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Welcome to the Cannabis Industry: Behind the Scenes

 September 13, 2019  Written by David Melnick
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For all of the intrigue that surrounds the cannabis industry, things are not always as they appear. Everything is not as bad (or good, for that matter) as it may seem. To have a clearer picture requires the peeling back of a few layers of the onion to really wrap your head around what is going on.

First, to address the main elephant in the room, most vape cartridges in legal cannabis markets are not tainted with foreign substances. To put it in perspective, medical cannabis has been legal in California for over 20 years and recreationally in Colorado for 5 years (not to mention several other states with more mature markets). If there was a widespread systemic problem that existed throughout the industry, why is it just coming to the surface now? There are plenty of established companies who for years have produced the same high quality, lab tested products. Now, if you should be so inclined to purchase products outside of a legal cannabis market, then the risk associated with these products is a complete unknown. The best advice is to only purchase products from a legally operating dispensary and to do your homework. If you are unsure about a product, ask dispensary staff questions. A properly trained employee should be able to answer any questions you might have and help guide you in making a safe and effective product choice.

Second, while people tend to think that every cannabis company is just “printing money,” that is not the case. While there are companies that are very profitable, there are also those that are not. Even the largest companies in the industry are burning through untold amounts of cash (https://www.newcannabisventures.com/cannabis-company-reven…/). Cannabis companies of all sizes face pressure from slower than anticipated market growth, fierce competition, and, of course, the dreaded IRS section 280E tax penalty provision (attributable to operating a federal illegal business). The advantage that these large companies have to remain viable for a longer time frame is that they are well-funded, relatively sophisticated organizations that know how to effectively maneuver within the various state specific systems. However, just like other industries, as the cannabis industry evolves and matures, companies (large or small) with the best and most clearly defined business plan, strategy, and consumer value proposition will rise to the top.

Finally, not all cannabis companies are created equal. There are many cultivators, manufacturers, dispensaries, and other ancillary businesses that are truly trying to make a difference and shape the industry for the better for future generations. They are not just out there trying to “sell weed.” The best source for information are sites such as Leafly, Weedmaps, Google, or Yelp, as well as recommendations from people you trust. Again, do some homework to try to figure out which companies might align with your own personal values and beliefs and give them a chance. The cannabis industry is all about experimenting to figure out what works best for you.

As its stands today, the cannabis industry is going through growing pains that were to be expected. However, given the extremely bright spotlight constantly shone on it, everything that happens seems to be magnified. In an age of extremes, sometimes we just need to take a deep breath and have a bit of a more moderate approach. Overall, the industry is headed in the right direction, but it will still take some time to work out the kinks!

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