Despite the legalization of cannabis in Colorado and 22 other states, the industry is not yet operating with the same ease and transparency of other sectors. That is already changing, but progress may be hampered in the absence of clear-cut rules and regulations.
Call it growing pains.
At the root of this problem is an inherent conflict between the Federal government, which considers cannabis illegal and new state laws permitting its usage. For example, banks still won’t provide financing for cannabis companies because they don’t want to work with businesses whose technical legality is still questionable. That is hampering growth.
“The biggest obstacle to success in any industry is the ability to raise financing,” said Eddie Miller, CEO of InvestInCannabis, a data mining company that provides investors with accurate information on the cannabis industry. “In order to successfully fund a cannabis business, investors rightfully expect complete transparency and real-time accessibility to all of a businesses’ relevant data.”
Miller added, “Once cannabis companies overcome this hurdle, a tsunami of investment will flood in.”
Without banks willing to provide financing and other services, cannabis companies are still relying on a cash-based system that lacks accountability – and may even invite criminality. Other organizations are also hesitant to deal with an industry for which there is little data about operations and financing.
At times cannabis businesses are caught in the middle of these different forces. That is, they have the right intentions but must wait for greater clarity.
Consider the hot-button issue of cannabis and pesticide use in Colorado. Cannabis growers are like other agricultural businesses that want to limit the chemicals on their crops. Consumers are demanding as much.
Yet Colorado recently blocked Denver’s attempts to regulate pesticide usage. Without a Federal mandate about which chemical treatments should be allowed, the state was reluctant to impose its own regulations. That has meant that consumers have no idea if, how much or what pesticides may have been sprayed on their cannabis product, even at levels Denver officials deem unsafe for human consumption.
Yet the signs also point strongly to a more open industry. Many retailers, dispensaries and related businesses are making a concerted effort to educate the public about legal, marijuana use. They are also highlighting their methods of production and testing that ensures the highest-quality product. New testing facilities with the latest technology, such as CannLabs, have also helped the cannabis suppliers and sellers improve their public image, while ensuring a safer product.
St. Pierre also points to a culture shift in the industry that will augur in greater transparency, and away from the pre-legalization and criminal “ganjapreneurs” who operated defiantly out of compliance. “We’re now moving to legalization 2.0,” he said, “where many of the new players come from the current business world and welcome the chance to comport with every regulation and tax, so as to be as legitimate as possible.”
Recent proof of this culture change includes news of a more than $50 million investment in the cannabis industry by PayPal cofounder and venture capitalist Peter Thiel and his Founders Fund.
Such a shift will also help government officials be more open to enacting or expanding cannabis legalization laws in states across the country, as marijuana starts to receive the same oversight as other substances. “Legislators and policymakers need to feel confident that there are appropriate safeguards in place such as with alcohol and pharmaceuticals in order for legalization efforts to truly progress,” said Miller.
A big winner in this changing landscape of greater transparency will be consumers, and health-care professionals who work with medical marijuana. Industry standardization will contribute to consistent labeling, predictable costs, quality and access, and allow for product liability torts. Health-care professionals who wish to work with medical marijuana can feel more comfortable about dosages, potency and continuing medical education.
“There is currently a lack of clinical trials held and vetted at the highest standards,” says Miller. “Once a multitude of pharmaceutical grade research studies are completed, patients and healthcare professionals alike will comprehend the immense healing properties of cannabis.”
via The Cannabist