Why Partnerships Are The Lifeblood Of The Cannabis Industry
Given the capital challenges cannabis companies face in scaling up their businesses in the U.S. and Canada, partnerships can be a critical part of the equation. At the Benzinga Cannabis Capital Conference Monday in Miami Beach, several business leaders within the cannabis space discussed their strategies and success stories establishing mutually beneficial partnerships.
One of the advantages of being self-funded for Wana Brands: the company had to figure out how to make money quickly, and partners played a major role in that process, said CEO Nancy Whiteman.
"We really saw partnerships as a way to go quicker and faster and better than we could do it on our own."
The CEO specifically mentioned Wana’s supply chain and technology partnerships.
“I consider partnerships to be a core competency for marijuana,” she said.
Partnerships Grant Market Access, Reduce Risk
SLANG Worldwide CEO Peter Miller said his company would not be able to effectively access certain markets without the strength of its partners.
“A good partnership creates efficiency,” Miller said.
“We wouldn’t be in the dozen-plus markets we’re in without great partners.”
Local market and customer knowledge can make the difference between success and failure, and partners can provide that insight, he said.
“Whether it’s a really big market or a small market, if you don’t have local knowledge, expertise toward the customer relationship, you’re going to be eaten alive.”
Miller said partnerships are critical for companies of all sizes, and mentioned that Mars was a long-time chocolate supplier to competitor Hershey Co (NYSE:HSY).
Jim Cacioppo, the founder, CEO and chairman of Jushi, said partnerships with other brands can help cannabis retailers mitigate the risk of launching new brands in such a fragmented market.
“Eventually when we become bigger, maybe 50 stores or 70 stores, we will have a platform to cheaply roll out a brand, and maybe we can trade with other retailers and say you carry ours and we’ll carry yours. So I’m looking for a very cost-efficient way to do it but also produce the outcome so it’s a high probability of success,” Cacioppo said.
Tickets to the next Benzinga Cannabis Capital Conference in Detroit, Michigan April 1 are available now.
What Investors Should Look For
Finding the right endorsement partner can open the door to national media coverage in a way that advertising can’t, said Jonathan Conforti, vice president of corporate development at Abacus Health Products.
In August, Abacus partnered with three-time Super Bowl champion Rob Gronkowski, and Conforti said Gonkowski’s story created mainstream media attention and lent credibility to the company’s products.
“He’s somebody who is not only a great guy but has suffered through nine seasons of pain and nine sugeries and really came to finding CBD worked for him to relieve this pain,” Conforti said.
Gronkowski has helped drive Abacus’ consumer awareness through the roof and has brought new customers to the compan, the cannabis exec said. In addition, with social media platforms run by Alphabet Inc (NASDAQ:GOOG) (NASDAQ:GOOGL), Facebook, Inc. (NASDAQ:FB) and others banning or restricting cannabis advertising, he said partners are critical in getting the word out.
“The only way to get right through and reach consumers is through advocacy,” Conforti said.
In fact, Conforti said any investors looking to get in early on cannabis brands should focus on brands with distribution partners.
“I would suggest to all the investors out there as part of your due diligence, whether it be THC companies or CBD companies, distribution is absolutely key to long-term success. Look for those companies that have secured distribution partnerships, and those are the companies that you want to bet on.”
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