Santa Monica resident William Doran retired from work as a welding inspector about eight years ago and instead of leaving his savings “sitting in the bank doing nothing,” he decided he wanted to invest some of it in the budding cannabis industry.
“I believe this plant was put on the face of the earth for us,” he said. “You can eat it, you can wear it, you can smoke it, God gave it to you.”
While Doran is confident he wants to invest in cannabis flower cultivation, CBD products or testing facilities, he is a newcomer to the exploding industry. He needed guidance, so he ponied up the money to attend the inaugural MJAC2017 Investors Hub International Cannabis Conference last week.
Held at the shiny, towering J.W. Marriott hotel at downtown’s L.A. Live, this two-day event marketed itself as bringing together “the best minds in the market” to highlight top-notch cannabis ventures and address changing regulations in California and beyond. Access to the conference wasn’t cheap — tickets cost $125 for a single day, $200 for both or $50 for live streaming access — but Doran made the most of his money. Partway through the first day he had already nailed down a few leads, and spoke excitedly about a potential investment opportunity in the form of a grow operation that owned a lot of acres and was equipped to expand with the industry.
In addition to cannabis ventures making financial sense to him, Doran said he’s driven by a much more personal motive. His brother’s granddaughter has severe health issues, he said, and while he implored her family to give her CBD products, they refused mainly because they live in Iowa, where it’s illegal. So Doran doubled down on his mission to educate them on the health benefits of cannabis, something he is familiar with first-hand.
“I’m high one day and depressed the next,” he said. “I can get up in the morning, put on my coffee, and I smoke a small little bowl of this weed and I’m mellow. … This stuff works. “
Doran wasn’t alone in this sentiment. While not all attendees were personal users of cannabis (well, at least one person I met wasn’t), they were nearly all enthusiasts. There were 50 exhibitors and dozens of speakers, expert panels and workshops, stacked from about 9 a.m. to 5 p.m. each day. Sessions covered everything from the weed industry in Canada to technology in cannabis and the testing-lab landscape in California. Hosted by InvestorsHub, a retail investor network intended to give investors a forum for sharing market insights, the event was loosely structured around answering one looming question: Is investing in the cannabis industry a safe bet?
The overwhelming answer to this was yes, but with quite a few caveats, warnings and trepidations.
“Do your own due diligence. There is no shortcut to that,” said Jacqueline McGowan, chief executive of cannabis consulting firm xchange.
McGowan, who presented both days and addressed best practices for investing in cannabis, explained that this due diligence should apply to all areas of a new business. For example, if you’ve identified a particular city or municipality in which to apply for a cannabis license, McGowan suggests getting to know the city officials, from the police chief to planning directors, and their stance on weed. If you’re planning to hire an attorney or consultant to advise on a cannabis venture, run a background check on that person first to ensure he's even qualified for the job: “Trust, but verify,” she said.
For newbies to the industry, McGowan suggested finding a veteran to collaborate with, and for existing operators, it’s a good idea to team up with established business experts to help grow the company.
“I always sum it up with, you’re going to have to money up, you’re going to have to lawyer up and you’re going to have to partner up,” McGowan said.
While the conference was thick with the usual weed bros, it also attracted a wide spectrum of newcomers and up-and-comers of various ages and professional backgrounds. Lawyers, investment bankers, retirees, cannabis industry veterans, entrepreneurs and regulatory wonks all cycled in and out of hotel conference rooms to size up their competition and scout the next big thing. There was even a “Shark Tank” event (modeled after the TV show), where burgeoning new cannabis businesses had the opportunity to pitch their ideas to a panel of “sharks” and in front of a room full of hopeful investors.
While many of Friday’s sessions were half-full, there was a lot of note-taking by those in attendance, as well as follow-up questions and hurried networking between speakers. While industry pros praised cannabis’ potential, many still encouraged entrepreneurs to explore ancillary businesses, those that don’t require direct contact with weed but can still benefit from the explosive industry.
Companies such as Kush Bottles, a packaging operation that produces everything from budtender gloves to those pop-top plastic canisters often found empty on the streets of L.A. Its chief executive officer, Nick Kovacevich, spoke Friday and explained that by avoiding handling the actual drug, businesses can sidestep complicated and expensive regulatory requirements and reduce the risk of raids or legal issues. Ancillary businesses often are more attractive to funders, as there’s still a significant amount of fear and stigma surrounding cannabis that discourages investment in weed companies, and they typically have better access to financial services, as big banks and lenders don’t accept weed industry clients.
Parallel industries that still have quite a bit of room for growth include cannabis media, accessories, hardware, insurance services and consulting, Kovacevich said.
Over the course of the two days, the conference hosted about 700 attendees, according to the event organizers, and some sponsors and exhibitors have already signed on for the next MJAC.
While most were there to glean some type of logistical insight they could parlay into a business idea or financial investment, Santa Monica firefighter Dominick Bei said he chose to go simply to get a better understanding of what all sides of the industry are thinking. He has applied to sit on the state’s Cannabis Advisory Committee, a diverse group that reports to the Bureau of Medical Cannabis Regulation on proposed state requirements.
Bei wants to take the knowledge he’s accumulated through years as a firefighter and working with at-risk youth and apply it to the California legislative process, he said.
“If people who are assisting with lawmaking and policy can hear more from the people they’re dealing with and what their viewpoints are, they can make better law, better policy and have a situation where everyone’s working toward the same kind of common cause,” he said.