4 Strategies To Keep Your Cannabis Business Afloat In Troubled Waters - And 1 Conference To Help You Figure It All Out

The cannabis industry is at a pivotal juncture. Once the poster child for American entrepreneurial spirit, it’s hit a wall, grappling with a litany of challenges that range from taxation woes to illicit market competition. Gone are the days of irrational exuberance and we’re about a year into a period that could only be described as a sobering reality check. As featured in MG Magazine, Benzinga’s Cannabis Capital Conference has become a hotspot for entrepreneurs searching for actionable insights to drive their businesses forward.

In adversity lies opportunity. Businesses may be operating in uncharted waters, but that doesn’t mean the ship has to sink. The storm can be weathered. The question, as always, is: How? MG Magazine has some answers.

A Penny Saved, A Penny Earned

As Andrew Carnegie wisely put it, "Watch the costs and the profits will take care of themselves." While many were hypnotized by skyrocketing sales a few years ago, the ethos in 2023 must be laser-focused on frugality. There's no room for extraneous SaaS subscriptions or overpriced packaging solutions when the name of the game is survival. Andrew Carnegie didn't become a philanthropist by being frivolous and neither will you.

Cost-cutting isn't just a one-time action; it's a corporate culture, a collective psyche that should permeate every business unit, from top-tier executives down to entry-level associates. That’s not to say that cost-cutting should be executed with a machete; it's more of a surgical procedure. When done right, you're left leaner but still as functional as ever. However, guard against zeal turning into recklessness. The quality of the product is the soul of your business; wound it and you’re essentially signing your own death warrant.

Show Me the Money!

In an industry where cash is king but often delayed, accounts receivable isn't just an accounting term; it's your lifeblood. In June, the collapse of California distributor HERBL should serve as a cautionary tale. When money stops flowing downstream, everyone is parched. Thus, it's high time brands become relentless bill collectors. But this isn't a green light to become ruthless; it's about due diligence, ensuring you do business with dispensaries that have a track record of financial integrity.

Credit Matters

Much like a romantic partnership, a business relationship can have joyous or disastrous consequences. Take a cue from California distributor Nabis, which has set up a credit-rating system to filter out the good from the bad. Vigilance should be the buzzword here. Keep tabs on your partners and evaluate their fiscal health frequently.

Your Taxes, Your Choice

While awaiting legislative saviors like the SAFE Banking Act, businesses must creatively navigate the minefield of tax laws. States like Illinois, New Jersey and Connecticut are slowly becoming tax havens for cannabis businesses, offering respite from the draconian 280E code. Investment banker Dai Truong suggests companies optimize their EBITDA margin over gross margin to minimize tax liability. The Benzinga Cannabis Capital Conference is not just an event but a melting pot of ingenious ideas for tax strategies and beyond.

The challenges are formidable but not insurmountable. This is a testing time for cannabis entrepreneurs, but also a time when the industry will likely emerge leaner, smarter and more resilient.

Photo by Jean-Pierre Brungs on Unsplash