EXCLUSIVE: Focus On Selling Numbers, Not Dreams, That's What Makes Cannabis A Good Investment

"Not trying to always be the next unicorn is okay… it’s actually great," Morgan Paxhia, a co-founder and managing director at Poseidon Investment Management, told the audience at the Benzinga Cannabis Capital Conference in Florida on Wednesday. He said selling a cannabis business and then building a new one from scratch is not a bad idea.

"We need to see good investments being made, entrepreneurs being realistic about the valuations and building good companies… and not being afraid to hit the bit," Paxhia said. That, actually is a great way to attract investors' attention, he added.

Paxhia joined three other experts, John Darwin, a managing partner of Luminous Capital, Brett Finkelstein, a managing partner of Skyvest Partners LP and Meris Kott, CEO of Shiny Health & Wellness Corp., on the stage at The Diplomat Beach Resort in Hollywood in a panel moderated by Tom Zuber, a founder and the managing partner of Zuber Lawler, on what makes a company investable in the cannabis industry.

Zuber said that what sells in the cannabis space right now are numbers. "Selling the dream is kind of over, and what you’re selling are numbers…if you focused on selling numbers, you’re going to have a lot more success in this environment."

See also: Marijuana Investors Bet Big On Long-Term Growth Over Short-Term Earnings As Market Value Rises By 39%

What To Look Out For When Investing In Cannabis

For Shiny Health's Kott, the first thing to look at when investing in a company is if it’s new, or if it’s "already made some mistakes."

She prefers investing in the latter. Why?

"Companies that are going through turnarounds that have already corrected, some of their miscues and have already cut their corporate overhead and cut some of their expenses and know the direction that they’re going," she said.

Luminous Capital's Darwin believes in investing in cannabis as well. Even though the past 12-18 months were challenging for cannabis operators nationwide, new partnerships are being forged.

"The people that are going to succeed in the long run are starting to truly define themselves," he said.

Want to watch our Cannabis Capital Conference live? For existing subscribers, you can get direct access. For new users, you can get instant access here!

Some of the key indicators or metrics he looks for when considering investment opportunities are capital stack and organic growth in addition to margins revenue and adjusted EBITDA, to name a few.

Skyvest Partners' Finklestein emphasized that there are still companies and great management teams that need growth capital and human capital that will help amplify their stories.

Best Investment Opportunities In Today’s Environment

In terms of what presents better investment opportunities in the current environment, Poseidon's Paxhia cited Ohio’s cannabis landscape, as well as New Jersey, Pennsylvania and Massachusetts.

"Ohio is definitely a very interesting market…they’re getting their adult-use market open sooner than we all thought," he said. It's "very cool what’s happening here [in Florida]," Paxhia added referring to Floridians being set to vote on a recreational marijuana constitutional amendment in November.

Skyvest Partners' Finkelstein agreed.

For cannabis multi-state operators (MSOs) Florida represents a great opportunity. "If you’re not in the Florida market, you’re gonna have to be here," he said. "It’s one of the states that are on hyper-growth on both visitors, but also residents coming into the market."

Now read: EXCLUSIVE: Florida On Cusp Of Adult-Use Legalization Cannabis Sales Boom, CEO Tells Benzinga Conference — ‘It’s Going To Be Huge’

Interested in the latest developments in the industry? Stay abreast at the ongoing Benzinga Cannabis Capital Conference in Florida. Want to watch our Cannabis Capital Conference live? For existing subscribers, you can get direct access. New users, you can also get instant access here:  https://www.benzinga.com/events/cannabis-conference/livestream/

Photo by Jean Laurenceau