We sat down with Taylor West to talk about where the industry is headed
We sat down with Taylor West, former Deputy Director of the National Cannabis Industry Association, and current Senior Director Of Communications For Cohnnabis, back in mid June during the NCIA Oakland Summit. We’d like to remind our readers that the NCIA Anaheim conference takes place September 21st and 22nd. To learn more, click here.
Marijuana Retail Report: Taylor West, former Deputy Director of the National Cannabis Industry Association and current Senior Director of Communications for Cohnnabis. Let’s start with you telling our readers a little bit about your time at the NCIA.
Taylor West: The NCIA is the only national trade association for businesses of the cannabis industry. They have just over 1300 member businesses nationwide, and our mission is twofold. First, serving as an advocate and a voice for the industry on Federal policy issues. We have full time, government relations staff in DC, who are lobbying Congress and working on legislation to treat cannabis businesses fairly at the Federal level. The second part of their mission is really about education and community. Building a community and opportunities for knowledge sharing within the industry, and that’s where a lot of NCIA events come in where they also provide opportunities for businesses to share information through the blog or through their podcast or by speaking at events. All of that is geared toward a goal of being a community for businesses of all types within the industry to get to know each other and stay on top of best practices and evolving technology.
Marijuana Retail Report: You used to be the deputy policy director for Tim Kaine, deputy of communications for the Democratic Party for Georgia, communications director for Chris Dodd, what made you want to take the leap from being a powerhouse for top players in traditional DC political rings to becoming a heavy hitter in the cannabis industry?
Taylor West: Well, this is an industry that is unlike any other right now. It is one of the most exciting and rapidly changing industries in the country, and it’s also a great intersection of business innovation and policy innovation. This is an industry that is built on an advocacy movement and has a lot of that DNA in it, which makes it a really amazing community to work in. And it’s also an industry that is going to be deeply reliant on policies in the future. It’s highly regulated, even in places where it is illegal, and having strong advocates where a background in policy is critical for the industry to succeed.
Marijuana Retail Report: The retail cannabis industry has been exploding nationwide. What do you attribute to this rapid growth?
Taylor West: A huge amount of that growth is really moving from a criminal market into a legal, regulated one. It’s one of the reasons that, I think, elected officials and law enforcement and policymakers are increasingly coming to support legal cannabis program. There’s a recognition that whether it’s regulated or not, this market is out there, and we’re in a better position, a smarter position, if we can bring it into the light and put some reasonable rules and regulations around it. In addition to that, I do think we are also seeing new consumers to the market and a lot of that is people who are recognizing the very real therapeutic benefit of cannabis. Some of these are true medical patients who are treating very serious conditions with medical marijuana. But others of them are, perhaps, buying on the adult-use market, not going to a doctor and getting a recommendation, but are still consuming cannabis for some kind of wellness priority; insomnia or managing stress, or stimulating appetite. These are all things that we’re seeing consumers increasingly turning to cannabis for and, in conjunction with that, often turning away from potentially dangerous or habit-forming prescription drugs.
Marijuana Retail Report: On the medical front, do you see the elderly market as the fastest growing market, or do you see the younger, youthful, recreational market as the forefront?
Taylor West: As we get older, some of the conditions that tend to come along with older age are things that cannabis can be really helpful with. You know, older people often have more trouble sleeping, or they’re dealing with chronic pain that is manageable with cannabis, instead of resorting to, you know, a prescription painkiller that is potentially debilitating, or overusing over-the-counter medication in a way that’s potentially harmful. Appetite stimulation, all of these kinds of things are often a priority for senior citizens and cannabis, for many of them, provides relief without a lot of the side effects that they would get from other medication. So there is a lot of opportunity there, and I think and hope that cannabis businesses will take that market seriously and continue to develop products that are designed and geared for that customer base. That being said, you certainly can’t ignore other demographics and there’s no question that you’re still seeing a significant market among younger people. I think the key for a cannabis business is really to hone in on which group you’re going to focus on, putting together a combination that works for you to be a thriving business, and then really focusing on delivering to those types of audiences. There is a large market for both.
Marijuana Retail Report: What would you say is the newest and hottest battleground in the new retail cannabis industry?
Taylor West: It’s hard to say. We certainly see, especially in states that are open as adult-use markets, that there seems to be an increase in demand for infused product, whether that’s edibles or drinks or capsules. Basically, an increase in demand for products that don’t require smoking. So there’s certainly opportunities in that market. The other thing that we see with adult-use markets is there tends to be an increase in demand for lower dose products. In the medical market, you are serving patients who are typically medicating every day and sometimes multiple times a day, you know, the need of potent products that relieve their symptoms and work for them despite a relatively high tolerance level. When you start serving the adult-use market, you get a segment of customers who may not be daily consumers, or if they are, it’s just a single consumption point maybe before they go to bed or something like that. Those customers don’t want a product so that they have to break up into 15 pieces to get a relatively small dose. So we have seen, for example, in Colorado over the last few years since adult-use legalization opened up, a significant increase in offering health products that are designed to be, kind of, single dose. The state has also created regulations now that require products with a higher dosage to be clearly divisible. But that regulation, actually, came about, kind of, after the market was already pushing products in that direction. I think, the other area to really keep an eye on is less a segment of the industry and more a market, which is California. It’s just hard to say what the future trends of the industry are going to look like, until we start to see how adult-use legalization unfolds in California. It’s such a large market, such an influential market. Just as a medical market, it’s already 50% of the U.S. legal cannabis market, but it’s also about to go through dramatic changes. You know, it’s a market that has, up until now, operated in a total patchwork of regulations, with lots of areas operating almost unregulated. That era is coming to an end, but it’s still an open question. Who is going to emerge in this newly regulated era with the capability to succeed in a much different world? And because that market is so big, the ultimate outcomes of that transition are going to have a big impact on the industry as a whole.
Marijuana Retail Report: Do you see regulation as coming to the forefront in the market and do you see this as more of a good or bad thing?
Taylor West: I do. I don’t think we will live much longer in a world where there are relatively unregulated cannabis markets. We’ve already seen this shift pretty much everywhere else. California was, kind of, the last big frontier for that and that has definite pros and cons, but it’s simply a reality at this point. Part of moving forward with broader legalization is the understanding that that legalization will come with regulation, and, ultimately, businesses are going to have to figure out how to comply with those regulations in order to survive. And that’s a difficult thing for a lot of people. Partly because regulations can be infuriating and contradictory and difficult to comply with and, sometimes, near impossible to comply with in certain markets. Even good regulations, the well-designed ones, can also be incredibly expensive to comply with. So it is a challenge and I don’t want to minimize that, but I think that markets are going to be regulated and there’s no use in trying to cling to a world where they’re not. So preparation is absolutely key here, and the businesses that succeed in this world are going to be the ones that have done the work and taken the steps and, in many cases, raised the capital necessary to comply with an emerging regulatory system. The other question now is what do these regulatory systems look like, and you’re starting to see a pretty stark divide between states that are creating relatively open regulatory markets, something like Colorado, potentially California, where they’re not these artificially restricted numbers of caps on things like licenses. Unfortunately, in my perspective, we’re seeing a trend in some states toward these extremely limited programs, where a handful of licenses go out for the entire state, and, so far, this has been primarily newer medical states. And it’s leading to a lot of problems and essentially creates such an artificially inflated value for any one, license that it incentivizes a lot of bad or at least ambiguous behavior on the part of applicants. It brings a lot of political maneuvering into the process. And, frankly, it incentivizes everything but good service to patients. So that’s a trend that I’m watching with some concern that states are moving forward with regulated programs that’s so artificially structuring them that they create a lot of negative unintended consequences.
Marijuana Retail Report: Do you see licensing and franchising of these major cannabis brands as a continuing trend? And on that front, do you see the states banding together in order to protect their retail cannabis businesses or push for interstate commerce as a possibility in the future?
Taylor West: Do I see interstate commerce? Not in the near future. I think in order for interstate commerce to really be a possibility, we have to see some kind of significant power to change at the Federal level, and not just a memo, like the Cole Memo that’s currently, sort of, guiding Federal policy, but something that truly would change Federal law. It could be something as simple as saying, of de-scheduling, where the Federal government doesn’t make it legal across the board, but does step out of the process and say, if a state had made it legal, that’s their prerogative; if it hasn’t, that’s also their prerogative. And states that are legal can potentially trade. But still, I think, will require some kind of real policy change at the Federal level before we’re going to see the ability to choose and use product across state lines in any real way. As far as states potentially banding together, I do think that we’re already seeing some signs of that. After some of the more concerning comments by the administration, we saw a letter from the governors of the four states with the first adult-use markets (Colorado, Oregon, Washington, Alaska) signing on to a letter to the Department of Justice urging them not to change the current policy, that’s probably down at the department now. We never saw, more informally, a lot of lawmakers and politicians, including people from both parties, pushing back on the Trump administration when they made some of these threatening comments toward the industry. You know, people like Senator Cory Gardner who’s a Republican from Colorado, and is not generally considered to be a real maverick or, you know, pushing back against the party lines that often, he spoke up in support of the industry, he then signed on to some legislation that would be helpful to the industry. I think states where there is operating cannabis programs recognize that this is a positive development overall that gives them, frankly, greater degrees of control over a market that was operating in a criminal market prior to this. So I think while it’s been concerning, certainly, to hear the administration make some of these comments, it’s actually been encouraging to see that the primary reaction to those comments, so far, has been people standing up more vocally expressing their support for the industry, and I would expect that continued with the administration, it’s hard to move forward with other changes. To get to your franchise and licensing question it’s slowly spreading out within the state I think is increasingly common. You know, there are certain individual operators that are the market gets more competitive, there are economies of scale to be taken into account. When you’re talking about products, increasingly branding is important. There are so many products out there, and a brand is a critical way that a company develops a loyal following and in order to really have that impact, that brand needs to be available widely. So I think you’re seeing companies certainly figuring out how to operate within different local regulatory structures within the same state, and that’s not unprecedented, you know. There are different alcohol regulations in counties and different states, less so than there used to be, but still, something that the companies have dealt with before. The more challenging question is operating in multiple states. Part of that challenge is because laws and regulations vary so much from one state to the next. But, also, you have the issue that you can’t move a cannabis product from one state to another. So if you are a huge product maker or a cultivator and you want to operate in more than one state, you essentially have to have separate operations in each, fully contained in each state. One of the ways that companies are dealing with that is with licensing, where they work with different frontline producers that license or franchise their formulas, their branding and try to ensure a certain amount of consistency of products from one state to the next. I think you’ll see more of that, especially where it’s in, like, infused products and you’ll also see ancillary brands. You’re able to do this much more easily if you’re not actually touching the plant if you’re not a cannabis product itself, but instead you’re a packaging company or a horticultural supply or something like that, then it’s much easier to work in multiple states.
Marijuana Retail Report: Do you see the international legalization of cannabis as a future potential? And, if so, you know, just hedging your bet, who would you say, as the first international retail cannabis brand?
Taylor West: Definitely we’re going to see a lot of changes on the global level. You know, Canada is, obviously, moving perhaps most quickly in terms of getting a Federal system and Uruguay has Federal legalization, as well. It’s a smaller program, very state controlled so it’s a little less influential on the market front. But, yeah, Canada, really, looking at this from a Federal level, which I think is really interesting. I know there have been discussions in Mexico now about that possibility, so then you’d be talking about all of North America having some regulated cannabis market. So it’s, definitely, everything’s moving in that direction. As far as global cannabis brands, again, that’s, like, that’s a tough thing to predict. There are some companies that, you know, are operating in more than one country right now. I think Privateer Holdings has, you know, subsidiaries that are operating in both Canada and the U.S., and possibly elsewhere. To be honest, I’m not entirely sure. But I believe they have, you know, some things going on in Canada as well as U.S. So certainly that you have companies like that, that have already started to build out presences in more than one country, would be early movers on that kind of thing. But, you know, if you’re talking about a global cannabis brand, you’re talking about the things that the questions that you’re looking at on a state-by-state level that is even more difficult to resolve, given that you’re talking about international borders and different approaches. So I would guess, you know, again, you’re more likely to see companies that simply have operations in multiple countries without, necessarily, a lot of actual overlap in terms of production and that sort of thing.
Marijuana Retail Report: Taylor West, Senior Director of Communications at Cohnnabis. Thank you so much for taking the time to talk with us today.
Taylor West: Yes, absolutely.