The Rolling Out panel discussed the practicalities of starting a new, legal cannabis market. The panel, chaired by Will Feuer, Business Reporter for the New York Post, covered the opt-out policy, federal legislation, the benefits of limited licenses and more.
Dr. Carlyn Buckler, Associate Professor at Cornell University, brought attention to the need for research funding, and the need for federal legalisation: “We need federal dollars, our states don’t have the kind of cash that it takes, especially to do human trials,” Buckler said. While federal legalisation would help research funding, Rob Sechrist, President of Pelorus Group, warned that there could be downsides, especially for those progressive states with high standards of testing and compliance saying: “You’re going to have a lower-cost CapEx effect states with probably lower cannabis tax able to import into the states that kind of forged the industry.”
John Hudak, Deputy Director of the Brookings Institute, spoke about the opt-out policy and warned that the deadline may cause some communities to opt out in fear: “The conversation with these municipalities, in some cases, I think needs to be more focused on the economic realities of the opt-in opt-out decision,” he said.
John also discussed the importance of learning from other states’ mistakes to “understand whether this works and, if not, where the failures are in that process and what the implications of those failures are,” adding that he believes New York will be the place that other states look to and will need to get it right.
New York learned from other states giving unlimited licenses which makes the “landscape challenging for small businesses to be real players,” according to Kristin Jordan, Founder of Park Jordan, and chose instead to give a limited number out, with 50% to be given to socially and economically diverse licensees.
Jordan was optimistic about the role of small businesses in that market and further encouraged by the appointment of Christopher Alexander to the Cannabis Control Board who she said had “a keen insight into the industry and the supply chain.”
While legalisation of cannabis is new to New York, capital markets are not. Moderator Debra Borchardt hosted the panel as they explored federal legalisation and what it would mean to companies to have access to new sources of capital.
Pablo Zuanic, Managing Director of Cantor Fitzgerald explained how the financial industry has changed its response to cannabis companies, moving from a huge risk to a massive monetary opportunity. He pointed out Cresco’s recent $100 million deal as an example, saying: “$US100 million dollars at 9% and that was a big deal!”. Zuanic also pointed out that 9% to any other industry would be very expensive, but even so he said: “The industry is evolving, it’s becoming more flexible, do you really think they’d have approved that five years ago?”
This industry evolution was obvious to Richard Carleton, CEO of Canadian Securities Exchange, who said: “Newsflash! Capital will find opportunity.” He explained that there are lots of people who are willing to “overcome the obstacles that the regulators and the politicians put in place” in order to see the industry succeed.
As with every panel of the day, even When Weed Comes to Wall Street came back to social equity. William Healy, Partner at Silver Spike Capital, believes there is a unique opportunity to create an equitable market by “being a bridge to the capital markets, creating mechanisms, creating channels where traditional long-term institutional capital can be deployed and can invest in the industry.”
Jeremy Berke, Senior Reporter for Business Insider, moderated The $6 Billion Question panel, where the panellists answered one of the biggest questions of the day: Could New York really be set to outstrip California as the new cannabis capital of the US?
Jeanne Sullivan, Chief Investment Officer for Arcview Group, started the panel by reminding the audience that, in a state of 20 million people, New York currently only has 10 licenses “when many states like Oregon have thousands and thousands,” explaining that those 10 licensees “can grow, can process and have four dispensaries.” In essence, this means that, currently, New York State can only have a maximum of 40 dispensaries to service consumers.
Sullivan said she believes this needs to change for New York to truly become the ‘Capital of Cannabis’, but remains positive that New York will surpass all expectations, saying: “We are going to blow it open here, because we are New York.”
Aaron Smith, CEO of the National Cannabis Industry Association, also thinks New York has barriers to being the Capital of Cannabis. He asked the delegates to help educate government representatives who may be out of touch with the industry, even with best intentions.
Aaron honed in on the move from Cory Booker to delay the Safe Banking Act until better social equity regulations can be passed: “I think his heart’s in the right place” he said, but “ it’s the small operators, its operators without access to capital, that the bigger players have that are going to suffer the most – and are already suffering the most – because of lack of access to financial services.”
Providing a nuanced look at what the Capital of Cannabis actually means, Geoff Trotter, CEO of Regennabis, wondered if it even matters whether the industry is worth $6 Billion, asking: “The bigger question really is, why are we even thinking about valuing or measuring success still in a mono-capital way?”.
Trotter suggested New York’s success is “not only about the revenues we can generate, but how many lives it could uplift, and what it could do for the planet.” Whilst he believes New York is the capital of fashion, food and finance, he thinks the cannabis industry has the opportunity to be the centre of both a profitable and also a fair market.