: EXCLUSIVE: 'Twitter Has Your Back,' Exec Tells Benzinga's Cannabis Capital Conference As Weed Advertising Finds A Home On Social Media

Photo: Courtesy of Sora Shimazaki by Pexels