In the cannabis industry, the good players keep up. The great players not only keep up but also anticipate and adapt. Is your company set up to be great, or are some adjustments in order? It’s a question to ask as the prospect of federal legalization is becoming real.

As Congress, for the first time, makes tangible steps toward legalization, your company has some serious scenario planning to do. There will be winners and there will be losers as customers gain more choices. The winners understand that the environment is far from static. To stay relevant, they must have clarity in their current positioning and strong operations, while also being able to look forward to see what may come next, be ready to pivot—and have the financial foundation and acumen to do so.

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Many cannabis operators are scrambling with the day-to-day on a tactical level, constantly responding to one challenge or opportunity after another. In the process, they’ve lost sight of the mid- to long-term future. Some have been able to get away with the status quo, but that won’t last. Now that federal legalization is around the corner—a significant shift that didn’t seem possible when initial forecasts were made—it’s time to consider a new outlook, starting with this premise:

Legal cannabis used to be difficult for the consumer to get. Now it’s not.

This paradigm shift is filled with possibilities and challenges—increased competition and consumer choice. Limited licenses will be less of an advantage, as being the only game in town will no longer be a luxury that can mask poor operations or short-sighted strategies.

Go Back to the Drawing Board

Start by checking the relevance of your business strategy and financial planning under the new premise. Contemplate what your plan would look like if federal prohibition never existed, because some variation of that is the future state of the cannabis industry.

1. Are your benchmarks and KPIs still relevant and comprehensive?

You probably have a handle on your current margins by SKU, completed four-wall financials, know your production capabilities, and have a tight understanding of what your current customers purchase. From the strains you grow, to the products you manufacture, to the brands you stock on your shelves and the inventory turns—all your projections are probably based on the framework that interstate commerce doesn’t exist.

So, what business strategy will you need to adopt when the landscape changes? Make additional investment in technology, people and your supply chain? Lower investment in bricks and mortar? Simple economics tells us that as supply goes up, prices come down. The comfort of riding the wave of expanding consumer demand may not be enough to support ever-increasing revenue projections.

Succeeding in a competitive environment requires vision, discipline, a deep understanding of customer preferences, and the ability to execute. You need to be prepared to fend off competitors that have more financing and more aggressive strategies than you.

2. Why would your future consumer choose you and not the company next door? What do your customers want?

Best in breed matters now. “Good enough” is no longer good enough when competition and accessibility enter the scene. That means having a tight handle on your expenses, exploring partnerships in a different way, seeking out additional revenue lines to satisfy consumer demands, and perhaps even jettisoning areas of the business where you cannot effectively compete.

Adopting a Customer-Centric View

Much like any other heavily regulated industry, such as healthcare or alcohol, compliance is critical in cannabis. But it is not a business strategy—it is one of the ways you conduct your business. If your current strategy revolves around a regulatory framework that will not be relevant, then you are looking in the wrong direction. The current framework limits competition, in terms of how many companies are allowed to participate, and that will be going out the window.

In response, cannabis operators that adopt a more customer-centric mindset, rather than compliance-centric strategies, will be set up to win the long game. To take on this shift and a more forward-looking strategic approach, the expertise of a CFO can give the guidance needed to maximize the opportunities ahead. Scenario planning will open up visibility for the executive leadership as this new way of thinking can turn the company’s vision into an executable strategic reality.

At Kukuza Associates™, we are all about maximizing cannabis companies’ growth and potential. Our consulting firm offers a wide range of cannabis accounting and finance solutions to support your business at every stage. Experiencing hypergrowth? Got a major transaction ahead? We anticipate what’s next, navigate it, and get it done right.

That’s exactly what we did for a dispensary on an aggressive growth track. Read this case study to see how we helped them, and then reach out to tell us about your vision for your company.

Eden Jones is a CFO consultant at Kukuza Associates, helping companies of all sizes in all segments of the cannabis market. She previously was CEO at Otrera Enterprises and held the CEO and CFO roles at Atlantic Shores Cooperative.