Highlights from the 1st Cannabis Private Investment Summit in San Francisco (November 5, 2019)
For the first time since Noa Kahner started the Kahner Global Cannabis Private Investment Summit series five years ago, we found ourselves in San Francisco at the Golden Gate Club in the Presidio. Under the shadow of the Golden Gate Bridge, over 160 investors and influencers in cannabis came together to discuss trends, issues and predictions for the future of cannabis investing.
The event kicked off with The State of the Industry, a panel discussion moderated by Matt Karnes, Founder of Greenwave Advisors and including Robert Finkle, Senior Counsel at Greenspoon Marder, Michael Weiner, Partner at Dorsey & Whitney, Nancy Skinner, California State Senator and Tim Coxon, General Counsel at Ackrell Capital. The discussion covered a wide range of topics from vaping issues to banking to M&A. When discussing the current regulatory environment and legislation, Senator Skinner asked investors to engage with government agencies and said that overregulation leads to lack of enforcement. “You can help us as much as the entrepreneurs in terms of developing regulations and modifying rules in a way that makes sense,” said Skinner.
James Pellegrini from Goat Rodeo Capital facilitated the second panel discussion of the day, a conversation about the rise of cannabis beverages and brands. Panelists Joyce Cenali of Big Rock Partners, Eric Eslao of Défoncé and Kevin McGovern of McGovern Capital weighed in the current state of brands in the space and what’s expected for the future. McGovern also added some anecdotes about his experience investing in the space and guidance for other investors.
From edibles, beverages and brands, the conversation changed to DNA Testing and Scientific Breakthroughs in Medical Cannabis for the next panel moderated by Douglas J. Hannah, Partner, Silverleaf Venture Partners. Doug Sommerville, CEO of PlantEXT Ltd. and Daniel Witt, President of Sonoma Lab Works shed some light on the research and insights coming out of the medical and scientific communities. The panelists agreed that the medical community needs clinical studies to back the effectiveness of cannabis products, and more research and education around dosage and how to dose, before we see more doctors and physicians integrate it into treatment regimens. Witt added that, “more time and studies are needed to reach a certain point of maturation where cannabis will play a role in relieving symptoms like Advil. You will see a ton of resources devoted to science as soon as Federal prohibition ends.”
The summit continued with our very own version of “Shark Tank” where six companies pitched a panel of investor judges with a seven-minute presentation. The esteemed panel of judges included Michael Mitgang, Managing Partner at WGD Partners, Jeff Matthews of Ackrell Capital and Max Shapiro, Angel Investor. The companies who participated in the pitch contest included PlantEXT, Vital Leaf, Province Brands, Phylos, Meristematic and BioMedican, Inc.
After breaking for a networking lunch sponsored by Ackrell Capital, the summit resumed by announcing the winner of the pitch contest, PlantEXT, followed by Matt Hawkins form Entourage Effect Capital presenting on the opportunities and challenges of cannabis investing during a downturn and Bryan Castillo from Ackrell Capital discussing recent trends in cannabis M&A.
Castillo then joined panelists Rob Sechrist, President of Pelorus Equity Group, Inc., and Jamie Mendola, Head of Strategy and M&A at Mercer Park LP on an M&A panel moderated by Murray Huneke, Managing Director of North Point Advisors. As one of the hot topics for the day, the M&A conversation was lively and included predictions that the strong will get stronger but groups that are only at $5M - $10M in revenue will struggle to get more funding. They also predicted that vertical companies will find their strengths and start to shed the rest to find efficiencies and streamline operations.
Understanding brand value in today’s cannabis market is a major asset for investors currently in the space and those looking to invest. Sarah Kunst, Managing Director of Cleo Capital moderated a discussion with Michael Apstein, Founding Partner of Primary Growth Partners, Garyn Angel, Founder of Magical Brands and Jim Taschetta, COO of NFuzed, to discuss branding. Apstein noted that, “there are very few actual brands in cannabis today, but new products and brands will always find their way to market and will find the support of investors.” Taschetta commented that, “without a brand, you are a commodity.”
And when talking about diversity and brand advocacy, Angel noted that “if you don’t give someone a voice inside your company, don’t expect them to be a voice outside for your company.” When Kunst asked what it would take to build a national cannabis brand, the panel responded that there are no shortcuts to building brands; you need to win customers one at a time. They also said that trust and education are key so there won’t be a national brand anytime soon because there’s no ability to establish trust at a national level right now.
So, what can we expect for the future of cannabis investing? Matt Bogumill, Private Investor moderated the Cannabis Investment Predictions & Insights for 2020 & 2021 panel featuring Hershel Gerson, CEO of ELLO Capital, Sherri Haskell, CEO of Canna Angels, LLC, Patrick Horsman, President & CEO of Integrated CBD and John Downs, Founder & CEO of Asia Horizon Group. The panel agreed that we’ll see consolidation among large MSOs in the industry because a lot of companies are struggling with their own capital structure which they need to reset. Horsman noted that CBD is a better investment than THC and hopes the FDA gets its act together to come out with CBD guidelines in 2020. Haskell thinks focusing on certain verticals like technology will continue to bring positive results. The panel also mentioned looking at waste management, recycling and other ancillary services that will grow in need as the industry grows.
Matthew Rosenberg of Tekening Capital sat down with Christina Sasser, CEO & Chief Product Officer of Vital Leaf for our final discussion of the day. They discussed the explosion of CBD companies and what has made Vital Leaf successful. Sasser noted that when CBD is extracted as full spectrum extract, it should be treated as any other nutraceutical plant ingredient in the health and wellness and nutraceutical space. She also envisions more options for consumers and patients in the future, some even geared towards children or animals, and noted, “there’s no end to the possibilities of different niche categories that this plant can bring to the world.” They did touch on the fact that in CBD today there’s a need for innovation, but no room for more companies doing the same thing and trying to make money quickly, ahead of regulations.
For the summit’s closing remarks, Christine De La Rosa, CEO & National Co-Founder of The People's Dispensary, came up on stage to talk about impact investing in cannabis. She said that, “investing in equity is actually investing in disruption.” Cannabis is not an emerging market or a new industry, it’s a transitioning industry with existing markets where normal paradigms of investing are not likely to yield the returns expected unless this unique position is taken into account. She encouraged investors to really understand how this market is different to maximize profit. With states like CT, NY and NJ requiring social equity to secure licenses, it’s important for investors to ask companies about their equity play. She says, “impact investors will be the bread and butter of the cannabis industry.”
The Cannabis Private Investment Summit showcases the best and brightest cannabis entrepreneurs in the industry and is the premier summit for institutional investors, family offices, and ultra-high net worth investors. Sign up now for our upcoming summit in February in Fort Lauderdale.
The Cannabis Private Investment Summit showcases the best and brightest cannabis entrepreneurs in the industry and is the premiere summit for institutional investors, family offices, and ultra-high net worth investors. Sign up now for our upcoming summit in February in Fort Lauderdale.
