Christopher Ratliff discusses getting down to the grass tax

Christopher Ratliff, president at Victus Consulting Ventures, discusses business piracy in the cannabinoid sector.

Getting down to brass tacks is an idiom thought to have originated in boat building. So let us do just that – let us build this ship and get down to brass tacks. For the less creatively inspired, let it be known, the ship I am referencing is cannabis companies in new emerging markets. Although the cannabis industry is a scientific industry and nowhere near maritime operations, I have chosen this analogy to accentuate the point of business piracy that often takes place within the cannabinoid sector.

One of the most important factors one should know about the cannabis industry is how many businesses pass around a model of; misused technical expertise to get the ship built to sail in the right direction. If specialised scientists and horticulturists are essential to properly build the “ship”, then recognising them positively will give them the courtesy to do the job. Unfortunately, many founders suffering from the Dunning–Kruger effect insist on marketing full-time roles, yet the intention is to use subject matter experts (SMEs) as contractors and eventually cut them loose.

Oftentimes the board of directors will bring in a very unqualified team to steer the ship due to their experience in banking or maybe flying kites (it does not make sense to me either). For the sake of your investment and reputation, you need to consider the ramifications of this practice. It will sink your ship, destroy lives, and turn you into the topic of someone’s lawsuit.

The times they are certainly changing like the wind that blows a sail and you do not want to blow your future sales. Any press is not good press anymore, and it probably never was.

Once the ship is built and the executive leadership team is in place, they set sail; confident in their experience to guide the ship’s direction. However, it usually sets sail about one-quarter of the way across the proverbial ocean before the experienced, technical builders are forced to walk the plank and get fed to the sharks. It is laughable to watch a group of people with a large learning curve go a portion of the way across the ocean of business development believing, “pull that rope over there, I saw them do it” will get them the rest of the way.

The confidence quickly dwindles when they find they are effectively spinning round and round in the middle of the ocean until someone else comes along to commandeer the ship. Mutiny, reverse takeover, and the same processes occur on repeat and, unfortunately, there is no one with innovative thoughts left aboard to help the situation. The sharks the poor souls encounter while treading water looking for a new ship to board are the next round of employers who may be up to the same exact activity. The sharks will undoubtedly want to speak to the captain of the previous ship to verify their qualifications. But because technical experts can be strong-willed, they will absolutely swim back ashore and try again.

However, due to the activities described, it becomes a never-ending cycle promoting distinct lies and more thought-out misrepresentation. This unfortunately leaves SMEs with genuine talent, specialised degrees, and a plethora of qualifications in a position to explain why they are no longer with the previous ship. Who in their right mind jumps off a perfectly good ship in the middle of the ocean to swim back ashore? No one unless you are Aquaman! Also, do you really believe the geniuses who pulled all the wrong ropes, read the wind incorrectly and burned the charts are willing to tell the next company your marvelous accolades of building every inch of their vessel? No of course not! A pseudo captain is not going to reveal that they are in reality… just a pirate.

Now the metaphorical point has been made, let us disembark from all the creative ship talk. The real shame about the cannabis industry in the way that it exists at the moment is how criminal and rather pathetic some of the start-up practices appear to be. Along with fraudulent misrepresentation and equity flashing, there are many stoner scientists doing a chemist’s job, banking executives leading product development decisions and grill cooks converted to “master growers” overnight because the industry titles suggest that is what they are. It literally is that ridiculous!

On the other hand, it is not every cannabis company and if you are not the target audience of this article, do not take offence. There are genuine people with great talents working at amazing companies holding the appropriate roles. It should not be a surprise that those companies and their staff members are sailing right into success within the sector.

What should start-up cannabis companies set out to do in accordance with healthy business practices?

For starters, having a broad understanding of the deployment of funds just will not cut it anymore. You need to specifically invest seed funding and even pre-seed funding into the right value-adding activities.

In my opinion, your most valuable assets are your team/staff, your equipment platform and your compliance infrastructure. Most often in the cannabis sector, you see investment going into marketing and branding, cultivar genetics and packaging.

I am not saying those activities do not also add value to building your company and consequently the brand, I am saying to clearly evaluate and prioritise investing in the interests that will generate the most effective ROI. Another point to reference is the overuse and misunderstanding of building an appropriate company culture. Most cannabis companies claim that company culture and the preservation of it is most important to the success of the business.

I concur with this notion; however, toxicity in a workplace due to a culture built upon prejudice, hierarchy and the clique mentality will not cut it either. Best business practices are to build a company culture rooted in diverse backgrounds, collaboration, and human understanding. This type of company culture will drive innovation, inclusion, and excellence in any business.

It will also drive revenue, production and promote an overall positive moral for all stakeholders. Until then there will be a lot of sinking ships and displaced sailors which is currently the “grass tax”.

Christopher Ratliff
President
Victus Consulting Ventures