The striking parallels between luxury fashion and the cannabis business

I read it recently The House of Gucci: A Thrilling Story of Murder, Madness, Glamor and GreedThe non-fiction book on which the 2021 film is based. While I’ve come to terms with fashion and high-end romance, I’ve stayed with a complex business case study that mirrors what I see in long-running cannabis companies. There are striking similarities here.

Multigenerational degradation.

The house of GucciThe plot revolves around Maurizio Gucci and his relationship with Patrizia Reggiani. The two meet at a party where Patrizia is star-struck by Maurizio and his family’s legacy. At the time, the company was owned by Maurizio’s father and uncles, who inherited the business from their father and later passed it on to their respective heirs. But mixing business and family will be a thorn for the Guccis.

Such multi-generational dynamics often create complex inter-company relationships for companies. This was the reality for many early cannabis businesses started by brothers or close friends when California first legalized medical cannabis. Even ten years ago, these jobs weren’t considered a viable investment—just as they were when houses started popping up in fashion at the turn of the 20th century. Instead, these small businesses were financed and supported by the founders or friends and family. Relationships and terms are often easily defined. Hiring decisions are often made based on who knows who, not who knows what.

As California’s medical markets mature, competition increases and a company struggles over which direction to take strained relationships and friendships. Many early companies would have done well if they had not been marred by ties that could not distinguish family ties from business transactions. One only has to dig into these older companies to find publicly filed lawsuits between founders, some of which make bold and outrageous claims, especially in California.

Personality rituals

Another striking similarity between fashion and cannabis is the characters at the center of the operation. A number of famous design houses were founded by iconic and outgoing individuals synonymous with their brands. Karl Lagerfeld. Oleg Cassini. Coco Chanel. These painters combined artistry and sophistication. Similarly, cannabis farmers have a deep passion for their work. The most talented breeders breed specific strains and terpene profiles and then work on the right way to harvest and cure their crops.

In times of crisis, such deep innovators pay little attention to honest details before they grow. In addition, they have trouble reconciling how to maintain quality while adding volume. This becomes a problem when founders look to investors who want to increase revenue and market share.

As Gucci struggled with their balance sheet, they focused on strengthening their management team. Domenico De Sol brought his business acumen and legal expertise to lead the company from bankruptcy to growth mode. The partnership and trust in the young, but talented Tom Ford breathed new life into the old brand, expanded the commercial product line and attracted millions of new customers. Unfortunately, the cannabis industry is young, and companies have a hard time finding customers. Instead, founders are often outsourced, and talent comes from other industries.

In my business we have seen management teams and directors come into these companies from traditional companies like Ford, PepsiCo, Constellation and others.

Pressure for an IPO

In the year In the 1990s, fashion houses began to see China and other Asian countries as viable markets and began to diversify their original lines to appeal to younger customers. To support those expansion opportunities, several designer brands have gone public. While some have prospered, other fashion companies have failed to deliver on their promises.

Donna Karan, the designer known for her minimalistic feminine fashion, had a much-anticipated IPO and shares rose from $4 to $24 on the first day of trading. However, expansion plans stalled, and the share price fell. This trend is repeated with other companies.

Over the past couple of years, cannabis companies have had to deal with the consequences of wildly overhyped IPOs (or, more often, reverse takeover RTOs); It also failed to deliver results in emerging markets. Some of these companies have had to liquidate their assets, some are tied up in ongoing litigation, and others have merged into larger companies. Most likely, the company’s valuation is lower than it was at its initial public offering.

As with fashion, consolidations continue to occur as new markets open up, and winners and losers eventually emerge. Today, we have mega fashion houses like LVMH, which raised Donna Karan and owns famous fashion brands like Christian Dior, Berluti and Tiffany. Today, Gucci is owned by the French luxury group Kerig, which has a stable of other powerhouse brands such as Balenciaga, Yves Saint Laurent and Bottega Veneta.

Cannabis companies are starting to build deeper benches and better market share through M&A activity. Recently, Cresco Labs announced that it will acquire Columbia Care for $2 billion. When the deal is completed, it will create one of the largest jobs in the US cannabis industry. In October, Truelive closed a deal with Harvest Health & Leisure that will give the company more than 149 retail locations in 11 states.

Consolidation is often painful for business but good for industries. They help establish economies of scale that lower the cost of goods and services and make the marketplace more competitive — and therefore affordable — for consumers.

It’s no surprise to people that there are many overlapping challenges and opportunities for cannabis and fashion brands. Both are cultural heroes and have had a huge impact on consumers. Both are related to how people see themselves and their lifestyle. Cannabis brands also often compete with fashion brands.

In the year A 2017 New York Times article called Bebon “the Hermès of cannabis.” Interestingly, the co-founders of Bebo are both involved in the fashion world. Clement Quan has worked for Theory and Dolce & Gabanna. Scott Campbell was and still is a tattoo artist who has collaborated with designers such as Marc Jacobs.

Brett Hayman brings unique and iconic accessories from her brand Eddy Parker to the cannabis accessories space with her eye for the Eddy Parker flower launch. Heyman, who has spent two decades in the luxury fashion world, says cannabis and fashion go hand in hand.

Heyman believes that luxury cannabis accessories that reflect individual preferences and personalities exist, just like high-end barware. She also believes that as brands mature, they will begin to move to create more comprehensive and thoughtful product lines that work together like fashion collections.

Indeed, fashion has many lessons to learn in how to position products and build brands that resonate with consumers. As Coco Chanel once said, “To be different, one must always be different.”