“We like to describe the cannabis industry as flying the plane while you’re building it,” says Diane Czarkowski, founding partner of Canna Advisors, a consulting and services company that supports clients throughout their business lifecycle.
Her co-founder, Jay Czarkowski, on the other hand, describes it as a circus.
Both analogies are likely applicable.
Cannabis companies must be consistently agile, the founders explain. “[Because] you’re also in a startup industry,” Diane Czarkowski says, “It really changes dynamically … even six months, there can be an important change that really [alters] the direction of your business.”
So what should emerging entrepreneurs do to get ahead of the game?
Expect change and consider contingencies in your financing structure.
“You have to be flexible,” says Jay Czarkowski. “The biggest issue in terms of anticipating change is changes to regulation … being able to roll with and adapt — and also just financially weather change — is a big challenge.”
He suggests raising the capital you need before a storm is on the horizon. “Pro formas are talking about where they are this year in revenue and how fast they think it’s going to scale up … it just doesn’t work that way,” he says. “To get a cannabis business up and running, it takes a couple of years before you’re generating a profit.”
Diane Czarkowski builds on this: “[Ensure] that you’re well capitalized, sometimes over-capitalized, because there are always going to be delays and changes,” she says. Your staff need to know that, too. “[Create] a culture where the people that working with you are comfortable with that constant change.”
As early movers in the cannabis space, entrepreneurs can and should have a say in how things are changing. In other words, find your voice, so your business can impact the industry’s evolution. “You have to be really participatory in defining and further defining regulations,” Diane Czarkowski says. “If you’re not participating in that change, you’re going to have change presented to you, and it’s much better to be on the offensive side of that in promoting the change rather than reacting to it.”
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