Reality Check: Cannabis is NOT the hardest industry
Earnest cannabis folks will complain that their industry is the most difficult and dysfunctional around.
As with many bold claims (and myths), this notion has more than a kernel of truth. Anyone who has worked in cannabis has their war stories. And of course, corporate results speak for themselves.
But does the claim “hardest industry” hold up to scrutiny?
Not really, at least in relative terms. Those who say this often have never worked in other sectors:
> Think CapEx is hard to come by, try raising money for a biotech or psychedelics venture.
> Consider the pace of cannabis business slow, check out pharmaceuticals or energy.
> Believe regulations are tough, try operating in defense or financial services.
> Complain that weed prices are volatile and margins are tight, spend some time in farming or fisheries.
In my experience, most of our community has unrealistic expectations about how hard business really is.
Many hail from the illicit market, where everything was simpler except dodging the cops and laundering the cash. Aggravating legal market concerns such as compliance, marketing, and AR were non-existent.
The economic reality is sobering. About 45% of all new businesses fail within 5 years, a number that is assuredly higher in an emerging sector.
I am not a psychologist, but I think other factors are behind the negative views.
Maybe people are hedging their poor performance in advance. This is akin to the perennial A student exiting an exam and claiming that he failed.
Perhaps some are contextualizing their challenges. Football fans are more impressed when you beat the Eagles. The Titans, not so much.
Finally, there is the social proof phenomenon. Misery loves company.
With 7+ years of sector experience, I won’t say competing in cannabis is easy. Far from it.
But in many ways, we have it easy. The industry started with some real advantages, unavailable to others. To wit:
1. Cannabis is a well-known product with a large, built-in market and a historical footprint in our society. Try explaining your crypto start up to a novice.
2. Product substitutes like alcohol are declining in popularity.
3. Cannabis’ appeal goes well beyond recreational use; it is increasingly appreciated and validated for its medical and wellness properties.
4. The huge potential for innovation. There is a wealth of cannabinoids to be unlocked and genetics to be tapped.
5. Despite its challenges, the cannabis sector remains a sexy industry to prospective talent and many investors.
While myths are comforting and stimulate lots of online engagement, they are not helpful in building a strategic foundation and healthy corporate culture.
Cannabis peeps need to be fact-based and hard-headed. And the fact remains, people have agency. If you can’t stand the heat, get out of the cannabis kitchen. There is no shame in bailing.
#culture #strategy #benchmarking