For this week’s Power Players interview, I spoke with Entourage Effect Capital managing partner Matt Hawkins. We talked about what the firm, which has made close to $200M in cannabis investments, is looking for in new companies.
On why it’s a good time to be investing in cannabis:
When you think about investing in distressed assets, the first things that come to mind are either margin shrinkage or top line shrinkage. In a lot of cases in the cannabis industry, that’s not the case: those two things are typically in a positive trend. The only thing that’s really impacting the cannabis industry in the negative sense, at least prior to Covid, was the cash crunch. There’s not enough liquidity and capital to take advantage of all the opportunities.
On the pandemic’s impact:
I think the expansion of state by state legality is going to be driven to a whole other level with states and municipalities looking for increased revenue streams to offset what’s been lost here recently and will continue to be lost. And the federal government’s no different. I think we can look to the federal government and say, “Look, we’re an essential business, why are we illegal? Why are we not able to participate in the CARES Act?”
On the industry fallout:
“There’s going to be some clear winners and some clear losers in the multi-state-operator sector. It really boils down to who has money and who doesn’t.”