Most Companies think they’re not in the cannabis business. Are they right?
In the five years to 2027, the $28 billion global cannabis market will nearly triple in size to over $82 billion. It’s nowhere as big as beer (a roughly $750 billion global market), but if projections are correct, cannabis will be as big as the global whisky market in five years. We may think of cannabis as a particularly niche market, sold only through narrow channels – but nothing with $28 billion in sales is “narrow.” The industry necessarily uses business services for financing, payments, advertising, software, data services, real estate, transportation and on and on. Companies whose leaders believe they aren’t involved in the cannabis market may be wrong – and as the market grows, both its risks and its opportunities grow too.
In light of sweeping legalization, what’s the risk? Cannabis is legal for recreational use in 21 states that are home to over 150 million Americans, legal for all 38 million Canadians, and legalization in Europe seems to be on the horizon. But the mind-bending legal fact remains that cannabis is “federally illegal” in the USA, classified under the Controlled Substances Act as a Schedule 1 drug alongside heroin. This creates serious legal complications in the U.S.A., and even if it were “completely legal” (as it is in Canada), marijuana would still be subject to complex regulations.
All this means that there are niche opportunities for specialist companies to serve the cannabis industry – and those specialists draw on the resources of the broader economy, including banks, marketing companies, software providers and more – which, from a legal and reputational perspective, means that those organizations are involved in the cannabis market, too.
The Cannabis Commerce Conversation
On Monday, December 12th, we held a DCA Expert Session featuring three professionals with deep experience in different aspects of the cannabis market: Steve Levine of Husch Blackwell (law), Eric Meth of Surfside (marketing), and Ken Condren of Alleaves (ERP software). The conversation was too rich to summarize here – but as we always do in our “Commerce Conversations” series, we will identify a few key questions for executives to ask themselves in connection with this issue.
- Are we more interested in engaging the opportunities of the cannabis market – or more concerned with minimizing its risks?
- Assuming we don’t currently work with any companies that “touch the product” – do we currently work with companies who support the industry? What work do we do with them?
- At what point of growth – in sales, legal acceptance, or cultural acceptance – will our organization be comfortable working more closely than we do with the industry? If we want to engage the industry, what are we green-lighting our people to do?
- If mainstream institutions like banks, fintechs, marketing firms and software companies will inevitably be directly involved in the cannabis market at some point, do we want to position ourselves to succeed there when the day arrives?
- If we want to insulate ourselves from the legal or reputational/social risks of cannabis indefinitely, how do we track our exposure to companies who serve that market – and how many levels of removal from the market do we require?
The questions above will only become more pressing as the cannabis market grows and gains more gravitational pull.
Related DCA Resource:
Looking for more of a deep dive on the opportunities and risks of cannabis in commerce? Check out our December 2022 Webinar! Members can access the webinar in our Strategy Center.