In recent months, with COVID’s impact sweeping across the U.S., businesses have dealt with an enormous amount of uncertainty. One of the pieces to note here, is the connectedness and resulting fragility of our economy. When businesses get hit, investment slows, and markets begin to nosedive as they did in early March. This is a delicate ecosystem, and while the pandemic has revealed many things about our world, this is certainly one of them.

There’s many challenges that come with running a successful business and being a responsible corporate citizen regardless of which industry or sector you are operating in. But let’s consider for a moment the additional challenge of running a cannabusiness.

The Complexities and Challenges of Running a Cannabusiness

For the last ten years, our corporate practice group at HLG has helped numerous cannabusiness owners navigate both the standard components of entity formation and maturation – start-up, financing, securities, corporate governance, business transactions, and mergers and acquisitions – and the added complexity of complying within the constantly evolving nexus of cannabis law, regulations, and policy.

When you consider all of these moving parts, it’s easy to see the long road cannabusiness owners must walk to achieve long-term, sustainable success. And we’re honored to have been a part of many of their journeys. But then add COVID to the equation.

Now we’re not just navigating through the complexities mentioned above, we have a global pandemic that threatens the safety of products, consumer behavior, stirs an already volatile market, discourages investors, dries up capital, and perhaps cuts your valuation in half (just to name a few considerations). In my mind, the question we have to ask is this – what is corporate or business leadership supposed to do in light of this pandemic?

This was one of the great lessons from the 2008 financial crisis. While it certainly can’t be applied as a blanket statement, what allowed some companies to weather that storm was having real leadership that embody expertise, exercise sound judgement, are proactive rather reactive, and execute thoughtful decisions by factoring in all the available data.

While there are many facets to weathering a pandemic of this magnitude, the importance of good leadership cannot be overstated.

The cannabis industry came to fruition in the wake of the 2008 financial crisis

I want to highlight another point here. The cannabis industry came to fruition in the wake of the 2008 financial crisis. The green rush rose to prominence during what’s considered the greatest recession of our time. People believed in this industry and invested, despite the fact that development was down, investments were down, the stock market was down, so forth and so on. Over the 10 plus years that we’ve worked in this space, we’ve seen that the cannabis economy is oftentimes disconnected to the economy as a whole.

This industry is resilient. While it is absolutely experiencing growing pains and will continue to do so for some time, its strength will carry it forward. For cannabusiness owners, sound management will be paramount. For the past few years the feeling has been to go harder, better, faster, stronger. Now, the time has come for a buttoned-down business plan over the next 24 to 48 months, a focus on the fundamentals, and wise corporate governance. It’s no secret the cash will be tough to find, and more than likely, we’ll see an uptick in consolidation.

Know that the Hoban Law Group is here for you. Our corporate and securities team can help guide your company through this difficult time. Let us bring our decades of experience to bat for you. A great leader knows when to ask for help, because sometimes, you just gotta poke around.