The Benzinga Cannabis Capital Conference in Chicago saw a heated debate among industry leaders on the optimal path to success for cannabis brands. The discussion, titled “Cultivating Success in the Heartland: Midwest vs. West Coast Dynamics,” focused on the merits of asset-heavy versus asset-light business models.
Asset-Light Approach: Focus on Expertise and Strategic Partnerships
Eli Korer, CEO of DABSTRACT, a renowned cannabis concentrate brand, championed the asset-light strategy. He believes that focusing on core competencies like processing, branding, and marketing allows for rapid expansion and national brand recognition without the financial burdens of owning and operating all aspects of the business. DABSTRACT partners with cultivators, manufacturers, and distributors in each state, providing expertise where needed. Korer emphasized the importance of complementing existing businesses, effectively creating a synergistic network.
Asset-Heavy Approach: Control and Quality Assurance
Bradon Noonan, CEO of the multi-state cannabis brand OGeez!, took a contrasting stance, advocating for the asset-heavy approach. Noonan, who humorously described himself as a “control freak,” believes that owning all aspects of the business, including manufacturing and licensing, provides a crucial level of control. He highlighted the importance of maintaining high quality standards, especially when producing complex products like gummies, which require meticulous attention to detail.
Navigating a Maturing Market
Chris Dynan, CFO of Ethos Cannabis, highlighted the challenges of operating in a rapidly maturing market. While limited licenses initially provided a competitive advantage, the market is quickly becoming more saturated. Dynan emphasized the need for strong operations and the ability to adapt to evolving regulatory landscapes. He also stressed the importance of understanding the unique dynamics of each state, including local consumer preferences and regulatory hurdles.
Relationships: The Key to Success
Nick Rinella, CEO of Hippos Cannabis, emphasized the crucial role of relationships in the cannabis industry. He highlighted the importance of finding partners with not only excellent facilities but also strong connections with retail outlets and budtenders, who play a vital role in product promotion and consumer engagement.
De-stigmatization and Community Involvement
Noonan acknowledged the need to address consumer confusion and fear surrounding cannabis. He advocates for community engagement, including participation in events like farmer’s markets, to help normalize cannabis and reduce stigma. This approach helps build trust and educate consumers, fostering greater acceptance and understanding of the industry.
The Benzinga Cannabis Capital Conference provided valuable insights into the diverse strategies that cannabis brands are employing to achieve success in a rapidly evolving market. The debate between asset-heavy and asset-light approaches highlights the diverse needs and priorities of various brands, demonstrating the dynamism and complexity of the cannabis industry.