‘Successful in Any Environment’

These are volatile times in the cannabis industry. From wholesale price compression and supply chain pressures to shifting regulations and changing consumer trends, businesses must be ready and eager to tackle anything as the market continues to evolve.

Colin Kelley, senior operating partner at Merida Capital Holdings, will speak at Cannabis Conference 2023 at Paris Las Vegas on how operators can leverage an understanding of all the major drivers and impacts to their business to control what they can and plan for the rest—in a sense, moving from surviving to thriving by being more prepared for the inevitable challenges.

Here, Kelley offers a preview of themes he’ll share during his session at Cannabis Conference, “Built To Last: Shifting From Reacting To Planning Ahead To Withstand Market Volatility,” which takes place at 10:30 a.m. PT Wednesday, Aug. 16.

MS: How can cannabis operators stay afloat in these conditions?

CK: I think for a lot of folks, it’s first understanding what they can control and what they can’t control. And then [they must understand] where their core competencies or strengths lie. I’ve seen a lot of excellent cultivators that have ventured too far out into creating and licensing brands, and then they’re not getting the traction on the brands that they had hoped [for] or anticipated. … They might need a partner who’s someone that’s very good at creating and launching brands. [Then] they can both focus on their strengths and both do well together.

MS: What are some best practices when it comes to creating a living budget for your business?

CK: Being self-aware and then the organization being self-aware. As owners, it’s [thinking about], “What am I really good at? Where are there challenges for me personally, and how do I surround myself with people who are really good at those things that I find particularly challenging?” And then that factors into our budget, where we’re hiring people and spending money and time and resources on folks that can execute on certain areas of the business really efficiently.

I think it’s very important to think about that it is a live, living document. It allows the companies to be agile and responsive. It also requires that evaluation frequently. Where is this working? Where is this not working? Where is the line in the sand where, if the price per pound of X product goes below this line, I stop executing? Where do I have to reevaluate as opposed to just continuing to chase it down?

MS: How can cannabis businesses evaluate some of their fixed and variable costs and make changes to better their financial positions?

CK: There were a lot of people and companies that were surprised … that there was price compression in California or Massachusetts or Michigan or Arizona, or they were surprised by different regulatory issues. … There were some operators that took those careful looks at their businesses on a regular basis, semi-monthly, and either they weren’t surprised, or they were able to very quickly adapt and plan to address this and implement changes.

They used their financials as a jumping-off point. They’re saying, “What are our financials telling us about the operations of our company?” They were asking that question on a very regular basis. What are my expenses? They would start to classify their expenses based on, what are the expenses that are required to exist? And then the expenses that they chose to undertake, and what the impact was, then, on the operations of the business.

Beyond that, we have to look for ways to grow the business. … The cannabis market, in general, continues to grow overall. It’s just the opportunities to participate in that growth are now harder to find.

MS: What would you like attendees to walk away with after attending your session?

CK: I want them to feel really confident and comfortable in knowing and understanding their business, and [feel] confident in their businesses’ ability to be successful in any environment.

Melissa Schiller is the senior digital editor for Cannabis Business Times.

Editor’s note: This interview has been edited for style, length and clarity. Read a longer version here.