Cost cutting? Developing new products? Moving into new markets … and getting out of unprofitable ones? Hoping and praying? It’s likely that cannabis businesses will do a little of all of the above in 2024.
Marijuana Venture spoke with more than two dozen entrepreneurs and operators in the cannabis space to get their predictions for 2024. Part 4 of this four-part series will cover business operations, with articles on other subjects published earlier this week.
Part 1: Consumer trends (December 12)
Part 2: Challenges and opportunities (December 13)
Part 3: Political movement (December 14)
Part 4: Business operations (December 15)
BUSINESS OPERATIONS
“As we approach 2024, the U.S. cannabis industry finds itself at an exciting point in time. With the government’s recent actions on issues like SAFER and rescheduling, the end of cannabis prohibition has never felt closer to becoming a reality. With future consumer growth expected to be exponential and large mainstream brands anticipated to enter the space, current industry operators must continue to invest in scalable solutions to remain competitive. Powerful digital infrastructure, deep data analysis and trusted customer relationships not only will be important factors in determining the future winners of the U.S. market, but also will shape the future of the global industry for generations to come.”
SOCRATES ROSENFELD
CEO AND CO-FOUNDER
“I believe 2024 will be mostly focused on margin improvement, whether it’s with public MSOs or private companies. I know many brands have come and gone, and it looks like we’re settling on the brands that survived. Those survivors aren’t planning on doing anything too risky, just entrench themselves.”
NOHTAL PARTANSKY
CO-FOUNDER AND CEO
“In preparation for 2024, cannabis operators are seeking to further cut costs and prioritize efficiency across the supply chain. We expect to see a cost-conscious evolution in the sector, marking a strategic response to market demands for affordability and sustainability, where practicality meets innovation.
With this in mind, manufacturers will need to meet these demands while differentiating themselves from competitors to position themselves as preferred industry vendors.
BRYAN GERBER
FOUNDER AND CEO
“MSOs will be focusing on the financial health of their companies, prioritizing cash flow generation and fostering leaner, more efficient operations.
If rescheduling and 280E relief occurs as anticipated, annual tax expenses would decrease, allowing companies to pay down debt and reduce annual interest expense. This, coupled with the prospect of adult use in Ohio, Pennsylvania and Florida, has the potential to result in significant deleveraging by 2025.
For additional perspective, AYR has 88 retail stores across our footprint today. Of those 88 stores, only 15 of them are adult-use stores. With legislative catalysts in Florida, Ohio and Pennsylvania, we estimate our adult-use retail footprint to increase nearly 6x by 2025.
You may see certain multi-state operators become a bit more aggressive in their expansion once again … but not until the end of 2024 or beginning of 2025, as these leaner, more efficient companies will be in a better position to expand once again.
Companies with larger brand portfolios will start slimming down and condensing their brands to allow for a more meaningful resonance with consumers in the markets where they are sold.”
DAVID GOUBERT
PRESIDENT AND CEO
“It’s a distressed market: Cannabis investors are looking at debt and maturity with balance sheets built to sustain them, and buyers are looking for assets they can suck up.
Investors should be mindful of cost of goods sold: If you can get your COGS down, you’ve got your competitive moat.
Focus on wholesale versus retail: Mainstream convenience stores like Circle K are lobbying for retail, and will have the advantage.
Expanded access and lower prices are the best ways to tackle illicit market: 65% of the California market is a weed desert where more than 60 counties can’t access legal, licensed products.
Schedule III is better than Schedule I — but advocating for full descheduling will keep people out of jail.
Interstate commerce is not just about tax benefits but carbon footprint: Why burn fossil fuels to grow indoor in New England when California can produce a higher quality input at a lower cost.
Execs in alcohol and tobacco see cannabis as competition: Alcohol is the industry to watch the most and tobacco needs to find something new.”
KYLE KAZAN
CEO
“In 2024, the cannabis industry is poised for unprecedented growth, but success won’t come to those who go it alone. The mantra for the year is collaboration. Businesses must recognize that operating in separate entities won’t cut it anymore. The key is to be stronger together — combining forces, pooling expertise and forming strategic partnerships. Investors are increasingly looking for unity in the industry. A combined company of experts not only mitigates risk but also presents a compelling case for sustainable success. It’s a year where teamwork isn’t just an option; it’s the winning strategy.”
JORDAN TRITT
FOUNDER AND CEO
“For cultivators, process optimization will be key in 2024 for companies to be successful and outmaneuver their competition. This starts with accurate data collection. Less crop loss per grow cycle means higher optimum yields. The economics will be undeniable with increased margins.”
ELMAR MAIR
CEO