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.”
