I spent the week at the Marijuana Business Conference and Expo in Washington, D.C. and as a builder of businesses during the infancy of the dot com boom, the parallels I see between what happened in the 90s and what is going on this industry today are strong.
There are 6 reasons the marijuana industry is the next dot com boom and 2 very important reasons it's not:
1 - Money is Flowing
Actual sales are outstripping projections in legal states, investors are actively seeking ways to participate, and alternative funding approaches for buying equipment and providing needed working capital abound.
Bottom-line: If you want to get into the industry, there is money to help you achieve your goal and evidence that customer demand is there to support you. Marijuana Business Daily released their 2017 Factbook at the conference, a report that serves as a guidepost to an industry that is hard to quantify and track due to the current environment.
2 - Uncertainty Exists
One of the first things my team had to resolve when bringing our Internet venture online was - how do we accept payment? Simple questions like this exist for the marijuana industry and served as the basis of a well attended "crash course" the day before the conference began in earnest.
Any time there is uncertainty, especially when it is supported by the overwhelming customer demand found in this industry, individuals in the entrepreneurial world flock to fill those gaps building solutions and companies to address them.
3 - Opportunity Abounds
You only need to spend a few minutes on the exhibit hall floor to understand that it's not just about the plant. During the gold rush, much of the money was made in picks and axes. It's no different for this nascent industry.
Exhibitors at the conference were peddling everything from soil to staffing to neon signs. In fact, the exhibit floor is one of the most diverse I have walked in my 25+ year career where fertilizer companies could be found next door to lawyers and point of sale equipment providers.
4 - Rules Are Being Written
Many of the tasks, information, and access available on the Internet today were considered unimaginable in the early days of the Internet. I distinctly remember paying my first bill online to the amazement of my friends and family that I would be so brave. By being an early adopter, I was part of an influential group that informed how the Internet works today.
This same opportunity exists in the marijuana industry. The speakers at the conference stated many times that industry participants should seek out ways to be an active part of the rule making process instead of waiting for rules to be defined for them.
5 - Newbies Are Everywhere
New to marijuana and new to business individuals could be found everywhere. While this might sound like a great disadvantage, I have found that one of the greatest assets you can have in business is ignorance. The fact that you don't know what you are doing allows you to take risks and try approaches that experienced individuals are unlikely to try.
Case in point - when I started my research company, industry experts told me I "couldn't fix price research" and there was no way to "make the projects repeatable". Fixed pricing and repeatable research was the exact way I scaled that business to over 200 projects a year and an appearance on the Inc. 5000 list 3 years in a row.
6 - United Under a Common Goal
When building dot com companies, secrecy and competition was the name of the game. Achieving first mover advantage and approaching the Internet with a "winner takes all" attitude was the standard. I had teams of developers who worked countless weekends and nights to make sure we got our products out before our competition.
In contrast, the marijuana industry is rallied around a common belief - legalization and access for everyone. This united goal is a great advantage to propelling the industry forward. Speakers on the stage encouraged collaboration and attendees were very open to discussing what was working - and what was not - as they develop their individual ventures and the overall ecosystem.
And two very real reasons it's not the next dot com boom:
1 - It's Illegal
During the dot com era, the major holdbacks were: 1) large company and large investors' ignorance around how "the Internet" worked and concern it was a passing fad and 2) user adoption.
As the crowd was reminded over and over again, marijuana and marijuana businesses are still completely illegal at the Federal level and at most state levels.
Until this is resolved, the industry will never reach its true potential.
2 - It's Not "New"
Much of the value created during the dot com run-up was found in brand new business models and technology that had never been considered before. Amazon, Facebook, Google all changed the way we live our daily lives and their current valuations reflect that.
The boom in the marijuana industry, on the other hand, is based on the demand for a plant - a plant that has been around as long as recorded history and was only within the past century vilified for political reasons. Marijuana is often used in place of another product - a pain reliever for example. Once pricing begins to normalize due to increased production, relaxed scrutiny, and decreased novelty, the existing upside will dissipate. In other words, money will move from one channel of use to another and marijuana will find it's rightful place as a beneficial commodity.