Is there a demand for your product? That is one of the first questions you can expect venture capitalists to ask when you approach them for funding. If you can say “yes” and you’ve done market research to support your answer, you are in a better position to get the financial backing needed to launch your product.
That is why New Jersey Entrepreneurial Network (NJEN) is inviting product developers and small business owners to its upcoming panel discussion, “Fundable Opportunities in the Legal Marijuana Business.” The panel discussion takes place Wednesday, October 18, from noon to 3 p.m. at the Princeton Marriott at Forrestal. Tickets are $55. A buffet lunch is included. Register at njen.org. For questions, call 973-451-1100.
NJEN’s chairman Robert D. Frawley, who has been following the public mood and legislative activity on the topic, expects recreational use of the drug to become legal in New Jersey in the near future. And he foresees a demand for products and services to solve the challenges of meeting production and distribution needs as well as compliance with regulations.
The NJEN website states that growth in the legal marijuana market (medical and recreational) is strong, and by 2020 legal market sales are expected to surpass $22 billion.
Speaking from their own experience in the field, panelists will cover the types of businesses and products needed, the challenges of being an entrepreneur, and the issues facing the industry that entrepreneurs can help solve.
Jennifer Hanser, who heads business development for Privateer Holdings at Tilray Global, will speak about legitimizing and defining the future of cannabis through acquisitions, investments, and incubation.
John Sfondrini, principal of Edge Partners, will explore business opportunities for entrepreneurs based on his experience as an investor in a Colorado-based, vertically integrated company in the marijuana business.
Dan Rosenberg, serial entrepreneur who was a participant in a marijuana business in Colorado, will provide an overview of the business with an insider’s view of the daily challenges and opportunities faced by marijuana entrepreneurs.
Frawley finds that business opportunities related to marijuana cover a wide range of possibilities. They include growing the plant and related activities like fertilizing, harvesting, and green house manufacturing; processing the raw plant for medical or recreational use; making a finished product; distributing to retail outlets; and selling the product.
Software developers can design programs and apps to help business owners look up and comply with regulations, as well as programs targeted for specific industries, like banking, which must adhere to laws governing intrastate transactions.
An article on SmallBizTrends.com cites business possibilities for products and services related to marijuana, including accessories and floral arrangements. Services built around marijuana could include social networking, security, product reviewing, delivery, and packaging.
Current business models range from predictable to novel. “In fact, there is a company called WeedMaps.com. It involves a mobile app that can tell you the sites of all the medical dispensaries and show you the one closest to your location,” says Frawley. “There’s a whole chain of production and distribution. It’s not just about selling brownies.”
Frawley believes that New Jersey is likely to approve recreational use of marijuana starting with the next legislative session. A bill to legalize marijuana for personal use was introduced this past spring and will be brought up again after the new legislature is in place in January. Gubernatorial candidate Democrat Phil Murphy and several other Democrats — State Senators Nicholas Scutari and Ray Lesniak, Assemblyman Reed Gusciora, and Senator Cory Booker — are in favor of legalization.
Although Republican candidate Kim Guadagno is not in favor of legalizing recreational use, she is for decriminalization and also for making medical marijuana more available to those in need.
Supporters of legalization in New Jersey have had the benefit of observing other states. “Colorado has had a tremendous tax windfall from legalizing recreational marijuana, and the state is always looking for new sources of revenue, so I think the chances of it being passed are pretty good,” Frawley says. In fact, Murphy has been quoted as saying that marijuana sales could bring in $300 million or more to the state.
Frawley, whose father was a bookkeeper and whose mother was a nurse, says he wanted to be a lawyer ever since he could remember. While studying at Georgetown University Law Center, he decided to focus on business law. After earning his degree he provided in-house counsel for a couple of companies before setting up his own practice in Morristown.
Based on his interest in business and law, he and a few colleagues founded NJEN in 1990. “There is no required membership and no minimum fee to join. We organize and sponsor five programs a year,” he says of the Morristown-based organization.
Frawley serves as the group’s chairman, and Louis Wagman serves as its president. Their goal has always been to create opportunities for small businesses and entrepreneurs by bringing them together with potential funders.
“A lot of entrepreneurs have a great idea,” Frawley says. “They go to venture capitalists or angel investors to get the idea funded without knowing if there is a market for their product. Often there isn’t. They figure if you build it, they will come. But in fact they don’t come. I remember one venture capitalist saying, ‘You know, the technology always works. The question is, does anyone want to buy it?’”
Frawley recalls an encounter with an inventor who had developed an oxygen generator for people with emphysema and other breathing problems. His selling point was that his devise generated 99 percent pure oxygen, and other devices on the market only generated 90 percent.
The investors asked him if he had researched whether or not there was a market for the higher quality generator that would be priced higher than the ones already available. As it turned out, the developer hadn’t researched it and had to say he didn’t know.
Frawley expects the October 18 seminar to create new opportunities for people who can provide solutions for issues the business community will face when the recreational use of marijuana becomes legal. As Frawley puts it, “Entrepreneurs, you’re smart guys. How can you help solve their problems?”