Did MJ Unpacked Just Change Things Up?

The oceanfront casino-wielding town of Atlantic City, NJ, was the latest backdrop for the MJ Unpacked 2024 cannabis trade show. The event differentiates itself from other shows in the industry by niching down and keeping the conference exclusive to retailers, brands and investors. This year was different.

The cultivation and science sectors were also front and center, and the keynote speaker was the renowned Israeli cannabinoid research scientist Dr. Dedi Meiri. A statement by Kim Jage, co-founder of MJ Unpacked and Jage Media, included in a recent MJ Unpacked press release also gave clues to the show’s shift. “Having Dr. Dedi Meiri, a globally recognized researcher, as our keynote speaker emphasizes our dedication to fostering a deep understanding of cannabis’ potential,” Jage said. “This year, we’re amplifying the importance of scientific research and financial growth, reflecting the industry’s evolving priorities.”

The three-day conference kicked off with a power-packed agenda of insightful panel discussions and strategic networking opportunities. While the exhibitor floor wasn’t available until the following days, this deliberate move by founders Kim and George encouraged a strong sense of community. Attendees like myself could delve into industry discussions and connect with peers over catered lunches, creating a foundation for even more productive interactions on the expo floor when it opened.

The conference’s dedicated science track buzzed with researchers delving into the complexities of cannabis. Dr. Meiri’s keynote, “Lessons Learned From The Complexities of Cannabis Profiling,” explored his team’s cutting-edge research on precision medicine. Their methods aim to comprehensively identify cannabinoids and match them to specific diseases for personalized treatment.

Dr. Codi Peterson of Cannigma championed the need for regulations and a standardized identification system for synthetic and plant-derived cannabinoids (phytocannabinoids). Dr. Peterson argued it would ensure consumer safety and regulatory clarity and guide future product development, mirroring established systems in the natural product industry.

A group of scientists took the stage and agreed that rescheduling is a positive step for research. However, all emphasized the need for federal legalization to unlock federal grants and institutional financing. Panelist Jahan Marcu, Ph.D., highlighted this conundrum: Universities now offer degrees in cannabinoid medicine, yet graduates have limited opportunities due to federal restrictions on cannabis research.

Adding a dedicated Cultivation Track was a welcome recognition of this crucial sector. Panels explored the “business and art” of cannabis cultivation, addressing topics like niche creation, differentiation and cost-optimization strategies.

A recurring theme throughout the conference was the rise of “intoxicating hemp” and its impact on the industry. Concerns swirled about its legality and potential risks/rewards for THC companies seeking brand awareness across state lines. Investors and researchers emphasized the urgent need for clear legal boundaries to prevent illegal activity, public confusion and difficulties for policymakers.

Frank Colombo, managing director at Viridian Capital, raised concerns about the capital crunch facing cultivators. Debt financing burdens over 90% of farmers, leading to investor panic in late 2023 as debt maturities loomed without clear repayment plans. Later that day, another investor panel unanimously confirmed this sentiment.

The Investor and Finance Track was a mix of optimism and caution from industry veterans. Both bullish on long-term potential, Pablo Zuanic and Frank Colombo addressed the lack of predicted M&A activity. They attributed it to the capital crunch of 2023 that forced MSOs to prioritize cash flow and market consolidation. Colombo, however, sees positive signs for future M&A based on valuations of top-tier MSOs.

Patrick Rea asked, “Where will the market need financing once 280E releases capital?” Colombo commented that there would be less need for capital raises after 280E for operational costs because MSOs have been in cost-cutting mode and streamlining operations for the last two years. Many are now cash flow positive and managing debt. Zuanic sees Florida’s potential legalization as a catalyst for consolidation, requiring capital for store expansions.

The VC Mega Panel, moderated by Patrick Rea, featured a mix of early and late-stage investors. When asked about pre-revenue capital raising, the panel unanimously agreed that entrepreneurs need to demonstrate operational expertise and profitability before seeking venture capital. Family and friends should be the initial funding source. “We help you grow, not get started,” was the echoed sentiment, reflecting the panelists’ own journeys.

Rea closed with a note of cautious optimism, predicting a return of investment flow, likely favoring established companies.

The Retail and Brand Track attracted brand owners eager to learn from top MSO buyers. TerrAscend’s Chantelle Elsner, Rebecca Raphael of Curio Wellness, and Julie Winter of Ayr Wellness shared insights into what gets their attention.

For these retailers, the key question is: “How will this brand help us sell more products?” Collaboration is key. Buyers want brands to offer deals, exclusivity, strategic product launches and support for budtender education. All panelists emphasized building strong budtender relationships.

Elsner offered advice on getting noticed by buyers: Identify gaps in a dispensary’s house brand selection and pitch products to fill them. Raphael highlighted the opportunity for $10 or less trial-size products to entice new customers and increase basket sizes.

Patrick Rea asked about investors’ perceptions on brands. The panel acknowledged the challenges of brand building in a fragmented, state-by-state market.

Here’s what resonated with the investors:

Vertically integrated retail operations emerged as the most attractive investment for these financiers due to their favorable profit margins compared to other sectors.

While panels addressed national trends, the exhibition floor showcased New Jersey’s burgeoning market. Experienced operators from established markets mingled with local players, eager to share expertise and gain a foothold.

Hemp companies with aspirations to expand into THC products were a notable presence. Beyond flower, gummies and vapes, New Jersey’s allowance of baked goods sparked discussion. One dispensary owner expressed skepticism about the category’s shelf life.

With over 100 operational dispensaries, 23 cultivators and 15 manufacturers, New Jersey’s market is still evolving. Supply and demand remain imbalanced, creating challenges. However, the Jage founders, Kim and George, are clearly playing the long game, and MJ Unpacked is well-positioned to become the premier trade show for the cannabis industry as it matures.