sully17
New Contributor
Hi there, thanks for checking this out. My goal is to launch one or more businesses in the cannabis industry that are:
We made an acquisition (all stock), changed our model to focus on the growth opportunities that would surely come with the recreational legalization of cannabis in California. We were right! The business exploded. But banks won't lend money to cannabis businesses. No credit lines = no working capital. Venture/Private Equity funding is the only way to fund growth. Our growth coincided with the election of Donald Trump and appointment of Jeff Sessions as AG who promised to challenge recreational cannabis. This had a chilling effect on private equity. We were forced to take on secured debt, which capped our ability to sell equity. We ended up selling the business to a public company just to pay our investors back, and I had to stay on to run it.
Today it's a $20M+ business. Great, right? Nope. Combination of high tax rates, low gross margins (over-investment by PE = industry focused on hyper-growth, race to the bottom economics) and lack of access to capital mean much more work to achieve operational profitability. And public equity in cannabis companies at this point isn't worth the paper its printed on.
Bottom line: I've invested a ton of time, money and passion into building a big cannabis business--from which I've gained experience, wisdom and contacts (finance, supply chain, retail, product dev., etc). But little else. Time to go back to basics.
I'd like to use this thread to encourage like-minded entrepreneurs focusing on the cannabis industry to post startup ideas, potential new models, progress or help needed on current projects. With the caveat they meet the three criteria outlined above. Hoping we can use the current carnage in the cannabis industry as an opportunity to launch some modest, cash-flowing, wealth-building long term businesses in this space.
- Profitable, preferably from Day One
- Focused on providing infrastructure or services (preferably B2B)
- Relatively low cost to start = zero or little outside capital required
We made an acquisition (all stock), changed our model to focus on the growth opportunities that would surely come with the recreational legalization of cannabis in California. We were right! The business exploded. But banks won't lend money to cannabis businesses. No credit lines = no working capital. Venture/Private Equity funding is the only way to fund growth. Our growth coincided with the election of Donald Trump and appointment of Jeff Sessions as AG who promised to challenge recreational cannabis. This had a chilling effect on private equity. We were forced to take on secured debt, which capped our ability to sell equity. We ended up selling the business to a public company just to pay our investors back, and I had to stay on to run it.
Today it's a $20M+ business. Great, right? Nope. Combination of high tax rates, low gross margins (over-investment by PE = industry focused on hyper-growth, race to the bottom economics) and lack of access to capital mean much more work to achieve operational profitability. And public equity in cannabis companies at this point isn't worth the paper its printed on.
Bottom line: I've invested a ton of time, money and passion into building a big cannabis business--from which I've gained experience, wisdom and contacts (finance, supply chain, retail, product dev., etc). But little else. Time to go back to basics.
I'd like to use this thread to encourage like-minded entrepreneurs focusing on the cannabis industry to post startup ideas, potential new models, progress or help needed on current projects. With the caveat they meet the three criteria outlined above. Hoping we can use the current carnage in the cannabis industry as an opportunity to launch some modest, cash-flowing, wealth-building long term businesses in this space.
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