What’s your endgame if/when the Feds legalize?

Img Credit: financenews.pro.com

Img Credit: financenews.pro.com

In some ways, Colorado marijuana business are in a snug little cocoon right now. Competition is curtailed with regulatory hurdles including both state and local licensure. Not to mention the fact that the product is federally illegal and can’t officially be brought across state lines, so you only have to compete with licensed in-state businesses and the black market. It’s cozy because it’s contained and contained markets lack the scalability that investors usually like to see.

But for some reason, there is a big interest in investing in marijuana businesses in Colorado.  In fact, there was recently a marijuana investors summit in Denver where venture capitalists mingled with entrepreneurs seeking investment. A reasonable person might wonder why.

I think that David Friedman of Marijuana Investor News put it best when he told The New Yorker, “Now is the time to get into the space, because as soon as pot is federally legal, and can be transported across state lines, the big companies with deep pockets-Tobacco and Alcohol-will take over. We’re all positioning ourselves to be bought up.”

That means that if you have a marijuana business right now and you play your cards right, you could stand to make a lot of money with federal legalization. That’s what all your investors are trying to get in on. The smart money is aiming for a cut of your resale value. Or, if you don’t plan on selling out, you’ll be facing bigger, better financed competition than we’re used to in Colorado. So, what do I mean by playing your cards right? What if you plan on staying in business?

I’m here to say that it doesn’t matter which endgame you prefer because the best thing you can do right now is the same thing for either scenario. Start scientifically hoarding a treasure trove of quality data. Those data can make or break your resale value AND your long-term competitiveness. Make sure you have data to support your answers to the following questions: What is the capacity of your production system? How are you measuring the fluctuating marijuana market? What qualities do you measure in your final product? How do you ensure your product meets your own quality parameters? Are your processes within statistical control and how would you scale up your production capacity? How do your data support your answers to these questions? How do you use these data to make business decisions?

Lots of people don’t have answers to these questions…yet. But these are the type of questions that big money could ask you in the future before making an offer. It’s ok if you don’t have the supporting data or the answers to these questions. But now is a good time to start. The most comprehensive way to protect your business is by implementing a standard Quality Management System. If you need an expert to consult your business in getting started in this direction, I’ve heard tell of a business for exactly this purpose. I’ve even heard their rates are cheap by consulting standards. But enough about me. If YOU have freedom, use it and so long from Colorado!

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