Wharton Professor Talks About the Major Hurdles in Marijuana Legalization
The marijuana industry is on the top of the minds of policymakers across the United States. There are so many things to consider, one of the most critical policies being banking regulation. And with former Republican Speaker of the United States House of Representatives, John Boehner, as a confounding new pro-marijuana spokesman, it seems as if there’s never been a more apt time to discuss marijuana legalization and policy.
That’s why University of Pennsylvania Wharton School professor Peter Conti-Brown dove deep into the marijuana industry to discuss the many policy barriers that are causing issues. In particular, he looked how the government’s current stance on marijuana is causing more trouble than it’s solving when it comes to banking. Continue reading…
USC Marijuana Dispensary Study Finds Closures Cause Crime Spike
USC Marshall School of Business Professor Tom Y. Chang and Paul Merage School of Business Professor Mireille Jacobson recently co-authored a study in the Journal of Urban Economics that examined how closing marijuana dispensaries affects crime in surrounding areas. The study specifically examined the aftermath of a period in 2010 during which hundreds of dispensaries were shut down. The crime rates around the closed dispensaries increased dramatically. According to Chang, “When marijuana dispensaries were shut down, we found the opposite of what we were expecting … Crime actually increased in the areas that closed relative to the ones allowed to stay open.” Continue reading…
Berkeley-Haas Surveys The Future of Cannabis Industry
Berkeley’s Haas School of Business recently published an article on the conclusion of “High Margins: The Business of Legal Cannabis,” a six-week student-organized series that explored the “most promising business models, investment strategies, future regulatory schemes and the changing risks for a market long forced to operate underground.”
Stanford GSB Alum Talks Cannabis, Future Investment
The Stanford Graduate School of Business recently published an article about the fledgling—and admittedly peculiar—cannabis consulting industry. Erika Brown spoke with Stanford ’91 alum Hadley Ford whose iAnthus Capital Holdings merchant bank-come-consulting firm has become a mover and shaker within the field.
iAnthus offers an “experienced staff that can handle the financial end of things and [a team] of cannabis advisors and contacts who can vet the cannabis operations.”
Although Ford, the co-founder and managing director, describes himself as an advocate for legal weed—“I am a child of the late ‘60s and early ‘70s; it’s about ‘power to the people'”—he didn’t initially think the the drug would be a sound investment, especially when it came to building large national brands.
“Cannabis is still illegal in most of the U.S., which means you can’t trademark or copyright your product or manufacture and distribute across state lines,” he says.
Ford quickly discovered that due to cannabis’ social stigma in the business world, entrepreneurs have “no access to institutional startup or growth capital” but they still “need counsel on how to run a company efficiently.” To offer some perspective, Ford mentions that he raised $800 million from his Rolodex on his last business venture compared to the $9 million he snagged with the exact same personnel and contacts.
To circumvent domestic policy and stigma, Ford opted to reach out to Canadian investors where “issuers can sell securities related to cannabis and investors can buy them.” Ford structured a $500 million “public vehicle that raises money in Canada and uses the money to fund businesses in the U.S.”
That said, Ford believes the tides could turn dramatically in the next 5-10 years in terms of domestic cannabis investment.
“We will see a lot more investing by smaller institutions and regional banks providing credit, though probably not the big banks yet. In 10 years it will look more like the alcohol business, with dry counties and wet counties.”
