Recreational marijuana is thriving in Colorado. There are more dispensaries open than ever, according to state data, and the number of plants and edibles sold has risen nearly every month since 2014.
Amidst this boom, CPR News asked three cannabis entrepreneurs what’s ahead for the industry.
All three have pioneering pasts: Kayvan Khalatbari got involved as an activist fighting for legalization in 2005, and a few years later, he and his business partners opened a medical shop that later evolved into an entirely new business known as Denver Relief Consulting, an industry advocacy firm. Wanda James is considered the first African-American to own a cannabis dispensary, Simply Pure. And Keegan Peterson founded an ancillary firm called Würk, which offers payroll and human resources services to marijuana-related businesses. Peterson started Würk because traditional payroll and HR providers didn’t want to get involved with the budding industry.
Here are five trends these entrepreneurs see as the future of cannabis:
Businesses that didn’t want to get involved with cannabis 10 years ago will change their minds.
Peterson: “Things are changing right now, and people want to get in before this goes completely legal and they miss their opportunity. So there’s a big shift in capital coming into the industry from folks that were typically very conservative investors.”
Khalatbari: “I think about who we borrowed money from when we started Denver Relief. I probably borrowed from 80 different sources the money that we needed to get Denver Relief up and running because no one would do it, and they were at incredibly high interest rates. But now, you have people competitive in lending. You’re actually starting to see some traditional lending institutions start to play in lending to the cannabis space.
“I think one industry that’s probably fueled this as much as any other is the tech industry. They’re used to taking risks; they’re used to being on the forefront of new industries. And I think that we’ve seen a lot of those people feel really comfortable, and almost see in the cannabis industry what they saw in tech 15-20 years ago.”
Investors will be able to invest — across international borders — in the U.S. cannabis industry.
James: “I think that we are now at that point with the industry becoming more mainstream and with Canada becoming legal mid-2018, this year, we’re going to start to see companies that are actually traded on a stock exchange in a country, that are going to be traded from country to country…”
“I think that obviously now when you start looking at cannabis not just being a Colorado thing, or a Denver thing, or even a United States thing, that it’s now a North America thing — we’re going to see Mexico probably follow suit — so we have to take a look now at what does that mean, you know from a business standpoint. And I think that that’s what every cannabis company is getting ready for.”
At least a handful of cannabis businesses, mostly based on Canada, are already available for trading, including the first to be listed on the Nasdaq in February 2018.
Expect more consolidation, particularly in retail marijuana.
Khalatbari: “I would venture to say the number of operators is probably 30 percent — unique operators — what it was five years ago. And the mom-and-pops simply don’t have the scale to provide and produce cannabis at the cost of some of these places that have massive facilities, that incorporate a ton of automation, that have multiple retail outlets, businesses that are really pushing their products. So it’s becoming very, very difficult for mom-and-pop operations to exist, especially thrive.”
There will be a boom in “craft” cannabis, mirroring trends in alcohol and beer.
Khalatbari: “I’m not chiding the big businesses that want to get big. I think that’s fair. You’re always going to have Coors and Miller and InBev and, you know, the consolidation in liquor, I think, is a great example of where the cannabis industry is probably headed. But you’re also seeing this movement of “craft;” small batch. Something that is higher quality. I’ll be very honest and say that I don’t buy cannabis from dispensaries in Colorado anymore because I don’t believe that you can find the kind of quality that I’ve become accustomed to.”
The struggle for people of color to break into the industry will only get tougher with certain types of regulations.
Khalatbari: “I can’t remember the last industry group meeting where there was an owner, or a high-level executive here in Colorado that was a person of color if it’s not Wanda [James] or it’s not Brandon Banks of Natural Selections up in Boulder.”
James: “If you want to own a dispensary in Denver, that means you have to buy [an existing license, since the city capped further expansion]. And that costs millions. So it becomes even more prohibitive in a place like Colorado to see minority ownership.”
Editor’s Note: Kayvan Khalatbari is running for mayor of Denver in 2019 against incumbent Mayor Michael Hancock and three other challengers. Hancock has proposed to mayors throughout the U.S. that they push Congress to remove marijuana from the Controlled Substances Act, and to allow state and local jurisdictions to decide how to regulate the drug.