Eyes Wide Open: Embracing Uncertainty in Hemp THC

So, you made the decision to enter the Hemp THC market. Congratulations and good luck.

However, did your strategy development process analyze and mitigate possible business risks?

The elements of risk with Hemp THC should be familiar to corporate planners.

For example, some States tenuously allow Hemp THC products. No one knows when the new Farm Bill is coming and what will be in it. Finally, it is not clear that your high consumer trial or burgeoning DTC effort will translate into a sustainable and profitable business.

For these reasons and many others, there is a great deal of uncertainty in the sector. How leaders navigate ambiguity could be the difference between success and failure.

Obviously, the best time to consider risk is before you make the leap into a new market. However, it’s never too late think about and plan for different possible industry paths.

Here is how I help my clients plan for uncertainty:

1. Deliberate

Stimulate discussion among key stakeholders about the swirling mix of consumer trends and regulatory ebbs and flows shaping the sector.

It is also important to align on key inflection points such as breakeven volume & revenue, distribution or reorder rates.

Fact is, this strategic thinking may be the biggest benefit of scenario-driven planning.

2. Consider different scenarios

Based on your discussions, identify possible market scenarios. They could differ by regulatory end states, growth rates, consumer preferences, channel access, market size and costs.

This analysis should also revisit underlying strategic assumptions and the impact on your financials.

3. Identify realistic strategic pivots

No single corporate strategy will be bulletproof against every scenario, including the existing one.

A better option is to design a strategy that creates value in the two or three most likely scenarios - with a backup plan if other scenarios emerge.

In turbulent environments, you must be open and ready to consider alternatives, and possibly an alternative that you are not comfortable with such as exiting the industry or doubling down.

4. Pay attention

Establish monitoring mechanisms and KPIs to track which scenario is unfolding. Always be adjusting your scenarios to reflect new developments or the possibility of 'Black Swan' events.

Black Swans are high impact but rare occurrences such as financial crashes, natural disasters and internal misfortunes (e.g., cyber-attacks) that can cripple your plan.

Some of the scenarios I see unfolding in the 2025 Hemp THC space are:

> Ongoing regulatory flux with some big markets closing, and some scaling up

> The entry of a large, non-cannabis/hemp players from bev alcohol or CPG

> The normalization of consumption in places like events, bars and restaurants

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