Introducing, “Contributor Spotlights”, a campaign aimed at highlighting our contributors who add their voice to DCN’s platform in order to educate and connect with other entrepreneurs in the cannabis industry.
Meet Sarah Sanger, Sarah brings 15 years of corporate finance, analytics, and operations expertise to the industry. In addition, she has seen over 100 cannabis-related pitches and business plans and has personally placed investment capital in this industry.
In this contributor spotlight, she shares with DCN readers her experience and knowledge on managing financial operations within a business environment, plus she provides her insightful perspective on how investors view the cannabis industry.
DCN: What obstacles have you faced on your journey?
Sarah: My transition from the corporate world to the cannabis industry has been interesting throughout. It’s certainly a different world dealing with cannabis operators than traditional big corporate types as some fundamentals of business etiquette and understanding are underdeveloped in this industry. In addition, since I’ve been mostly working with startups, there is typically a great deal of uncertainty and ambiguity that I wouldn’t have experienced when I was in upper management, in a corporate role, and collecting a paycheck every other Friday.
Many operators are entirely unfamiliar with accounting principles, financial statements, or anything corporate. Historically, this industry has been encouraged to “not put anything in writing” in every possible way. Not to mention, accounting for cash transactions requires more than downloading an automated paper trail like we take for granted in mainstream industries. This has been a challenge as well as an opportunity for me as I see a need for professionals with traditional backgrounds to help legitimize and mainstream this important industry.
DCN: Why did you get into cannabis industry?
Sarah: This is a question that I get asked quite often. I have a long list of reasons that I’ve shared on my blog (www.whyicannabis.com). However, for today, I’ll try to succinctly articulate the most compelling reasons I joined this wild ride.
- Black market operators don’t pay taxes or enforce safety standards. It’s time for society to acknowledge and accept that this drug exists and is widely used. If we can transition from a black market to a regulated market, society will benefit from incredible tax revenue and safer products. Unless and until cannabis is legal and regulated, we cannot have a reasonable dialog about product safety, public safety, toxicity testing, or any number of other important topics. There is no way to exterminate cannabis, it grows in nature. People will use this drug whether it’s legal or not. If you think it’s “bad”, I would think you would support the idea that it should be taxed and regulated just like every other product we buy and enjoy.
- Cannabis is a medicine that many people depend on. I have close family members that need this medicine. Legitimate doctors should be able to prescribe legitimate medicine for legitimate medical needs, just like they do with the thousands of other prescription drugs that are out there. I recently heard a statistic, touted as great news, that over 70% of Florida voters approve of the use of cannabis for medical patients. My reaction was to wonder who the other 29% are and what they think about the scores of other dangerous, behavior altering, addictive pharmaceutical drugs that are prescribed daily. Many of the cannabis operators I have met entered the industry because someone dear to them had a life-changing experience from their use of medicinal marijuana.
- Short term arbitrage opportunity. Another reason that I entered this industry is because of the incredible investment opportunities that exist as a result of the imbalance between supply and demand of capital. The cost of capital (that is, how much it costs an operator to get financing which translates to the amount you get paid for being willing to invest or loan money) is determined by the demand for capital (how much capital is needed by operators that want to expand their businesses) and the supply of capital (how much capital is available from investors or lenders). In most any other industry, the supply and demand find a fairly normal equilibrium, with many options available to operators that need cash (bank loans, traditional institutional capital, friends and family, etc etc). In this industry, the equation is completely out of whack. The demand is bloated due to strong favorable momentum at the state level and the supply is choked due to the unquestionable illegality based on federal law. This means there is zero institutional capital or traditional financing sources. Private investors are an option but you have to strip out anyone that is risk-averse or morally opposed to the industry. Higher demand = higher prices (think Lululemon). Lower supply = higher prices (think diamonds). So, what we are seeing is extraordinarily higher prices which in this case means very favorable investment opportunities.
DCN: What was your opinion of cannabis growing up? How has it changed?
Sarah: I sat through many D.A.R.E sessions but grew up in a relatively liberal family and community. When I was growing up, I was always very focused on academics and in a “rule follower” in almost every way. I started experimenting with cannabis casually and infrequently in high school and enjoyed it. To this day, I am the type-A, rule-following type. My kids go to bed at 7, I married a nice Jewish real-estate professional with a great golf game, followed the typical high-school → college → 2 years of work → business school → back to work progression. I see the dentist twice a year, dermatologist and doctor once a year, and make sure to have 4 servings of vegetables per day. However, I still enjoy partaking in cannabis and spend my time trying to break down the stigma that seems to persist to this day.
DCN: How has your involvement with cannabis changed personal and career relationships?
Sarah: I’m lucky to be part of an open-minded community and accepting family. There have been some in my life that do not condone the use of cannabis or support legalization, but I haven’t felt any overt mistreatment stemming from my decision to pursue this industry.
DCN: What are your hopes for entrepreneurship in the cannabis industry?
Sarah: I’m hoping to be an active participant in the movement of the cannabis industry as it evolves from an archaic black market to a thriving mainstream industry. I want to connect and assist as many operators as possible to ensure that this industry provides safe, high-quality products that are accessible to adults that want or need it.
To learn more about Sarah and what she’s up to in the cannabis industry, check out Sarah’s page.
Interested in being a contributor? Click here.
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