Pioneering cannabis communications
KCSA’s initial foray into the cannabis industry began in 2015, when we were tasked with supporting the communications efforts of a group applying for one of the original medical cannabis licenses in New York. As these were literally green fields in terms of public and investor relations, with no concrete examples to help guide us, KCSA forged a new path, writing the initial chapters of what would eventually become the de facto playbook for providing communications counsel to cannabis companies.
Despite the fact that cannabis remains illegal at the federal level, the Obama administration’s writing of the Cole Memorandum – and the protections it afforded – essentially opened the door to individual states to set their own rules regarding the sale and consumption of medical cannabis.
Currently, 33 states and the District of Columbia allow for the sale of medical and/or adult-use cannabis. And today, 93 percent of American voters support the use of medical cannabis, while nearly two thirds (63 percent) support the legalization of marijuana in the US, according to a Quinnipiac University Poll.
Many Canadian and a few US-based investment banks have seized this once-in-a-lifetime opportunity to raise billions of dollars of growth capital for cannabis companies. At the same time, a few intrepid stock exchanges, led by the Canadian Securities Exchange (CSE) – sometimes referred to as the Cannabis Stock Exchange – have become home to hundreds of publicly traded cannabis companies. Nasdaq and the NYSE are not far behind, having recently opened their doors to federally compliant cannabis companies such as Akerna or Green Lane, that either do not touch the plant in the US or are ancillary service providers.
With the investment banks and exchanges either dipping their toe in the water or wading into the deep end, coupled with trends favoring national legalization, the need for PR and IR services has never been greater.
Today, KCSA is widely regarded as the pre-eminent cannabis communications firm in the world. Our clients range from start-up companies looking to raise initial capital and prepare for a launch to more established private and publicly traded companies looking to build their brands, raise their profile, drive sales and – when needed – raise even more money. KCSA’s clients span the entire supply chain from companies that grow the plant, process it and dispense it to companies that provide consulting services, financial services and even ancillary products such as nutrients and packaging.
KCSA’s leadership role within cannabis communications doesn’t begin and end with our clients: we’ve also worked hard to position ourselves as advocates for the overall cannabis industry.
– Just over 90 percent of the respondents identify themselves as individual investors.
IR conclusion: While this result is not surprising due to the fact that cannabis remains federally illegal in the US, KCSA guides its publicly traded cannabis companies in developing and executing communications strategies that cater to the needs of the active retail investor audience for cannabis.
Source: KCSA
– Investors are spreading their bets across multiple companies: 39 percent have invested in four to nine companies and just over 32 percent have invested in 10 or more companies.
IR conclusion: There are a lot of companies to choose from when considering where to invest in cannabis. In order to stand apart from the crowd, KCSA believes it is imperative that publicly traded cannabis companies build their investor relations programs based on IR best practices.
– It has become increasingly difficult to make money investing in cannabis companies. In the first KCSA Cannabis Investor Survey fielded in March 2019, 89.3 percent of respondents say they have made money investing in cannabis, while in the September 2019 iteration, only 40 percent indicate they have made money investing in cannabis.
IR conclusion: Similar to biotech in the 1990s and crypto-currencies today, the challenge for cannabis firms is to transition from the hype and promise and begin to deliver strong, measurable operating results. To build and maintain credibility with investors, KCSA advises its clients to communicate transparently and frequently. At the same time, we recommend that management teams establish clear and manageable metrics from which investors can gauge the progress their company is making.
Capitalizing on our decades of investor relations experience, coupled with our initial entrance into cannabis through our PR team, KCSA has become the go-to resource for cannabis companies looking to outsource their IR. To date, KCSA has provided investor relations support to more than 75 cannabis companies that have transitioned from private to publicly traded companies, and are listed on Nasdaq, the Canadian Securities Exchange, Toronto Stock Exchange and OTC. Of note, most of these companies have completed significant capital markets transactions, including private placements, reverse takeovers, up-listings and special purpose acquisition companies.
As an industry that remains illegal on a federal level, it is still a challenge to operate as a publicly traded cannabis company, with the lack of access to commercial banking options, institutional investment capital, expensive debt markets and the potential sword of Damocles hanging over the industry in the form of federal regulation. To both address and overcome these challenges, KCSA advises its pre-public and publicly traded cannabis clients to:
KCSA remains steadfast in our belief that the future of the cannabis industry has never been brighter, and the industry has been derisked to the point of general market and cultural acceptance.
Celebrating its 50th anniversary earlier this year, we are proud to say that KCSA Strategic Communications has secured its position as one of the most trusted strategic communications companies in the US. Specializing in providing investor relations, public relations and digital media services to companies around the globe, KCSA has developed a unique brand of integrated communications that combines passionate, persuasive storytelling with pioneering strategies. Over the course of five decades, we have established ourselves as one of industry’s most entrepreneurial and trusted agencies, aligning our objectives with those of our publicly traded and private company clients. By providing expert communications counsel atop a deep platform grounded in best practices, KCSA helps our clients inform, inspire and influence.
