Janet Jackim, executive co-chair of the Arizona Cannabis Chamber of Commerce, cast a pall over the industry.
“2023 is going to show us the weaklings and the strongmen or strongwomen,” said Jackim, executive vice chair and partner at Zuber Lawler law firm.
“We are going to see a substantial number of activities that are going to be very difficult to deal with.”
Jackim spoke as part of the Zoom “2023 Industry Overview and Forecast” on Jan. 11. It was led by the chamber’s executive co-chair Kim Prince, founder of Proven Media.
Jackim said there are so many products and cultivators that the retailers can’t stay ahead of the game.
“Arizona is getting closer to what’s happening in California and Colorado, as opposed to the new emerging markets on the East Coast,” Jackim said.
The influx of cannabis means the products’ sale price drops drastically. Also, Arizona has very high taxation and inflation, which equates to diminishing the cash that’s available to companies and consumers, Jackim said.
“There are also relatively low unemployment numbers and as a result there aren’t enough people to fill slots,” Jackim said, “so a cannabis company has to pay more or provide more benefits to attract good employees.”
Unfortunately, she said, Arizona still has a strong legacy market, “the illegal market.” Lax enforcement activities lead to this problem, she added.
In addition, the retailers are asking for more money from the wholesaler to add their products on the retail shelves, negatively affecting the wholesalers.
The cost of borrowing to keep a cannabis business afloat has increased just as the mortgage rates on residential homes have soared.
Most of the multistate operators “listed on stock exchanges have seen their stock prices dimension repeatedly into a very low price per interest or stock value,” Jackim said.
In addition, the complex regulations, applications and fees, “tend to discourage more entrances into the marketplace across the country,” she said. “So, how low do we go?”
“This year, we have a kind of hybrid blend of in-person and Zoom meeting,” Prince added of its January overview and forecast meeting. “We thought the best way to kick off the year was to just talk about trends and predictions that we are seeing, to give us an edge in our businesses after we navigate the world of cannabis in 2022.”
The chamber represents several companies in industries like such as estate, title and zoning, insurance, many law firms, public relations/media and cannabis businesses to ensure the cannabis industry is thriving and here to stay.
“I think what Janet said is a harsh reality sometimes to hear,” Prince said. “But to deal in realities, we are all businesspeople here; the chamber of commerce exists to provide networking, information, support, so that we can all thrive.”
Prince acknowledged the Arizona Dispensary Association attendance in the Zoom meeting.
“We are so excited to have them on board,” Prince said. “The Arizona Dispensary Association has just as much invested interest, as we do, in making sure we have a really healthy cannabis economy.”
Chamber member Bryan McLaren of Zoned Properties works throughout the country, sharing his expertise, Prince stated.
“Maybe to put a spin on this for the positive, everything has challenges and opportunities; that’s the beauty of life,” said McLaren, chairman and chief executive officer for Zoned Properties.
“You have to deal with realities, these are super challenging tasks we all have in front of us,” he said. “Whether you’re a direct plant touching operator, whether you’re an ancillary service provider, ultimately all of our abilities to work with each other on these complex challenges is the formula to create success.”
“This is an ebb and flow, like any industry,” McLaren said. “We at Zoned Properties have been doing this for 10 years, so we have seen a lot of different parts of this industry. Beginning in the exciting stages when the first few states came online, when Canada legalized and that translated to excitement across the continent.”
McLaren explained there are new states coming online and new communities enacting opt-in.
“Opt-in versus opt-out: whether your city, town, county will allow cannabis permits within,” McLaren said.
McLaren said the exciting part of this industry is that the cannabis industry has made it far despite these challenges.
“That’s where creative solutions allow opportunities and value to be born,” McLaren said. “My hope in this industry as a whole, and all of us as professionals or just interested parties who are observing the industry is to discover together where we can create value and advance the discussion.”
Prince agreed that real estate is almost “the most important thing you can secure when you get into the dispensary business,” she said. “This is why zoning is so very important. And working with someone again can create a good community with zoning.”
McLaren reiterated, “All of our interactions with this space will come down to the physical built-in environment…at the end of the day, to get this business operational or to apply for the license you need the real estate,” he said.
“The beauty of real estate is that no matter where the macro-level industry is, the real estate is always hyperlocal. You just really need to be focused on that project and the challenges in front of you."
The 2023 trends Prince sees in the cannabis industry are directly related to the shaky economy.
“Right now, because of the economy, value has become very important,” she said in a previous statement. “It’s value versus brand. It can be challenging for the dispensaries, because people are bargain shopping. People are waiting for the BOGO sales…buy one, get one and they’re stocking up on those.”
The outlook for 2023 is challenging, she explained. “This is why we (AZC3) feel very strongly about supporting the economy, the businesses,” Prince said. “Because consumers are so value driven.”
“All of the ancillary businesses that support any industry are also included in cannabis,” Prince said. “That’s where it gets challenging…like the tax revenue is directly attributed towards the retail sales of marijuana, the medical sales; but all the other robust economies that surround it, from insurance to PR to real estate to packaging…there’s a whole other side of cannabis, and it is pretty healthy in Arizona, despite a challenging time in the industry.”
Arizona Cannabis Chamber of Commerce Meeting
WHEN: 5:30 to 7 p.m. Tuesday, Feb. 21
WHERE: Curaleaf North Scottsdale, 16277 N. Greenway Hayden Loop, Scottsdale
COST: Free
INFO: azc3.org
