Alan Brochstein is a cannabis industry analyst and the founder of New Cannabis Ventures, a publication that seeks to educate readers about financial aspects of the industry.
Can you tell us a bit about New Cannabis Ventures?
New Cannabis Ventures, which launched in September 2015, aims to highlight promising companies and influential investors in the cannabis industry. We publish only financial news. Our readers like that we are able to filter out a lot of noise, saving them time. Most of our content is curated, but we also offer some original content and several resources as well, like our family of stock indexes, a curated business directory and even a careers page.
How did you get into the cannabis space?
I stumbled into the cannabis public markets in early 2013, when I was working as an independent analyst with several institutional clients for whom I was providing research. I was shocked to learn more about these companies, many of which didn't even file with the SEC or have material operations but had large market capitalization. There were few, if any, financial analysts covering the space at the time, and it was truly a Wild West. I had always been pro-cannabis (marijuana, since I wasn't familiar with the term cannabis!) for civil liberty reasons, but I had a lot to learn about the plant and the industry. I spent those early months doing a lot of research and sharing my findings publicly through Seeking Alpha, a spot where I had been a prolific blogger since 2007.
Walk us through a normal day.
I begin my day at 4:30 A.M. each day and usually shut it off between 10 and 12 at night (in the Central time zone). My duties at New Cannabis Ventures and 420 Investor keep me very busy, more so during periods of financial reporting. I work long hours over the weekend too, but there aren't so many interruptions that I get a lot done then! This is when I write articles for my monthly newsletter or contributions for Forbes or Leafly.
During the week, I see a lot of information in the form of press releases and SEC filings, especially early in the day. I share all of it at 420 Investor, and I decide which is worthy of sharing at New Cannabis Ventures, where the information is more filtered. I provide two market review videos per day for my subscribers at 420 Investor and spend time throughout the day monitoring stock prices. Some days I may not make any changes to my model portfolios there, but rarely would there be an entire week without some adjustment. On Tuesday evenings, I host a chat with my subscribers from 9-10 ET.
I spend a lot of time communicating by email and phone throughout the day as well. My editing and publishing duties at New Cannabis Ventures are a full-time job in and of themselves as well. Finally, I have a great partner at New Cannabis Ventures, and I am in communication with him throughout the day.
What has been your biggest lesson about working in cannabis, and in business in general?
I have learned a lot over the past 5+ years, but one of the biggest challenges for me has been the start-up nature of this industry. Historically, as a financial analyst focused on more mature companies, I had better data upon which I could assess companies. This industry is so new, with so many companies that have no operating history, that I have had to learn how to analyze more speculative companies. I think my biggest lesson has been how it is important to have a good handle on the underlying fundamentals and valuations of companies, but one risks missing out on big opportunities if one is too cautious and places too much emphasis on these factors.
What is the most frustrating aspect of the cannabis industry today?
5 years after I realized how much chicanery there was in the publicly-traded cannabis sector, it saddens me that there are even more questionable companies today than at the beginning. It also extends into the private sector. Sadly, there are just a lot of opportunists. Fortunately, though, the growth in the responsible companies has been even greater.
What about the biggest opportunities for businesses within the cannabis space?
There are so many opportunities, but one that I think stands out is the ability to create new markets. Many cannabis businesses have gone after the same traditional demographic and with legacy products, whether flower or extracts. Creating new products for emerging demographics is a way to get out of the very competitive commodity business, in my view. I also think that there are opportunities to create services that help cannabis growers, processors or retailers compete more effectively, maintaining or improving quality and compliance or reducing costs.
What advice would you give to anyone looking to get into the cannabis space?
For those looking to enter the cannabis industry, I don't think one needs to reinvent himself or herself. My advice is to figure out how your skills fit with the needs of the industry. There are many companies hiring aggressively from traditional industries.
Do you see any big changes coming in the future of cannabis?
Many fear "Big Pharma" and see it as a risk, but I see the FDA path as a great new market to go along the health and wellness market that we call "medical cannabis" today. I believe we will see more research and development in the years ahead, and this will create its own opportunities while at the same time boosting the perception of cannabis as a worthy health and wellness product.
Do you consume cannabis? And if so, what's your favorite way to consume?
I am a big fan of small amounts of cannabis, but I live in Texas, which doesn't have a medical program or any other access (except for CBD for epilepsy). I have a California medical card, and I have spent significant time in both California and especially Colorado over the past five years, allowing me to learn more directly about its consumption. I prefer micro-doses of edibles (huge shout-out to Kiva!), but I enjoy vape pens as well.