The Operator Perspective Mitigates Risk

Many of our investors in the Receptive Capital Syndicate are operators. The operator perspective mitigates risk in investing.

The ability to conduct due diligence through the lens of an operator enables the operator to, among other things, ask the tough questions, manage growth expectations and provide the entrepreneur with more useful feedback. That is most likely why operator investors make great advisors! We have been cautious to lead another deal this year. Candidly, we have not seen many new companies that fit our investment strategy and those who did, were still hoping to raise at unrealistic valuations in a historically timid cannabis investing environment.

This is starting to change but It’s still not clear to us if we’ve begun the turn around. We’ve seen signs of life in September following the HHS announcement and more recently with SAFER making its way through committee for the first time. Companies who are positioned well and called off fund raises in 2022 and 2023 are back out again. While attending the Benzinga Cannabis conference in Chicago last week, we noticed a different energy. We would call it “cautious optimism”. Perhaps the greater investor community is starting to take a page from the operator perspective.

Updated Thoughts on Social Consumption Lounges: Summer 2023

I was pretty excited about social consumption lounges. These businesses, if located in one of the East Coast markets, are within our investment criteria. I’m sure it will come as no surprise that we have yet to make an investment. More recently, I'm starting to challenge the viability of the stand-alone social consumption lounge idea purely from a consumer experience perspective.

The premise behind separate, stand-alone cannabis social consumption lounges is flawed. It still may work, but it remains somewhat flawed. I think there are some scenarios that still make sense such as a social consumption lounges adjacent or within a cannabis retail environment. Listening to a recent episode of Coffee with the Collective podcast by The Cannabis Collective with Ariel Palitz, New York City´s first “Nightlife Mayor”, she reinforced and validated this thought process for me. During the show, Ariel was answering a question about the challenges of siloing cannabis in the night life scene. She said that it’s challenging because “cannabis is consumed everywhere”. She’s right. Cannabis is used in a wide array of social gathering places and separating that social use from other social gathering places such as bars, restaurants, night clubs and event spaces doesn’t make much sense.

State liquor licensing outfits think they have alcohol and cannabis siloed but they don’t. Finish your drink at the bar, walk outside, smoke a joint, walk right back into the bar and order another drink. Bring an edible with you to the bar and eat it right after your first drink and a few wings.

Cannabis use in social settings will have to become more nuanced for the type of environment the social use is taking place. For example, beer and wine are served and sold in many places where whiskey is not…and for good reason. Allowing different types of cannabis social consumption in different types of social environments needs to be considered and defined. Cannabis beverages at a bar or restaurant make a lot of sense. Allowing anyone to smoke a joint in a bar or restaurant would annoy almost everyone, including those smoking the joints.

The East Coast markets have yet another opportunity to lead by redefining social consumption for cannabis. Recently New York’s Office of Cannabis Management approved Cannabis Growers Showcases (CGS) as a stop gap to increase access to safer cannabis products. In a Linkedin post they rightly described this move as meeting consumers “where they are”. I am hoping this is a good sign as it relates to the development of regulations with regard to social consumption lounges as well.

If you or someone you know are building a company that addresses this opportunity please contact us.

Buyer’s Club 2 in Hudson, NY

Buyer's Club by On The Revel in Hudson, NY last week was so good. I wish I had more clever words but that's it. The feeling I've had so many times over the past 5 years of "I can't wait until events like this happen in New York" came full circle. The only thing I have to wait for now is the next one.

With so much negative noise right now in cannabis (especially New York) my biggest take away from this event is that we have a strong group here in New York that is going to make this market happen. I am meeting people in the New York market I admire almost every week at this point.

Very important work that Lulu Tsui and Jacobi Holland are doing here in New York for years now. Really exciting to see how their platform is developing as we enter the next phase of our market.

Let's open some doors and then blow them off.

MJ Unpacked 2023 Week in New York

It was a great week of meeting entrepreneurs, operators, investors and advocates in the New York cannabis and East Coast cannabis community. The feeling at the events in and around MJ Unpacked was telling.

EVERYONE has their gripe (or multiple gripes). Examples include...

1. Some are frustrated by the slow moving (and sometimes strange moving) progress in New York and New Jersey.
2. Some are frustrated with more Federal failure.
3. Some are frustrated with the absence and poor quality of options to raise capital.

But NO ONE is talking about throwing in the towel.
WELCOME TO NEW YORK.

Speaking of, the highlight of the week was the Welcome to New York Event hosted by the Cannabis Collective where members of the New York cannabis community convened to celebrate the opportunity we have ahead of us. As an executive member, it was a pleasure to see the focus and efforts pay off for Jeffrey Schultz, Andrew Lowitz, Kristina Adduci, Shahbaaz Kara-Virani, Sloane B. and Jes Feuer

If you're interested in joining as a community or executive member, click the link below.