The Bengal Bite 🐯 - Surviving Until Things Make Sense - 2/27/20
“Face it, Jared, being too early is the same as being wrong.”
Richard Hendricks, Silicon Valley
Our good friend Richard at Pied Piper is right. Being too early in any industry - be it tech, finance, or cannabis - can be the death knell of a business. Cannabis is a burgeoning industry, and its early innings have been about making things work in an imperfect world. The industry has seen the emergence of some unconventional business models, but right now it’s all about “surviving until things make sense.”
The operators who have survived in this environment have done so in a crucible and are building the foundation for their future success. Only the strongest operators will “survive until things make sense,” and those left standing will be awarded access to the massive cannabis market of the future.
The Bengal Capital Team
MediPharm sues Hexo claiming breach for $9.8M in unpaid bills
MediPharm is suing Hexo after Hexo failed to honor a supply agreement between the two parties. The alleged breach demonstrates the challenge faced by many operators when it comes to implementing supply chain management at this early stage in the industry’s life cycle.
Is the Safe Banking Act on the Ropes?
The SAFE Banking Act became the first standalone marijuana bill to be passed by a House floor vote in September 2019. Since then, the SAFE Banking Act has languished in the Republican-controlled Senate. For now, it appears that legal cannabis operators will have to continue to survive without full access to banking based on the current environment in DC.
California Recreational Marijuana in Crisis after Two Years
California’s legacy, illegal operators can sell cannabis at a lower price point than licensed, legal operators due to the high taxes and local control provisions dictated by Proposition 64. Governor Gavin Newsom has proposed a handful of changes to alleviate these challenges, but, for now, licensed operators will have to endure the current environment.