Access to traditional banking, high state fees, and 280E taxation remain major roadblocks for cannabis companies
After the rollercoaster ride that kicked off 2022, it's time to spend some energy understanding what's going on the cannabis sector. With federal legalization continuing to be teased, as well as state-by-state legalization chugging along, what's next for the cannabis industry?
Today we sat down with Rob McEvoy, Vice President Customer Success, Corporate Development, and Government Affairs at Agrify Corp (NASDAQ:AGFY). Rob is an experienced cannabis business owner and advisor, with a passion for advancing companies to the forefront of industry through pragmatic management and charismatic leadership. Rob has a background in vertical operations, CPG product development, state licensing and compliance, and process improvement practices.
Rob leads client operator cultivation centers in successfully achieving cultivation goals by integrating hardware and software technology, establishing multi-level accountability, and creating loyal workplace cultures. Prior to Agrify, Rob served as a Partner in Shift Cannabis, as well as President of the extraction and manufacturing divisions of the company. Shift began as a national consulting company with clients from the financial, entrepreneurial, and real estate sectors where Rob assisted with fundraising campaigns, executive coaching, and business building. Rob played an integral role in Shift’s transition to a large-scale cultivation, extraction, and retail company, successfully penetrating mature markets with a turnkey product portfolio of diverse, variable form flower and concentrate offerings.
Schaeffers: What major opportunities do you see in the cannabis industry?
As more states expand current medical programs and look to future adult use sales, new and existing businesses will see opportunities in sustainable agriculture, genetic crop steering, product development, and brand differentiation. Markets and customers are maturing and starting to push cannabis companies to be more socially responsible and operationally transparent while delivering safe, consistent, and delightful consumer packaged goods. This environment in turn fosters research, innovation, and perhaps most importantly, competition. Specifically, advancements in delivery systems, novel cannabinoids, and formulation science will influence and create new consumption categories, industry services, and customer preferences.
Schaeffer's: What major obstacles do you see in the cannabis industry?
While the ability to finance in the private sector through debt options and venture investments is increasing, access to traditional banking, high state fees, and 280E taxation remain major roadblocks for cannabis companies. From above market financing terms, limited engagement choices, and minimal tax deductions, small and big industry businesses alike need equal banking protection, benefit, and treatment. Correlated to this problem are inconsistent licensing, testing, and operating regulations from market-to-market, which increases costs and expenses while concurrently slows production and brand growth. Efficient launch and scalability is universally critical for first-time entrepreneurs, experienced producers, and large-scale organizations.
Schaeffer's: What motivated you to join this stigmatized industry?
Cannabis deserves to have the same societal normalization and regulation as pharmaceuticals, over-the-counter medication, tobacco, and alcohol among other consumer necessities and indulgences. That said, the industry needs better actors who have a high regard for professional ethics, exhibit respectful behavior, and value education. We as an industry need to embrace the word “accountable” more and establish attitudes and cultures of inclusivity and equality to unlatch inaccurate stereotypes and stigmas from cannabis users and workers. Years of change and challenge lie ahead, but through stakeholder collaboration the faces and voices of cannabis will continue to evolve, transcending gender, race, religion, socioeconomic status, and political affiliations.
Schaeffer's: What do you think the next 'big thing' in cannabis will be?
Multi-form factor, full-lifestyle CPG product and cannaceutical integration is not only gaining momentum nationwide, but will transform purchase and consumption habits into the industry’s future. Plants cultivated specifically for end-use application and concentrates refined for optimal experience will create shifts in next-generation health, wellness, and recreational cannabis behaviors that will intersect with nutraceutical categories already offering supplemental gummies, powders, and capsules. Routes of administration and desired effects will have advancements and demand for intentional breeding and unique extraction will grow. How cannabis is cultivated, manufactured, and retailed will become intertwined with contemporary mainstream media and commerce creating an atmosphere of acceptance and normalization.