There is a buzz on the street about yet another huge name in the Cannabis business that has run into trouble. Rumor Has It that MedMen is running around trying to reorganize the financial roots of their company.
This is the same thing that happened to the dot-com’s. There was a big rush to the gold fields of the internet during the 1990’s, and we all know what happened — the Dot-Bomb. New internet companies went out of business and their stocks stopped trading. There was nothing left but databases and debt for the vultures to pick over.
Technology at the time was not adequate to support what the imaginative dot-com Founders wanted to do with their online businesses, and not enough people outside the major coastal cities had fast internet service. All that has changed now. The internet is now an important part of all our lives and successful companies abound. The same will happen to cannabis companies once the laws and regulations catch up to reality like technology caught up with the dreams of the early internet startups..
People love to talk about how big the Cannabis industry is going to get, and they are perfectly correct. The bankruptcies and consolidation we are now experiencing is a standard fact at the birth of all brand new Industries. It takes a lot of money to get an Industry started. It takes much more money than just getting the businesses themselves up and running. The entire infrastructure must be updated. In the case of the dot.com’s it was technology and the availability of fast internet service that had to catch up. In the cannabis industry, it is the Federal government, States and Municipalities, banks, insurance, interstate transportation, real estate, and more.
All cannabis businesses are surrounded by sets of rules and regulations, plus all the side industries such as accounting, law, employment recruiting, real estate, merchandising, advertising — all of them are floundering around trying to figure out how to do business legally in this new industry.
Chances are that none of the big names in cannabis will still be around in three years. That’s about how long it’s going to take for the rest of the world to catch up with the Cannabis industry and its needs.
The next question is what happens now? Any business that touches the plant may not be able to go through bankruptcy because that plant is still not legal according to our federal government.
What will happen to cannabis cultivation facilities, manufacturing, distribution, and those fancy Medmen dispensaries? Will they be sold with their licenses? None of the stores or cultivation and manufacture facilities will have value without the licenses. All the money and effort put into branding will be lost unless it can be sold or, better yet, refinanced so the companies can remain in business.
Until this happens, the Black Market will continue to do 80% of the industry business. This will require a major reality check for everyone — particularly the lawmakers. And to be fair, some major reparations to the entrepreneurs who have been valiantly trying to do whatever is needed to become legal.
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