On February 21st, Gregg Steinberg of Growcentia, will speak at Kahner Global's Cannabis Private Investment Summit in Fort Lauderdale, FL. This event gathers industry leaders and investors for a day of collaboration and networking
We spoke to the Growcentia CEO about the year ahead, within our borders and beyond. Here, he talks about evolving markets and consumers, and how business in a Post-Cole Memo landscape looks as green as ever.
This interview has been edited for length and clarity.
January 2018 saw both the opening up of the largest legal market in the U.S., as well as the reversal of the Cole Memo by Attorney General Jeff Sessions. Where is the industry focus in this moment framed by both opportunity and instability?
There wasn’t as much talk as I thought there might be relative to the ability for the Department of Justice to actually implement anything because the funding is not there. I definitely don’t hear the consideration or the concern post that conversation than there was early on in this administration’s tenure.
People are focused on the business at hand. The California opportunity is probably much more of a conversation than the worry about what’s coming out of Washington.
In terms of the California piece, from the artisanal and craft side of the business, and the concern of the large cultivators, that market evolution is going to be an interesting evolution to watch. The craft beer industries vs. the big beer companies is a good analogy to that and we’ll see something similar in our industry. California is where we’ll probably see that play out more than anywhere else in the near future.
With all of the energy surrounding California, is there anything that we’re missing in Massachusetts where legalized recreational cannabis use will roll out this summer?
What’s going on in Massachusetts, you’ll also see it in a number of other New England states in terms of the regulatory environment changing dramatically. New York, New Jersey and New England combined are awfully compelling in terms of what that opportunity is going to look like.
You can’t go across state borders and can’t go across country lines, but for ancillary businesses, the opportunities and impact for companies like ours, these are compelling opportunities that continue to create interesting business models and the ability to really be part of the growing industry.
Consumers have an underlying confidence in products with a USDA organic certification. As that market grows, what are your thoughts on establishing industry standards for a crop that is not recognized by the federal government?
There are a number of organizations that are trying to get those guidelines put in place with leading cultivators. The more that those organizations are able to be an attraction, one or two organizations are going to end up being the cream of the crop and holding those guidelines. Those who are adhering to those guidelines and methodologies are going to be able to demand a higher price.
As soon as the federal regulations change, one or two of these organizations will become a certifying body, or be absorbed by one of the federal agencies. Those that are already adopting to it will have a fast path to entry. It’s definitely going to be a competitive advantage.
Consumers are becoming more sophisticated at all levels. A more sophisticated consumer is a better consumer and a better consumer is going to look for quality products.
How is Growcentia positioning itself for when that change in regulation does come?
We think about it as an organically certified product. The process we had to go through to get our organic certification required a three deep review of our raw material inputs. It will be similar, I would hope, in terms of the rigor and requirements that are put in place to organically certify a crop.
As an organic product looking at that marketplace, when that certification is federally in place, we will be one of the products that are looked at because it’s going to have to be part of that supply chain.
Looking outwards, how does the US fit into the global marketplace?
The global export and import market is going to be interesting for a few countries that can play together but that’s not going to happen in the US for a while.
The European landscape is definitely changing dramatically and we’re seeing that ourselves in terms of our presence in the EU market. That market is very friendly and changing quickly so the opportunity is there.
I would take a look in South America where we’re already seeing changes in the regulatory environment. That’s going to continue to move more North into Central America and into Mexico. You can go across to the other side of the world to Australia, which is also a compelling marketplace.
When you look globally, this trend that we’re seeing in North America and in Europe is on the same track in terms of modifying public opinion across borders and across geography.
The projections show we’re going to see that the cultivation whether it’s for flour or oil, and other parts of this business is going to be one of, if not the, fastest growing businesses in the world.
With so much potential for growth, nationally and internationally, what should investors be keeping an eye on this year?
From an investor’s perspective, there’s a growing number of companies that are in various sectors of the ancillary space. Early stage market breeds lots of products and lots of different companies but over time there is a consolidation of that.
From our stance as the leading bio-stimulant in the market, we think of what those partnerships may look like in terms of synergistic products and creating a suite of products that the commercial cultivator will look to.
Coming back to the organic piece of it, as organic becomes more regulated, I’d be looking for the companies that are the leaders in the industry, that have the ability to be one of the places that the cultivators go to down the road because there will be consolidation.
There’s a lot of content being created on consolidation on the licensed cultivation side. We’re going to see that same in many other components of the industry.
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