Business Law Insights is an internet publication of the Business Law Practice Group of the law firm of Carlile Patchen & Murphy LLP. You are receiving this because we value your relationship with us. Business Law Insights is published monthly (via email only). We encourage you to forward this publication to a friend. If you have comments, or suggestions for future topics, we encourage you to contact us or visit www.cpmlaw.com
By Alicia Nesline Shaw
It’s all over the news, and in Ohio, companies and individuals are bracing for…or embracing…as the case may be, legal medical marijuana. But what does it look like to be a successful business trying to capitalize on this new market? What are the realities facing business owners who want to get involved?
As Part II of our series, “Ohio’s Medical Marijuana Program ‘Goes Live’ “, I discussed this topic with Steve Concilla, Founder and Co-owner of Midwest Concentrates, LLC. Midwest Concentrates owns and distributes equipment used to process small batches of essential oils without the need for any solvents. While his equipment can be used to make nearly any essential oil, Steve has found that the primary user of the Canna Clamp® and his company’s other products, are individuals who want to extract cannabinoids from marijuana plants in the comfort of their own home. To fulfill a growing worldwide interest and use of marijuana, Midwest Concentrates ships orders around the world, displays at cannabis trade shows, and is generally, quite involved in the cannabis culture.
Steve was quick to point out to me that unless a company or individual has a near blank check for funding, and has already been involved in cannabis as it’s been legally made available in other states or international markets, business owners looking to get involved now are more than likely too late….Way too late. The only viable avenue to get a “piece of the pie” now, is through product innovation. Creative, entrepreneurial individuals, who are able to think fast and capitalize quickly and efficiently, will prosper. Whereas, businesses that are slow to start and require a lot of investment in their start-up, will struggle in this particular industry.
This may not be surprising, and is fairly applicable to many industries that have little or nothing to do with cannabis, but what makes the cannabis industry require even more quick-thinking than other industries is its “gray area”, as Steve refers to it. The fact that cannabis is not legal in all states, and different states have drastically different laws, not to mention that cannabis remains a Schedule I drug under federal law, makes the investment in it as a business even riskier. What is perfectly legal one moment, may not be with the passage of a new law or even a local city ordinance. Steve points to permitted cannabis businesses in California that became unpermitted on January 1, 2018, when the shift to recreational use became effective. In addition, some businesses involved in the actual growing and selling of marijuana have found their supply chain to be uniquely affected by their product. Some companies refuse to do business with a company involved in the production of marijuana, which creates additional challenges.
So, what is Steve’s biggest piece of advice for those looking to invest in a cannabis-related business? …Take the cannabis out of it and invest in hemp. Or create something that isn’t dependent upon the legality of cannabis itself. He anticipates that more and more states will be adopting recreational use of cannabis in some form or another, but with greater expansion comes greater regulation. It’s easier and potentially much more profitable to be a periphery business without all the risks.