Avoid 5 Critical Mistakes that Can Doom Your Cannabis Business

Shon Williams Mjardin
Lessons Learned as a New Executive in the Cannabis Industry

Guest post by Shon Williams, Director of Business Development & Project Management at MJardin

“By failing to prepare, you are preparing to fail.” – Benjamin Franklin

I have been in the cannabis industry for one year, though I have already recognized many recurring themes that I see from aspiring canna-business owners that can spell disaster before they even get off the ground. This industry is more complex and nuanced than I could ever have imagined, having come from aerospace and defense, and at times has a very “raw” feel when developing best business practices, forming strategic relationships, or interpreting a specific state’s regulations. However, even in this short time, I have been impressed with the growing level of professionalism, savviness, and sophistication that has made me a believer that the legal cannabis industry can and will be a very viable sector that will continue to grow.

Will you be able to stay in business long enough to grow with it?

There is a common misperception that this industry is different than others in that bags of cash will be thrown at you just for participating. Knowing your market (size, ramp rate, and constraints), in most new legal states or countries, to judge initial facility size, estimate cash needed (for both capital expenditures and operating expenses), and understand the nuances of the regulations, is one of the most important steps any new business owners should do to better prepare themselves for long-term success.

Daily, I am contacted by a group or individual who claims only to need a little consulting guidance to steer their team in the right direction. The vast majority are in states with recently enacted medical marijuana laws where legal cannabis will be sold for the first time. While there is great excitement and enthusiasm for these new markets, there should also be healthy skepticism. No one can predict the future of a state’s actual patient base until the program begins functioning and often times, this can take one to three years or more before the medical cannabis market stabilizes and a company can become cash-flow positive.

The most common mistakes by hopeful companies trying to break into this industry that I see are:

  • Over-estimating their state’s initial market/patient base – Sufficient qualifying conditions? Ease and comfort level of medical professionals in recommending treatment? Flower sales allowed or only extracts? Difficulty in obtaining a medical card? General patient acceptance level of this type of treatment?
  • Planning for too large of a cultivation facility – having an accurate pro forma, created by a party with actual experience and solid data from many other locations can assist in this regard. If the demand is not going to be there and/or competition is fierce, a large facility can become very burdensome and finished product can back up quickly. Instead, we recommend having a scalable plan over a period of years as the market demand begins to increase.
  • Under-estimating the capital expenditures – it costs money to make money in this industry, much like any other. Companies need to understand the capital and operating expenses needed to start and run a legal cannabis facility.
  • Over-estimating the expected revenue – cannabis is a commodity crop, and eventually supply and demand will level out.
  • Waiting too close to the license application deadline before assembling the team – We typically recommend having the team and resources in place at least two months beforehand to prepare.

Strategic patience, expectation management, and proper preparations pay off. Don’t prepare to fail.


About the author:

Shon Williams is the Director of Business Development and Project Management at MJardin, a turnkey cultivation management operating company based in Denver, CO. Shon brings 22+ years of experience in organizational leadership, strategic planning, engineering, program management, and business development to the MJardin team. During his 20-year career in the US Air Force, he served in various capacities from space systems development, flight testing and flying aircraft following graduation from the USAF Test Pilot School, nuclear weapons effects, international policy, and managing F-22 and F-15 fighter aircraft programs, to include a $16B international sale – the largest in US history. Shon was deployed in Afghanistan in a Joint Service role prior to retiring as a Lieutenant Colonel. Following his military career, Shon served as Director of Business Development at Calspan, a wind tunnel and flight testing company.

Shon has two masters’ and one bachelor’s degree from the United State Military Academy at West Point (BS, Mechanical/Aerospace Engineering, 1994, Honor Graduate), Air Force Institute of Technology (MS, Astronautical Engineering, 1999), and Air Command and Staff College (Master of Military Operational Art and Science, 2007).

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Published by NCV Newswire
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