The Well-Rooted Cannabis Startup

Without a healthy root system, a plant will never thrive. Roots provide structural stability, so plants can grow tall and withstand powerful wind. Roots also function as ”mouths“ for plants—and the larger the root structure, the more opportunities exist to find food. Without strong roots, plants will forever need to be supported artificially, and will rarely ever grow to be as productive as their well-rooted counterparts.

As a cannabis cultivator, I have often observed that the same principles I apply in order to grow healthy and productive plants, apply just as accurately to grow healthy businesses.

If you are part of an organization, it’s good to reflect upon and invest in its roots. Roots are not intended to be temporary. Although roots can sometimes break due to natural forces, they are integral to the structure of the plant. If one root breaks and the surrounding roots aren’t strong enough to bear the plant, the whole organism will fall.

When I work with cannabis start-ups, even those that have already attained some measure of success and profitability, one of the first things I try to identify are its core values—the roots. Hopefully, the company will already have one or two strong roots. And through working together, the goal is to create a strong internal network of support that can give the business its best chance for success, no matter what challenges it will face.

The problem is, many businesses don’t seem to realize that growing roots is not a matter of convenience. It’s essential.

I would never stick an unrooted clone in soil and assume it will take root and thrive without careful attention, but I’ve encountered a surprising number of teams that believe they can artificially prop themselves up with favorable market conditions, or a big capital raise, or investment in a hyped-up technology they may not fully understand. And then, the wind blows, the market shifts, the money dries up, the technology fails, and the company falls.

As in nature, the fallen company often becomes compost for other businesses to build upon, but that’s not a comforting to the team who risked much and failed.

Desiring money is an acceptable root—so long as it is supported by roots or principles that bring value. Let’s be honest, most of us want money. But what can you offer that is uniquely valuable? What will attract people to your cause, your product, your technology?

Colorado experienced a ”green bubble“ in which record numbers of cultivators opened up shop. Many grew mediocre weed at relatively low cost. The brands were murky and lazy, and they may well have just named themselves ”Cash-Grab Cannabis, LLC.“This surge in availability of product caused wholesale prices to plummet to levels that were nearly impossible for most small-to-medium scale cultivators to compete with. As Cash-Grab LLC went under, they’d sell at a loss, and prices would drop even further.

Two very different business models survived this storm. Either businesses were able to consistently execute a high-volume cultivation and distribution model with low-cost, mediocre cannabis products, or they were able to execute medium-scale cultivation and distribution model that provided something special—special genetics, a special cultivation system, a compelling story that went along with unique product offerings. In short, the survivors were either rooted in providing bargains or providing quality. Of course, some businesses rode out the storm on a raft of capital, but even those businesses will eventually sink unless they are able to root in something substantial.

Already, we are beginning to see widespread cannabis legalization across the globe. As new cultivation facilities are constructed, they’re designed to accommodate export under GMP/GAP/GACP standards. Within the next 5-10 years, cannabis grown in these facilities will be distributed worldwide. The same economic principles will apply when international trade opens up—a handful of behemoths will dominate the bargain market, but there will still be thousands of smaller producers that deliver on quality. When the storm of international cannabis trade blows at your door, how rooted will you be?

If you’re reading this, you are probably not a behemoth. Thus, you’ll need to take the path of quality over quantity to survive long term. What does that look like for your company? What is authentic to your brand? Start building upon that now.

But before we go any further, let’s get one thing straight: you are being watched. If you invest in one values system, don’t haphazardly jump to a different values system just because that investor you toured last Tuesday suggested it. And for the love of God, even if you do this once, please don’t repeat it. Here’s why: your team is watching you. Your customers are watching you. If you unify them with one story, but then casually hop to another, they will stop believing that anything you do is real.

What values, habits, or principles keep your company rooted? What motivates your employees to give you their best? If the energy on your team is waning, or if key employees are leaving for greener pastures, your team isn’t well-rooted. But they need to be, or you will spend most your time hiring, firing, training, and ”coaching.“ An unrooted team is a drain on your company, and you will (fairly) not be able to count upon them during tough times. Instead, ask yourself how you can invest in following through on your values, and showing your team that everyone is working toward the same goal?

Has quality shifted in your production, so that the value you once promised is no longer up to your original standards? Are you in need of HVAC or infrastructure upgrades in order to deliver safe, high-quality products? If yes, find a way to do this. If you know your products are no longer something you can stand behind—or be honest about—you need to change that. Don’t do this before it’s too late.

You will know you have strong roots when you have confidence in your foundation. When you have strong roots, you will not jump at shiny objects, erratically bounce between technologies, or copy business models you don’t truly understand. Although it can be frightening, investing in your roots is the only way to gain lasting respect and success in this industry. Be brave!