“5 questions you should ask in order to successfully invest in the cannabis industry”, with Adam… (2024)

Firstly, the industry is incredibly young and we’re still learning so much about this wonderful plant each and every day. I’m excited to learn more about its medicinal properties and how it can be used to treat a variety of medical issues. Secondly, I’m excited that more and more states have adopted some form of legalization. I truly believe we’ll see full legalization in the next three-to-five years. Lastly, I’m excited about the global growth of the industry and the investment large legacy companies are making like Constellation, Anheuser Busch InBev, and others. The continued de-stigmatization of the product is encouraging.

As part of my series about “5 Things I Wish Someone Told Me Before I Started Leading a Cannabis Business” I had the pleasure of interviewing Adam R. Dolan, a tested litigator with a multifaceted practice. A partner in Goldberg Segalla’s White Plains, NY, office, he chairs Goldberg Segalla’s Cannabis Law Group. He also regularly authors articles exploring liability and cannabis law, including serving as a frequent contributor to Life Science Matters, the firm’s blog covering the life sciences and medical device industries. He brings expert analysis of the latest trends and breaking news surrounding the cannabis legal landscape to his writing, and his colleagues routinely recognize him for his thoughtful research, turning to him for strategic advice and insight into the many developing aspects of this new area of law. He has been recognized as a New York Metro Area Super Lawyer Rising Star for 2016–19, a National Law Journal Cannabis Law Trailblazer in 2019, a Data Bird Cannabis Law Expert in 2018, and an Irish Legal 100: Irish Rising Star in 2017. In addition to the work he performs with the Cannabis Law Group, he also defends clients in a wide range of claims including transportation, premises liability, building maintenance actions, and more. Finally, before returning to private practice, Adam was an assistant district attorney in the Bronx County District Attorney’s Office for four years prosecuting a variety of misdemeanor and felony level crimes.

Thank you for joining us! Can you share with us the story about what brought you to this specific career path?

Initially, I began my career as a prosecutor in the Bronx County District Attorney’s Office and loved every moment. I truly enjoyed trying to bring justice to victims of crime and the colleagues I worked with on a daily basis. Eventually, the opportunity presented itself to enter private practice and after a number of years, I was lucky enough to join Goldberg Segalla. I immediately began working on numerous interesting life sciences’ cases and was asked to contribute to our blog, Life Science Matters, about an exciting topic. I decided to write about medical cannabis and the content gained some traction. After I began to write more on the subject, I realized I had a passion for the industry and our firm could provide an excellent resource to any company operating in the space. It is an exciting area of the law to be a part of because it’s very rare for lawyers to have the opportunity to help shape an industry and an area of legal precedents. Those who practice in this space have that opportunity.

Can you share the most interesting story that happened to you since you began working in this field?

One of the most interesting things that happened so far was being asked to prepare a business proposal for a company seeking to enter the space in New York and identify the various issues that might arise as they set up their business. I attempted to provide them with answers to the problems because New York is a very tightly controlled state with limited medical licenses and no adult use. The restrictions placed on entering the market are incredibly high and I enjoyed trying to identify potential problems, while also preparing creative solutions to the problems. I’ve also loved meeting all the people working in the space, from the insurers to the scientists to the business owners. At one of the larger conferences I’ve attended, I met the president of one of the largest international medical cannabis companies and discussed the industry. It was fascinating to hear his stories and learn how he helped guide his company through the years.

Are you working on any exciting projects now?

Right now, we’re working on providing guidance to some consulting companies when they have the opportunity to enter into the space. This involves identifying potential problem areas, steps they can take to mitigate risk, and how they can educate their employees and managers regarding the space. It’s allowed us to perform a deep dive into the law and really develop a user-friendly template that non-lawyers can utilize to make good decisions when approached with a job opportunity.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful toward who helped get you to where you are? Can you share a story?

The people you would expect helped me along during my professional career. My parents are my biggest role models for hard work and setting a high bar of accomplishment to live up to every day. My wife is an amazing attorney in her own right and incredibly accomplished. She always pushes me to achieve more, while encouraging and believing in me.

Professionally speaking, I’m blessed to have partners here at Goldberg Segalla who truly embody the meaning of that word. My practice group co-chair, David Choi, is an incredible attorney who is always there to bounce ideas off of and helped lead our group through incredible growth. Our firm’s managing partner, Rick Cohen, has gone out of his way to provide guidance, advice, and listen whenever I have questions about how to best tackle an issue. He’s an incredible leader. Also, Mike Shalhoub, a partner in my office, has been a great example of how to approach any case and issue with the utmost care and has been a wonderful example of how attorneys should approach a case.

This industry is young, dynamic, and creative. Do your clients use any clever and innovative marketing strategies that you think large legacy companies should consider adopting?

Many of the companies coming into the space have utilized social media incredibly well, while recognizing the unique difficulties of operating in a space where you can’t transport your product across state lines. They engage their local customers at all levels and that’s something legacy companies need to realize ― that this industry is developing at a state level and at a grassroots level. Making sure to retain your initial client base is crucial when legalization occurs.

Can you share three things that most excite you about the Cannabis industry? Can you share three things that most concern you?

Firstly, the industry is incredibly young and we’re still learning so much about this wonderful plant each and every day. I’m excited to learn more about its medicinal properties and how it can be used to treat a variety of medical issues. Secondly, I’m excited that more and more states have adopted some form of legalization. I truly believe we’ll see full legalization in the next three-to-five years. Lastly, I’m excited about the global growth of the industry and the investment large legacy companies are making like Constellation, Anheuser Busch InBev, and others. The continued de-stigmatization of the product is encouraging.

I’m still concerned that banking reform has not fully occurred. It’s still incredibly difficult for companies to find credit unions or banks that will handle their business, which continues to be an impediment to growth. Additionally, I’m concerned CBD-infused products are still illegal per the Food and Drug Administration (FDA) in many states, including New York. I was hopeful that the federal government would deschedule it when the World Health Organization released a report in 2018, which stated CBD is generally well tolerated with a good-safety profile, and no evidence of recreational use of CBD or any public health-related problems associated with the use of pure CBD. The fact that it didn’t happen concerns me. Finally, I’m concerned that the federal government does not allow cannabis companies to deduct their expenses like they do with every other company that is lawfully organized. It continues to inhibit companies from expanding operations and reinvesting in their business.

What is the current status of cannabis in the state(s) in which your company operates?

We’ve been approached by multiple companies operating in this space and the first thing we look at it is the current laws governing cannabis. What opportunities are present to obtain market share if it’s just a medical state? Can you gain market share immediately, or is your ability as a company to operate even guaranteed?

Are you a multi-state operator and do you have plans to become one?

We had a company come to us about entering into the CBD space and what they would need to do so. Some states are more lenient with their enforcement of certain regulations while others, like New York, have recently begun cracking down on certain areas like infused products. Multi-state operators have already developed a specific business plan and executed in one or more locations which indicates an ability to grow and gain market share. Depending on what the investor is looking for, multi-state operators represent a potentially safer investment.

What is your market share within your specific state?

This is just something I’d want to know ahead of time. If you’re considering investing in a brand-new company, I’d want to know how many other companies are operating in the space. Do they all share equally in market share? Is one or two clearly dominating the others? We had a company seek us out regarding advice to grow their business, and they had already cornered the specific market they were in by offering a very unique service and product. The ability to offer something no other company can make presents itself as a much more appealing investment.

Does your company possess all the required licenses to operate and if not, have you applied for said licenses? What is the status of the application(s)?

Many companies seeking investors have not fully built out their facilities. They may still be in the licensing application process. I’d want to know the status of the application. How long has it been pending? Has there been any indication that there is a problem with the application? How many licenses will the state issue? How many have been issued already? If I’m an investor, knowing whether a potential investment company has completed the necessary steps to move forward is one of the first things I’d ask.

What is your five-year plan for growth?

This industry is growing by leaps and bounds and we see evidence in the news every day. I’d want to know what specific plan a company has in place to grow their footprint, if they have any contingencies should a specific area not come to fruition (e.g., adult use/infused products), and how a company plans to pivot if such unexpected events occur. Remember cannabis remains federally illegal so unlike other products, a company’s ability to think outside the box and prepare for potential impediments to their planned growth is paramount. We had a company that sought to enter the infused-beverage market, but also planned for a hemp growing operation. This ability to use their property and product for multiple uses allows them to thrive.

What advice would you give to CEOs or founders to help their employees to thrive?

Treat them like you would any employee in any other business. Recognize that they are facing significant difficulties by choosing to make their career in the cannabis industry, but they’re incredibly passionate about the work. Listen to their ideas. Many see this industry as the next technology or Silicon Valley, and want it to succeed as much as you. They may have valuable insight into how to better cultivate a plant and how to market it to the general public. They may just want to be heard and by doing so, they’ll work even harder for you. We have a saying at Goldberg Segalla ― TEAM: Together Everyone Achieves More. It’s true. Treat your employees as a team and you’ll achieve great things.

What is the best way our readers can follow you on social media?

The best way to see content I discuss online would be by connecting with me on LinkedIn, visiting goldbergsegalla.com, and by subscribing to our Life Science Matters blog. I’m very active on LinkedIn, as is my firm.

Thank you for all of these great insights!