A Note from Your Partners

The cannabinoid industry as a whole continues to rapidly evolve and grow with the total addressable market potentially reaching $100 billion by the end of this decade. With such rapid growth there is bound to be growing pains and learning opportunities. This is evident as the CBD hemp industry continues to experience dramatic ups and downs. Today, Delta 8 is restricted in 21 U.S. states. Six months ago Delta-8 was providing significant liquidity to operators capable of manufacturing the chemical. The scientific evidence continues to build regarding the benefits cannabinoids provide to the human body, and because of this evidence, the future outlook for hemp and cannabis could not be brighter. We look forward to continuing the journey with everyone involved.

– Kellan Finney

As operators look to expand their footprint, an increase in mergers and acquisitions (M&A) is a path toward larger strategic positions. Tim Seymour of CNBC recently said “You’re going to see those companies that have been waiting on the sidelines begin to start nibbling some more as valuations become attractive enough for certain capital-rich players.” Recently, conversations have intensified with outside organizations looking to dive headfirst into the exploding industry. These opportunities can lead us down two different paths. This could lead to either the acceleration of consolidation and strong growth, or it could lead to a more difficult path toward one entity, which has never been straightforward and is even more challenging when it comes to cannabis. The path you choose depends on your plan of action and the resources leading the charge.

– Bryan Fields

Editors’ Note: This is an excerpt from our Monthly Playbook. If you would like to read the full monthly playbook and join the thousands of others you can sign up below.

Manufacturing, Retail, & Distribution

From childproof plastic containers to vape hardware, the majority of packaging for cannabis products is manufactured in Asia. One of the main transportation routes out of Asia to the US markets has been the Shanghai Pudong International Airport. However, due to reported COVID-19 cases which were reported among cargo workers, the airport has closed the airport cargo terminal. This closure is already affected several major cargo shippers including Lufthansa Cargo, Qatar Airways, Air Bridge Cargo, and Polar Air Cargo, which were all forced to divert shipments to other airports.

As the global pandemic continues to flare up and affect the supply chain in various ways it is important for operators dependent on consumables to display extra diligence when managing inventory levels of consumables and packaging. Maintaining several months of inventory is vital to keeping your brands on shelves and consumers coming back for the same product. Consistency will be key to managing the ever evolving supply chain.

Editors’ Note: This is an excerpt from our Monthly Playbook. If you would like to read the full monthly playbook and join the thousands of others you can sign up below.

Why We Love Them: The Wooden Elements Blend Nicely into the Rustic Feel and Design

Papa barkley’s beautifully designed branding is minimal but powerful and professional. It’s a masterclass in colors. Brands sometimes feel the need to push multiple artistic elements when creating their packaging. Papa Barkley demonstrates this is not needed. The wooden appearance works beautifully with the blue and white. The same stylistic approach is used on their website. The shades of tan don’t interfere with the product branding. The social proof is also apparent under the main header that is clear, clean. The photo elements of the product are also strategically placed to take your eye from the right toward the left where the Call to Action CTA is located. The colors are used to systemically take you from the main header to next key point as your eyes work through the page. The biggest negative on their website is their USP. Why Papa Barkely vs others? What makes you unique? This element helps me understand the why. The element is positioned farther down the page but its white and green contrast doesn’t work as well as the others.10

Visit Papa And Barkley at papaandbarkley.com

Editors’ Note: This is an excerpt from our Monthly Playbook. If you would like to read the full monthly playbook and join the thousands of others you can sign up below.

The Question is, What Happens After You Say, “I Do” ?

As the summer winds down, what was expected to be the summer of Canna love with multiple mergers and acquisitions (M&A) didn’t happen like we thought it would. Why depends on who and what ultimately happened. What we can take from this is the conversations were happening but the details that go into these events are massive. These processes take time, and aligning two active organizations will always be a challenge, even more so in the cannabis industry. As organizations scour the marketplace looking for attractive partners to integrate into their budding, or in some cases exploding organizations, multiple factors need to be considered. Let’s say you’ve done the first part and have found your partner, you worked out the terms and you’re ready for happily ever after. The question is what happens after you say, “I DO”?

In our experience in the Cannabis M&A space, the initial step post-merger has varied across the map. Some organizations approach the relationships as independents and operate completely separate of one another. These organizations typically are adding on value services or operate in the same landscape. These types of M&A don’t typically have synergistic benefits unless combined purchasing departments take advantage of economies of scale. Please note, this is not one size fits all and every scenario is different. Two growing organizations scale better than one organization scaling on its own. The adage of more is better applies in this scenario. The other side of the coin is, we’ve seen companies acquiring others deploy a small team to the newly acquired organization. This team role is solely to align the new organization for the benefit of the synergistic efforts. To truly benefit from the combination of aligning the operations of two organizations, a detailed plan explaining the intricacies of both businesses needs to be developed and then executed.

Information transfer, reporting, SOPs, technology stack, leadership role, purchasing decisions, 3rd party resources, consultants, lawyers, a ccountant–these different areas are just a few of the many, nuanced details that arise in these acquisitions and need to align within the new organization. The challenge continues to be the speed with which the industry is moving. The C-Suite has identified a key partner and has acquired that company. If the execution team doesn’t exist, or isn’t aware of some of the key details on why and where the C-Suite found these added synergistic add-ons, then do the shareholders actually realize the value of the combined efforts?

We recommend the option of deploying a small team. In some instances, these small teams might not be available. This is where a trusted third-party resource can be make or break the M&A. Have the team audit the new operation and provide a clear roadmap for how this acquisition integrates. The goal of the team is to ensure the shareholders receive the value as originally intended. Understanding the business case and having a trusted party can be a huge difference to the alternative which is uprooting a strong employee to a new role where they may become disgruntled, frustrated or just not familiar with the necessary steps to aligning organizations. The expectation going forward is that many will try various paths forward but the end result will be across the map. Multiple alignments will be needed, and specialized resources, to help accomplish this role will continue to grow in importance.

Editors’ Note: This is an excerpt from our Monthly Playbook. If you would like to read the full monthly playbook and join the thousands of others you can sign up below.