With marijuana legal or medically available in 16 states, a new industry is rising to capitalise on the new commodity.
Interestingly, many of the entrepreneurs in the cannabis industry are finding a way to run their business without even touching the drug, which remains federally illegal.
One such set of entrepreneurs is Joseph Slotin and Matt Hudson, the team behind MJCharts.com.
Slotin and Hudson are trying to provide up-to-date historical financial data through their Cannabis Price Index. Their firm is one of the many that see billion-dollar potential in the legal marijuana business and are trying to get in at the ground floor.
Here’s the transcript of our chat:
Business Insider: What does MJCharts do, exactly?
Hudson: So right now we’re collecting and presenting all the data related to cannabis products, markets, segments, and products within those segments.
We’re interested in presenting market share data, trend visualisation and then identifying pricing differentials, identifying strong brands.
We’re looking to provide a resource for retailers, producers, and consumers. We feel that all of those sectors should find value from this data.
BI: Where do you get the data from?
Hudson: We get the data from publicly published pricing — advertisements essentially — and we go out and scrape it. This is directly from the dispensaries, there is no black market data at all that we look at . We feel that is not very useful at this stage of the game. We have built custom spider software that reaches out to directly to stores, however they are publishing that data.
BI: Are you alone?
Slotin: So far we have been. We’re the only people doing historical indices on this. We haven’t found anyone else doing this quite the same way — or at all.
BI: So you’re aiming to be the Bloomberg terminal for marijuana financial data?
Slotin: Yeah, I’d agree with that. Absolutely. We’ve always looked at MarketWatch.
Hudson: We’re definitely taking the financial approach to presenting the information. rather than the educational or social approach.
BI: What are your backgrounds?
Slotin: I’ve owned a few companies and worked in some finance and business. I’ve had some startups. I was also a medical marijuana patient for a number of years – still am — so I kind of identified a need here as the industry moves forward.
Hudson: I’ve worked in the tech sector for the better part of a decade. I have a background in system administration and web development. I’m always had an interest in data gathering and data visualisation, so this project presented a perfect opportunity for me in that regard.
BI: What was the process like getting started?
Slotin: Well after our initial meeting in December we decided when we were gonna do this I went out to go and look for funding. We got a small amount of start-up funding and we got it working. We’re hoping to branch out and explore partnerships with businesses in the peripheral industry — clinics, garden supply, dispensaries, testing labs.
Hudson: We hope to be able to provide consulting expertise because of our unique views of the market data. So we would hope to be able to answer questions for the growers, like what products to produce or what products to stock on their shelves, to see what other businesses are doing.
BI: How long do you think it will be before the marijuana industry will be considered a serious investment?
Slotin: People are already starting to dabble a little bit, but seriously throwing money at it? It’s moving forward, but I’m looking at one to five years for people to really get into it. I think forfeiture laws are the real obstacle here.
So when the federal government decides to let states do what states do, I think that will have a huge influence. I think statistics and polls [are] showing a political and social change with regards to marijuana and cannabis in general. Things are moving.
BI: What are asset forfeiture laws and why do they make marijuana a risky investment?
Hudson: Currently the way federal laws are written, a business that engaged in touching cannabis at a primary level is still technically subject to federal forfeiture laws.
That means the federal government can confiscate assets including real estate, bank accounts, and it makes it more perilous for people to go into the business.
BI: As an industry what makes marijuana businesses different than regular businesses?
Slotin: I don’t think there is any real difference. It really comes down to antiquated systems at this point and just moving forward. I don’t see the marijuana entrepreneur being any different than the anyone else selling any legal, recreational substance.
It’s just about normalization at this point and we’re moving forward pretty quickly. Gallup poll puts out a stat every year about how Americans feel about federal and state marijuana laws. About two and a half years ago that tipped the scale towards legalization. The hold outs are the people 80 years and older and some southern states. Normalization is happening.
Hudson: You’ve got more risk takers in the marijuana industry. People who are comfortable working with state law and not necessarily working with federal law. There’s certainly a risk-taking aspect and it’s certainly a high-risk investment with regards to federal law. But, we expect to see that change, that’s changing
Slotin: We’d love to see some people who can afford to take those risks jump in and help to push it forward. That would hopefully make a difference.
BI: So at the moment it’s high risk, high reward.
Slotin: I’ve seen numbers all the way up to a $50 billion industry, but it’s hard to measure that because the black market is just a huge part of that too.
Hudson: That’s where we come in. We’re measuring it and we’re publishing what we find. We hope that data helps speed up this normalization process in terms of presenting the facts about what’s going on out there in the industry.
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