EXCLUSIVE: Cannabis Leaders Reveal Strategies For Success Without Relying On SAFE Banking Act

Marijuana businesses have been struggling to raise capital for years. Now the industry is hanging on hopes of major federal reform that would resolve the money issue. With the SAFER Banking Act approved by a Senate committee on Wednesday, optimism is rising.

Still, the question is – how can cannabis businesses stay competitive amid a capital crunch, and survive until 2025?

Many industry experts have been sharing their strategies at the Benzinga Cannabis Capital Conference in Chicago.

“We've built a business that's not really relying on that,” Darren Weiss, president of cannabis operator Verano Holdings Corp VRNOF, told moderator and executive editor at Green Market Report, Debra Borchardt. According to Weiss, it’s best when businesses are built assuming that cash never becomes available, and when entrepreneurs try to build a sustainable business.

Overall Sentiment Has Improved

Jamie Mendola, chief business development officer at marijuana company Ayr Wellness AYRWF, believes that things have slightly improved in the last month, and that there has been “some increased appetite for risk in the space.”

Vishal Rungta, co-founder and president of vertically integrated cannabis company C3 Industries, agrees with Mendola that the sentiment has improved even though that doesn’t necessarily translate to actual capital availability.

“The cost of capital is still high,” Mendola said, adding that it will take more time to see improvements, but there are definitely signs of capital activity happening.

Also Read: EXCLUSIVE: Why The US Virgin Islands Are Fertile Soil For Cannabis Businesses

Rescheduling Or SAFER Act

Borchardt inquired whether we are likely to start seeing financial gains in 2024 or 2025.

Alex Gray, executive vice president, and chief strategy officer at Good Day Farm, Missouri's medical cannabis brand, says only when either SAFER or rescheduling happens, capital will be more readily available. He believes that rescheduling has a better chance than SAFER, but “it’s all politics.” Gray added that there's a likelihood of something happening before the election, and subsequently, there could potentially be an increase in capital within the sector.

What To Do In The Meantime? Back To Basics

Gray advises against chasing more licenses and focusing only on expansion into new markets, but instead to concentrate on core markets to survive. “At the end of the day, it’s just basic business principles of trying to make more money than you spend.”

Rungta suggests staying lean, as none of these markets can be handled on autopilot. "You have different things happening every day."

Mendola related to this by saying that it is important to build the cost structure, stay lean, and focus really on efficiency.

Weiss added that it is key to maintain perspective, “to think about the long-term trajectory of the space.” We need to understand that we are not at the midpoint or the endpoint, that we are really at the very, very beginning of this industry, he added.

According to Weiss, the industry doesn’t need SAFE banking, and doesn’t need rescheduling. The focus should be on building a business that can stand on its own, and that produces quality products for its patients and customers.

“And we're not going to rely on the federal government or any state government to be able to allow us to do that in a way that returns value to our shareholders,” Weiss said.

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Now Read: EXCLUSIVE: The SAFER Banking Act Is A Long-Awaited First Step Towards The Economic Legitimacy Of The Cannabis Industry, Says Benzinga Cannabis Capital Conference Panelist

Photo by Carlos Alvarez.