Panel Explores Risks of Adapting Cannabis Business to New Markets

- August 15th, 2018

Jennifer Sanders, CEO of CNS Equity Partners, gave a preview of her panel at MJBizCon INT’L and explained the strategy of her equity firm.

As cannabis markets continue to open across the globe, companies are eager to translate products and brands into emerging areas of the sector.

A panel at this year’s MJBizCon INT’L in Toronto will cover the challenges companies face when interacting in foreign markets.

Jennifer Sanders, CEO of equity firm CNS Equity Partners, will lead the panel during the second day of the conference on Wednesday (August 15).

As part of our coverage of the MJBizCon INT’L, the Investing News Network (INN) had the opportunity to chat with Sanders about her panel during the conference and about the strategy for her equity firm.

Sanders explained her panel will evaluate the need for companies to understand there are multiple operational challenges and pitfalls within the cannabis industry innately that can affect the move into a new geographical market.

The executive said the first thing she looks at when evaluating companies with intentions to make the jump into a new market are their investment advisory teams.

“If someone does not have or they don’t have access to someone who has that international advisory, international council auditing, tax … there’s really no way that they are going to be able to navigate properly, it’s extremely expensive to bring these people on,” Sanders told INN.

Capitalization plays a big role in expansion for Sanders, as she explained it the process of going into a foreign space for a company is a lot more expensive than projected.

Another factor for Sanders is how translatable a product or a concept or the brand itself will be in the new market. “Are people in, say, Southern California going to adopt a brand that came from Canada and what speaks to them about that.”

Landscape of investment in the cannabis space and growth of health/wellness

CNS Equity Partners has a focus on investing based on impact methodology, essentially which companies have “strong philanthropic business practices” or are performing in an environmentally and socially responsible way.

Sanders told INN there is a correlation for cannabis and hemp to be adopted within the health and wellness market space, which she said in its entirety is outpacing the growth of cannabis.

One of CNS’ portfolio companies, The Green Heart, is a cannabis dispensary offering an entire holistic approach to the sector in Oregon. Its stores offer consumers juices, salads and yoga classes. The company also has an approved cannabis license.

According to Sanders, The Green Heart will begin offering franchise licenses in 2019. The dispensary will setup the new shops for the franchisee adopters including operating the store, doing inventory management and keeping everything compliant.

“I think that’s also a really unique way of entering the industry of having a store like that but having the time to learn the way that this business works, that’s really exciting to me,” she said.

Investor takeaway

When asked about the areas of interest for investment in the cannabis space, Sanders said she has noticed a lot of product and brand side. While expressing some concerns for the cultivation side of the industry, Sanders said investors have been high on retail.

Following the announcement from Ontario’s Progressive Conservative government to open the retail market to private companies for the sale of recreational cannabis, the interest on the retail strategy from cannabis companies has gained momentum as a top metric for investors.

Don’t forget to look for our coverage of MJBizCon INT’L, with show notes from the floor and exclusive interviews on INN. You can also follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in contributed article. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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