A new market matures as the old evolves

Cannabis is the new kid on the block in agriculture

Cannabis is the new kid on the block in agriculture. Legalization of recreational cannabis created a whole new market, with a new regulatory regime, eye-popping share prices and cultivation processes that were starting from scratch.

But cannabis has graduated from infancy to adolescence, and with that comes new problems and challenges. The industry has suffered from the inevitable hype cycle that new products often do, where companies have gone from valuations that were through the roof to market consolidation and insolvencies. 

Securities litigation is the latest challenge for these adolescent companies. A regulatory wild west has also created huge uncertainty for cannabis producers. “I think [litigation is] going to continue to increase as time goes on, but right now I’m seeing, too, challenges against regulatory bodies for making decisions or refusing to make decisions,” says Matt Maurer at Torkin Manes LLP (Cannabis Sector Litigation on Rise). 

Agribusiness, on the other hand, is the wise adult in the room. Food safety is a fundamental operating principle, and most agribusiness companies have avoided the cannabis roller coaster ride due to strict regulations restricting how cannabis products can be produced. 

But the COVID pandemic has caused uncertainty for agriculture as well, with disrupted supply chains and economic turmoil making what was once a stable business look a bit wilder. And with missing inventory and closed borders, the public’s attention has shifted from cannabis stock prices to how we get food to our table. 

For both industries, lawyers say, technological innovation will be a key part of their long-term viability. “There’s almost nothing that you can’t infuse with cannabis,” says Rob McDonald at Bennett Jones LLP (From (Digital) Field to Plate). On the agribusiness side, the more successful companies are expanding into artificial intelligence and data collection, says Leilani Kagan at Thompson Dorfman Sweatman LLP (Green Versus Green). With all those forms of innovation comes a need for proper intellectual property protection.

While cannabis may be the new kid in town, it is fast joining its agriculture brethren as a mature industry. And as both industries navigate the uncertainty of a pandemic, sound legal advice will be a key factor determining their success.