Penny-Wise, Pound-Foolish

‘The road of excess leads to the palace of wisdom,’ William Blake famously said. My take on it is that ‘money can afford you a lot of stupidity’.

Over the last 25 years in the cannabis industry, I have seen all ranges of the spectrum when it comes to living large like there’s no tomorrow with cash galore and then having to max out your credit cards to cover your bills. From bottle service to ramen noodles, I have witnessed plenty of friends throw away their sweat equity with nothing to show for it and two months to go until next harvest.

I won’t lie, I like flying first class just as much as the next person, but at some point, where the rubber meets the road, the cost of the fantasy realized usually outweighs the pleasure derived from it.

Welcome back to Reality-ish!

‘Welcome back to reality-ish!’, The press release reads, ‘We just launched our new ‘State-of-the-Art’ Dutch greenhouse facility to the tune of $70 million. We have an additional $30 million to launch our first of five brands. We have hired the highest pedigree talent from multiple industries. We are vertically integrated with every license available and will be launching in July!’

The early stages of a startup are when you feel invincible. You’ve got your foot on the gas pedal, and there is no one there to slow you down except, of course, reality.  Having witnessed it before in a fantastical way, I have ridden that roller coaster up, and instead of enjoying the ride down, it was like a 1,000 ft plunge into a foggy quagmire not knowing if the construction crew had finished the rails yet.

This is the cautionary tale that is so easy to fall into. Anyone can sell a fantasy, but when it comes to building success, someone has to create the roadmap, roll up their sleeves and get their hands dirty.

On the flip side, now with my boots firmly on the ground, the mom and pop farm that has been garnering a lot of press recently has just posted another modest gain for the 7^th year in a row. They are lifelong cultivators of cannabis that have perfected their craft. They live for each harvest and just recently got into auto flowering although the jury is still out on that one.  Each year they up their game while they see more of their neighbors fall off the legal landscape.  But their focus has always been to bring this medicine to the masses and support the growth of our industry in the face of exceptional regulations and their associated costs.  They are quoted as saying, ‘It has never been about the money, although, it’s nice.  I will be happy if I can grow cannabis for the rest of my life while supporting my family and my community.’

No matter what your business model may be, it is always within your control to establish reasonable focus with whatever your circumstances entail, get down and do the work necessary to achieve that goal, and don’t bite off more than you can chew.  Vidal Sassoon famously said, ‘The only place that Success comes before Work is in the dictionary.’  Now that we have established the ground rules, let’s dive in.

Focus on one thing, perfect it, and then move on

Focus on one thing, perfect it, and then move on.  This is not what the conquerors of the world want to hear,  but the cannabis industry is still in its infant stages and requires a tremendous amount of focus to see a project to fruition.  When I think about the boldness of launching a vertically-integrated company all at once, it makes me shutter to think how much money will be lost trying to understand the ever-changing landscape that is the cannabis industry. Endeavoring to take on just one component of vertical integration, let’s say, cultivation, can, by itself, be a one way ride to the poor house if you don’t have the right people and focus.

Now, money can mask a lot of problems and afford you the ultimate reset button when the wheels fall off the bus, but at some point, your burn rate is most likely going to outrun your success rate, and the Grim Reaper is going to come calling. Life’s lessons are best learned in small, manageable doses.

Don’t become a victim of complacency

At most points in any company’s progress, there is always a moment when they must become penny wise. In the cannabis industry specifically, it always seems like the goal posts to success are constantly moving.  We are reminded every day that while the ‘green rush’ is amazingly luring, the money, ingenuity, passion and perseverance it takes to succeed does not usually follow a predictable path.

So when the coffers inevitably start to dry up, there is nothing like tightening the purse strings to drive the anxiety parade.  ‘Do more with less!’ is what the leaders would say.  To which the response would typically be, ‘What do you think WE were doing?’

The stark realities of a corporate restructuring can be demoralizing with a lot of finger pointing.  This is where you really understand what it means to be ‘second fiddle on the org chart.’  People’s livelihoods are gone overnight because the leaders who were allocating the resources were either following an outdated playbook or didn’t understand the rules of the game to begin with.  The cannabis industry requires you to not only establish focus but to reinvent yourself daily by thinking outside the box as the variables are always changing.

If you find yourself in a hole, Stop Digging!

‘The most important thing to do if you find yourself in a hole is to stop digging.’  Warren Buffett sure had this one right.

The one thing I would add to it is invest the time and the resources initially in the right mix of people who have experience, vision and true empathy to avoid digging the hole in the first place.  Any structure is only as good as its foundation.  In the end, you still might end up in the same spot, but with a cohesive team, you can identify the problem quickly and change direction.

The ultimate goal here is success but being pound-foolish is not a viable strategy.  While the excess affords you the ability to hide your failures, more often than not, it only offers temporary relief to a company’s ensuing demise.  But if you have the right mix of leaders, team, experience and focus, excess takes on a whole new meaning.  Finding that balance and the right business structure to support it can be a thing of beauty.