With Canada poised to cash in on cannabis, U.S. executives eager for their turn
Uncategorized October 10, 2018 MJ Shareholders
Mainstream executives want in on the cannabis craze.
That’s not surprising, with the value of some Canadian pot businesses topping $10 billion and Coca-Cola Co. and Molson Coors Brewing Co. eyeing marijuana as the next trendy ingredient. But the burgeoning industry faces a unique hurdle: Pot is still illegal at the national level in the U.S. — the world’s biggest consumer market.
Acs Canada prepares to legalize weed next week, and regulations loosen in some U.S. states, there’s growing demand for experienced executives to take leadership roles and help startup companies create the next generation of pot products. Yet, the federal ban in the U.S. has created a legal minefield for headhunters trying to find enough bodies to meet demand.
“Getting started in cannabis is probably a lot like when Prohibition ended in the 1930s,” said Catherine Van Alstine, who recruits executives for the industry as a partner in Vancouver for search company Boyden. “Everybody thought the world was going to end because alcohol was going to become available and legitimate. That’s the way to think about cannabis.”
The latest flashpoint for recruiters: threats from U.S. Customs officials of potential lifetime bans for Canadians employed in the pot business trying to enter the U.S. That’s forced some executives in Canada to reconsider taking board seats or executive roles at weed companies. And search firms are fielding questions from U.S. business leaders as well, who are concerned about the implications of being tied to corporate cannabis.
The tension is complicating hiring for Gabriella’s Kitchen, a packaged-food company that’s adding a line with cannabis-infused products for sale in California, said Chief Executive Officer Margot Micallef. The Calgary-based company retained three search firms, including Boyden, to help it fill posts such as chief operating officer and vice president of development and will soon seek a chief financial officer, she said. Most of its sales are in the U.S., and the company has a manufacturing facility in Santa Rosa, California, she said.
“The roles that we are hiring for are all U.S. positions,” Micallef said, partly because of the border risk and lack of support from Canada’s government. “The result of that might be that Canadians don’t get offered positions that they might otherwise have been qualified for.”
Even without Canadians, Micallef said there’s been no shortage of people reaching out to show interest in the positions, particularly from the packaged goods and alcohol industries.
Harris Damashek had no reservations about changing careers. Still, he was aware of the stigma and waited two months to tell his mother he’d left Anheuser-Busch InBev SA to become chief marketing officer at Acreage Holdings, a New York-based cannabis company that counts John Boehner as an adviser.
At the beer giant, Damashek worked in the unit responsible for tracking consumer trends and investing in small, fast-growing businesses. He broached the idea of the company getting into cannabis, but left after the proposal was rejected, he said. The boom in the Canadian stock market and interest from big consumer companies are helping legitimize the field, he said.
“That stigma is being replaced by titillation that this is a big financial opportunity,” Damashek said.
Legal U.S. employment in the industry is expected to double by 2022 from about 160,000 this year, according to the publication Marijuana Business Daily. Thousands of jobs are also expected to be added in Canada in coming years.
Ahead of Canadian legalization, the value of the industry there has surged to about $60 billion in the stock market, with shares spiking on any mention of cannabis. Canada’s government has estimated annual legal pot sales of roughly $3.1 billion annually. The market is already larger in the U.S., where a handful of states have legalized adult use. Total U.S. sales of legal pot are expected to reach $11 billion this year, according to a report by Arcview Market Research and BDS Analytics.
Heady predictions aside, the federal prohibition in the U.S. has kept big banks and corporations mostly on the sidelines for fear of running afoul of regulators. Among the five largest recruiters, Heidrick & Struggles, Russell Reynolds Associates, Spencer Stuart and Egon Zehnder declined to comment on whether they were participating in the hiring of executives for cannabis companies. Korn Ferry didn’t respond to requests for comment.
Heidrick & Struggles has recruited for a medical marijuana company, and the firm is looking at working with companies that produce cannabis for recreational use, according to a person familiar with the matter. The firm is evaluating whether that business fits with its culture and the values of existing clients, said the person, who requested anonymity because the details are private.
For now, smaller firms are picking up some of the slack. Vangst — Dutch for “catch” — has grown from a one-person operation in 2015, charging $500 each to recruit college grads for the industry in Denver, to a firm with 65 employees. The company outgrew its original name, Gradujuana, as clients wanted more professional services.
Vangst opened a second office in Santa Monica, California, and is adding recruiters in Toronto, said founder Karson Humiston. The firm has placed 10,000 workers at more than 600 companies, she said.
Cathy Logue was already an established recruiter of chief financial officers for more conventional industries at Stanton Chase in Toronto when she attended a panel of cannabis company executives at her alma mater in eastern Quebec. She has worked in the weed world ever since.
While she’s been successful placing executives at pot companies, Logue said she has about a 50 percent failure rate in getting people to accept director roles.
“I don’t think that will change for a little while until the legal issues are sorted out,” she said.
–With assistance from Kristine Owram and Doug Alexander.
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