Last year multiple states legalized cannabis and as a result, many industry pundits believe federal legalization may be increasingly near. Yet not all share this view. For instance, Richard Batenburg III, chief investment officer of Cliintel Capital Management Group, a Denver-based venture capital firm, believes legalization may be a lot further off than we think. Batenburg, who has been investing in cannabis since 2015, contends that 2022 will be a year of consolidation and competition. It’s a compelling forecast and he cites a number of reasons for it.

Iris Dorbian: Why do you think 2022 will be the year of consolidation of existing companies and increased competition due to the growing strength of brands?

Richard Batenburg III: Regulations, marketing and scale. Cannabis, in its current regulatory environment, is not adaptable or scalable. The market is experiencing arrested development due to crippling tax regulations, a lack of institutional banking and the commoditization of the plant, leaving operators with little to no margin for revenue and further incentivizing the consolidation of the industry.

Creating an emotional connection with consumers will continue to be key to success in cannabis, much like any industry. But in cannabis, brands must also create a strong connection with budtenders, who are highly influential in shaping consumer’s buying preferences. You can spend all the money you want on marketing, but if the budtender suggests a different product, then you can’t win. By consolidating and growing, companies enhance their ability to execute comprehensive multi-pronged marketing strategies that engage consumers and budtenders at all levels. Surviving 2022 is possible by creating a consistent product, building an authentic brand, and gaining as much shelf space in as many dispensaries in as many states as possible.

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