No Market Favors | How Local Marijuana Startups differ from Big Corporate

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Large marijuana companies are typically multistate operators, either privately owned or publicly traded. On the private side, companies find funding through Private Equity, Venture Capital, Hedge funds, or a form of generational capital past sideways or downward. The public marijuana operators dress up in ticker symbols on the Canadian Stock Exchange, or they “don’t touch the plant” and list themselves on the U.S. Stock exchange.

Major Bloom is the startup local to New England, and on numerous occasions, while raising capital, an exit strategy becomes the topic. Selling the business requires thoughts of Major Bloom’s future valuation. Finding that sweet spot for a company pre-revenue valuation, you have to consider a few market variables and factors. One might ask, does a marijuana company’s value proposition match how much the company is worth?

It depends on who is buying. The value of something is what one is willing to pay. The stock price of many publicly traded marijuana companies can inflate and become overvalued, yet people still buy. Public companies have a fiduciary obligation to create value for their shareholders and board members, yet investing is always a risk.

There is absolutely nothing wrong with a strive to make money and the high returns. With cannabis, it is just as or more important to have a business model that aims for high social impact and fostering a culture for employees where they feel they are contributing to a meaningful cause.

When infusing capital, the resource should not disturb the business’s day-to-day operations. Big marijuana companies may want to invest in local companies to “look good” in public perception, but that perception can disrupt moral principles. An institutional loan is not disruptive by nature, but it doesn’t come easy in marijuana.

The large marijuana companies in your local market are familiar with the political, financial, and social landscape. Differentiation comes by meeting needs and sharing real value. When big corporations only worry about profits, you differentiate by caring about people.

Don’t worry about money; the money will come. Focus more on purpose and truth. Not worrying about money does not mean you can spend wildly or even worse reject income, it merely means that if you search for meaning and serve the needs of others, the money will follow.

Social Entrepreneurship is an approach to business that meets the needs of a customer market of end-users while also providing resources to a social cause or social problem.

For example, the company FeedProjects sells stylish bags to end-users while also providing meals to children in hunger, contributing to a solution for a social problem.

With states regulating the sales of cannabis, one of the most significant social issues in legalization is diversity in equity and business funding sources. Without the regulation of sales, the most significant problem with cannabis is the disproportionate arrest rates of black and brown people.

Major Bloom has made it through licensing as a small startup on a shoestring budget, raising funds through family and friends. Some large marijuana companies have proven not to care about the local and diverse businesses by even suing local towns. It hurts to say that many of these large companies do not care about legalization, the plant, or the people; they only care about making more money for their already wealthy Board Members and shareholders.

When a large marijuana company makes money off end-consumers, their profits come at the expense of millions who have been disproportionately impacted by prohibition. The goal is to stay rooted in high social impact. There are real socio-economic interests that attempt to refute, people of color, diversity, local, and small business. Given the economic and institutional harm during prohibition, the message remains the same; it feels good when you know your weed source stands by sound moral principles.

Originally published at https://themajorbloom.com on April 30, 2020.

Entrepreneur | Professor | Writer

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Ulysses Youngblood

Ulysses Youngblood

Entrepreneur | Professor | Writer

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