Two Paths to Success in the Age of Cannabis Legalization

Have you ever made a wish and gotten what you wanted only to find the reality did not match your expectations?

According to the Merriam-Webster dictionary, the phrase, “Be careful what you wish for” is used to warn people to think carefully before they ask for something, suggesting the long-term ramifications may render their yearning less desirable.

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The origin of the adage is said to be Aesop’s Fables, a well-known collection of morality tales circa 260 BC. Yet, it seems perfectly apt today.

I have spoken around the country for several years, warning people that federal legalization of cannabis may be a double-edged sword. While most of us in the cannabis industry want the plant legalized, the moment that the ink dries on the legislation, the market will be forever changed.

Legal cannabis will be an enormous industry, rivaling tobacco and alcohol. Accordingly, the big players from those industries, and from pharma, will descend on our little corner of the world like a committee of vultures ready to consume everything at its feet. But unlike real vultures that feed on the deceased, this group of corporate buzzards will kill thousands of living businesses.

Once legalization occurs, the cannabis business owner will face a rapid onslaught of mega competition from companies that have a petty cash drawer larger than your yearly revenues. These corporate giants will outspend and outperform you at every turn, command coveted shelf space, and turn thousands of small brands into nothing more than memories.

Sound apocalyptic? Well don’t hate the messenger.

And with the new administration and congressional makeup, federal legalization seems closer than ever.

So, is the end in sight? Unfortunately, with federal legalization, the colossal increase in competition from well-funded companies will cause massive market disruption, and many brands will simply cease to exist.

However, there are critical steps you can take now to take advantage of legalization rather than becoming its victim.

There are two paths that business owners can take to profit from federal legalization:

The first path is the easiest. Simply make your company huge. Generate hundreds of millions in revenues, and then when legalization occurs, you will be well positioned to either be purchased by the corporate giants for huge sums and you’ll live out your days on a beach in paradise, or you will be able to effectively compete with the giant slogs since your company is already so well established. Easy, right?

But if you are unable to become a cannabis industry behemoth because, perhaps, you are not a publicly traded company that can afford to lose millions of dollars each quarter during your “growth” phase, or maybe you like having a smaller family business, or maybe you just want to be able to sleep well at night knowing you haven’t enriched yourself at the expense of your investors. Whatever the root reason, you’ll need a game plan to survive legalization…and that is path number two.

Path two is a bit more complicated than the first path. It requires the creation of a powerful brand. Note that powerful brands do not require massive companies standing behind them, although a great brand usually will accelerate revenue growth.

Creating a great brand doesn’t require a lot of money, but it does require a great deal of thought, careful planning, and excellent execution.

Let’s review: When legalization occurs, the large cannabis companies either will be sold to giant international corporations or must be strong enough to compete with them. The smaller companies will wither away due to increased competition and lack of available shelf space once it is hoarded by the giants.

But a third group of cannabis companies—those with great brands—will be in the driver’s seat. These companies either will persevere as a specialty brand or become an attractive candidate for purchasing, nicely fitting into the expanding portfolios of the mega corporations.

When big tobacco and alcohol invade our market, they will bring the knowledge and expertise to build massive brands, which are absolutely vital to success. They know strong brands command loyalty, generate sales, and become revenue-generating machines.

Accordingly, these corporations will look for the best brands in the industry, and make generous offers to purchase them, because it’s quicker, easier, and less costly to buy a brand than start one from scratch.

So, there you have it—two roads to success once our dream of legalization comes true.

If we all choose wisely, we can flourish in the cannabis industry of the future.

Then, maybe we can change the saying from “Be careful what you wish for,” to a more accurate and reflective, “Wish for anything, but be well-prepared if your wish comes true.”


Kary Radestock

Kary Radestock brings more than 20 years of award-winning print and packaging expertise to some of the top brands in the world. She launched Hippo Premium Packaging in order to fill a need for professional, compliant packaging, brand development, and graphic design to the emerging cannabis industry.

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