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Home 🌿 Marijuana Business News 🌿 Why Mainstream Businesses Are High On The Cannabis Industry 🌿Why Mainstream Businesses Are High On The Cannabis Industry
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Cannabis cultivators in the mountains of Northern California’s Emerald Triangle, which is the heart of marijuana production in the U.S., are off the grid. But one of the country’s largest propane gas providers, AmeriGas, happily supplies growers with 1,000-gallon containers of propane to fuel their operations.
Pennsylvania-based Clark Associates, one of the largest food-service equipment distributors in the U.S., also sees an opportunity in the legal marijuana industry. Kevin Burg, a senior account manager for the $2.5 billion (annual sales) company, says he has four cannabis customers now, but expects that to triple in the next couple of months.
“I’d never say that about any other industry, but these guys move fast,” says Burg.
The industry is wide open, says Burg. Cannabis companies don’t have longstanding relationships with equipment companies, so Clark doesn’t need to compete with other distributors, nor do they have to convince cannabis companies to switch suppliers.
“They’re flush with cash and buying,” Burg says. “There is tons and tons of opportunity.”
In industries like healthcare, a big sector for Clark, it could take three years from the time a sales rep meets a company to the time they want to be a customer. But in cannabis, if a distributor can provide what a cannabis company needs, they’re ready to go. “It’s wide open and moving fast,” he says.
“We didn’t seek out this market—it sort of came to us,” says Burg. “We started with a couple of customers, felt like this was the way the wind was blowing, and we figured we’d go all in and try to do well with it.”
For Austria-based pharmaceutical packaging manufacturer Constantia Flexibles, which makes blister packs for pills and child-resistant packaging, the legal marijuana industry is a growing niche. The company sells child-resistant packaging for edibles companies—Cheeba Chews is a customer—as well as packing for THC vaporizer cartridges and prerolled joints.
The cannabis industry is one of the country’s fastest-growing industries. Last year, legal sales reached $17.5 billion. By 2030, annual sales across the U.S. will reach $100 billion, according to Cowen. Fortunes are being made; even new billionaires have been minted thanks to cannabis. Although many mainstream companies are sitting on the sidelines—especially those in banking and payment methods like Visa, MasterCard, Square, Shopify—others see a burgeoning market that needs help now.
AccuBanker, a 40-year-old family business based in Miami, sells cash counters and counterfeit bill detectors to some of the largest fast-food companies like Taco Bell and Starbucks and to hoteliers like the Four Seasons and Hyatt Regency. But cannabis companies are now a substantial part of the company’s bottom line. Oscar Cepero, the company’s CEO, says last year only 1% of AccuBanker’s revenue came from marijuana clients, but this year it’s already at 5%.
“We’re seeing opportunity here,” says Cepero. “Little by little, it’s growing; more people are coming to us.”
Cepero, whose aunt and uncle started the business after immigrating to the U.S. from Cuba, says federal legalization might result in less cash being used by customers, especially if payment processors like Visa and MasterCard accept cannabis transactions, but he thinks the marijuana industry will always be cash-intensive, like the fast-food industry.
“There could be an impact, especially when it’s federally regulated, but people need to understand that this industry was built on cash and a lot of people don’t realize that millions of Americans don’t qualify for credit, so cash is the only thing they can use,” says Cepero.
The picks-and-shovels strategy has a uniquely American history. Levi Strauss & Co., one of the most storied brands in the U.S. started in 1853 when a Bavarian immigrant named Levi Strauss started a dry goods wholesaling business in San Francisco, selling supplies to miners during the California Gold Rush.
By 1873, Strauss invented the first pair of denim blue jeans, which held up well under the strain of gold mining and became the company’s signature product. Over 150 years later, Levi’s jeans are sold in over 50,000 stores around the world and the descendants of Strauss control a billion-dollar fortune. Today, with the Green Rush in full swing, companies selling supplies and equipment see a similar story line playing out.
Miami-based Worldwide Safe & Vault’s bread-and-butter clients include luxury products and jewelry companies like Tiffany & Co., Cartier and Louis Vuitton.
“Name a jewelry chain and they’re a client of ours,” says founder Scott Hirsch.
But seven years ago, Hirsch started getting requests from cannabis cultivators who were looking for high-composite burglary- and fire-resistant safes in which to stash weed and cash. Once he realized this industry was only going to be getting bigger, he decided to aggressively court cannabis businesses looking for custom vaults and safes.
“It’s the fastest-growing vertical for us,” says Hirsch, who founded the company 31 years ago. “It was becoming a market for us in a strong way, and we needed to take it seriously.”
Hirsch expects federal legalization to help his business. Hirsch says there will likely be rules requiring dispensaries and grows to use DEA-compliant safes to store product, just like pharmacies are mandated to store Schedule II narcotics like opioids in these types of safes.
“I don’t think it’ll be the lion’s share of our revenue, but it will be one of the stronger markets, especially when it’s federally legalized,” says Hirsch. “If you want to run a dispensary or a grow, you’ll need a safe.”
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