Recreational marijuana was legalized in New York City on April 30, 2021 by ex-Gov. Andrew Cuomo, but the changes haven’t been immediate. It is still illegal to buy or sell marijuana, but people have been lighting up in public whenever they want—as long as they observe the same restrictions as cigarettes, according to the New York Times. There are still a lot of gray areas when it comes to this legalization, and Emily Paxhia, the Managing Director at Poseidon Asset Management was in Williamsburg to speak about it.
High NY, which was founded by Michael Zaytsev (Mike Z), is “one of the world’s largest Cannabis Meetup communities.” Cannabis lovers and investors get to meet up at events to network, learn, and participate in spreading the word of marijuana. They held an event in Williamsburg this month, “Investing in East Coast Cannabis,” with Paxhia as the spotlight speaker. Interested investors and sponsors were gathered to learn some insight on how to invest in this booming industry and why now is the right time.
Paxhia took the time answering questions from the crowd.
Governor Cuomo just resigned. What does that mean for adult-use legalization in New York?
“What does it mean? It’s hard to read the news on this, but I will say this. As someone who has seen the shift of political life over the years, it’s amazing to think that our country has been divided on so many things including how to manage through the pandemic. But what we have been, when you look at the polling data, the most united amongst all the issues is on legalizing cannabis, especially medical cannabis. It’s above ninety percent. When you see the polling on adult-use, it’s about sixty percent. We now have 38 medical cannabis states and 19 adult-use states, but not all of those are open. What I saw with Cuomo was that he was using cannabis as a token. ‘Look at this shiny object that we all kind of agree on!’ He held it out there and got it through, but then he sat on it, and it’s been unbelievably delayed in the progress that we’ve seen. But, he’s not here anymore. I’m hopeful that our new governor (Kathy Hochul) is going to take this seriously and that we will make progress.”
What are some common misconceptions about investing in cannabis?
“Anyone that has been paying attention over the years can see that it’s been a wild gyration of cycles in terms of how this industry ebbs and flows. This industry is great. You can’t see growth replicated where the same amount is being generated by these (supporting) companies. In almost any other industry, even in the high growth consumer industries, it’s usually growth ethic/cost of the bottom line. But our businesses are strong in spite of all the frictions that our businesses face. The cost of capital is higher than any other industry, the taxation is outrageous. This all trickles down to your bank accounts costing more, your insurance costs more. Everything is more expensive when you’re running a business in cannabis. On top of that, the economic subscales don’t really exist, because you can’t have a national, central location where you’re distributing products from. You have to go state-by-state. After that, you have these crazy nuances because you have to have different labels, weights, and measures. All of this is my way of saying, it’s way harder than you could think. I have people tell me that since I invested early, it’s easier. No, it’s really hard. That’s one of the things I would like to dispel. It’s harder, it costs more, and takes more time than anyone would like. But, this is the good work that is worth doing.”
What are some of the most rewarding and what are some of the most challenging parts of what you do?
“The most rewarding part of what I do is leading the people in this industry. I really count them as friends, as family. It’s like going through the crucible, going through something really difficult and feeling like you were burnt down a few times, and we have as a sector, then you really come together. It’s been a tremendous journey from that standpoint. The other thing is the honest to goodness of building a business. We’re creating jobs, we’re inviting people back to work. What was more exciting is how people are excited to go into work at a facility that is growing, producing, manufacturing cannabis to distribute throughout the state. And there’s incredible pride in that. Being able to see tangible job creation in the U.S., and for better or for worse, this crazy, federally-illegal nature of this business makes it such that we have these things. We have these job creations, facilities being developed over places that have been forgotten. For me, that’s where things get really exciting. Educating consumers who are coming into the space who, like me, felt like they hadn’t found a cannabis product that was the right fit and then you get to share that knowledge and change their lives.”
What does it take to succeed as an entrepreneur in this space?
“You 100% invest in people, because it is so hard in this space. That’s why I need co-founders and people at Poseidon I can trust, and the same thing with founders. The quality of a founder is the following: brave, but with sufficient humility. It’s always because the investments that have become the most challenging is where there isn’t that moment where the founder looks around and says, ‘Who can I rely upon who has more knowledge in this area? Who can I surround myself with and who can bolster myself and help me to become a better founder?’ A lot of these folks are blazing trails. Seeking mentorship is key and knowing who good mentors are is key, because there are a lot of people who come into this space who are like carpetbaggers. They go down the path and spend all this money, as an investor, it’s really hard to see. I like the person who is brave and bold and willing to work hard who has that level of humility to ask for help and knowing when to ask for help. The longer you wait to ask for help when you’re a founder, it’s exponential how bad business can go off the rails. That’s why you need good people around you.”