Panel: The State of the Cannabis Industry
EisnerAmper’s Rising Stars (a team devoted to helping members improve their networking skills) recently held a panel discussion on “The State of the Cannabis Industry,” moderated by EisnerAmper manager Scott Wasser and featuring panelists Lauren Rudick, partner at Hiller, PC; Jeff Samuels, VP of business development at HillviewMed; Ryan Smith, CEO of LeafLink; and Rich Taney, managing director at Tuatara Capital.
The panelists kicked off the session by discussing the current state of cannabis at the local, national, and global level. Jeff spoke about his company’s experience in applying for one of only six new medical marijuana dispensary licenses in New Jersey. He mentioned how the Garden State is going to be one of the toughest regulated states in the country, where applicants are vetted on a number of attributes including business history, operations plan, and real estate location. He touched upon banking and finance issues “plant-touching” companies deal with on a day-to-day basis, including large amounts of cash on hand, and prohibitive ability to open and maintain bank accounts. Ryan then transitioned into running his tech company, which is an online B2B cannabis commerce platform that connects brands, distributors, and retailers. He discussed topics around brand building and scaling operations across multiple states as the industry matures. One of the more difficult challenges he noted was that although the company is coast to coast, LeafLink has to conduct business as if it only operates in each state due to the fact that cannabis is presently federally illegal and transactions cannot cross state lines.
Lauren discussed the legalities surrounding the industry and mentioned how all cannabis (marijuana and hemp) companies are operating in open violation of federal law, but stressed the importance of the U.S. Farm Bill. Until December 2018, recently, both marijuana and hemp were Schedule I drugs under the Controlled Substances Act and federally illegal. The Farm Bill, which the President signed into law on December 20, 2018, included a provision to legalize hemp. Lauren also talked about IRS Section 280E and how companies are working with their advisors to structure their businesses to help reduce taxes. Rich shared with the audience his company’s rigorous screening process for investing in cannabis companies and current valuations. He believes there is more growth potential for cannabis in the U.S. on the East Coast, where states are just starting to legalize, versus California, who first legalized medical marijuana in 1996, and other western states. He spoke about growth sectors within the industry and the three areas he highlighted were recreational (adult use), health and wellness, and pharmaceuticals.
Many thanks to the panelists, attendees, and EisnerAmper Rising Stars who held the event. We look forward to holding more events like this in the future.