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Banking On The Green Gold – How Big Business Is Welcoming Cannabis

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Unlike the “flash-in-the-pan” industry in California during the 1800s, the green rush continues to spread, this time, it involves multi-million dollar investments from big companies. 

The industry for Cannabis started in 1996 when the state was the first to legalize the use of Medical Marijuana in the U.S. A few years after, 34 states including Washington D.C have received their approval for the use of marijuana for recreational purposes. This led to a growing demand for marijuana products, in fact, based on the report from The Marijuana Business Factbook, cannabis sales is projected to be close to $22 billion by 2022. 

Alcohol & Marijuana?  

Seeing the potential of the industry, and the market gap for the lack of cannabis products, big conglomerates have dipped their toes on investing in the green rush. Companies like Corona brewer Constellation Brands have invested $3,8 billion into the Canadian-based marijuana grower, Canopy Growth Corp. 

Reports also claim that other brewing brands such as Heineken and Molson Coors Brewing Company have announced their plans to launch marijuana-infused drinks. For Gregg Smith, founder of investment firm Evolution Corporate Advisors, alcohol brands are seeing the drastic shift in demand saying “We are witnessing a rapidly accelerating trend of corporate investment by Big Alcohol into cannabis-related companies as they realize the evolving social-lubricant-substitution story that is occurring — cannabis instead of alcohol.” Smith continues “Many of these companies are now racing to grab a cannabis dance partner and can provide scale, credibility, and capital, yet opportunities will still exist for smaller quality-cannabis-product makers.”

Other Big Business Ventures 

However, marijuana products are not just limited to alcohol as other tech giants such as Microsoft is stepping up and partnering with KIND in offering seed-to-sale tracking solutions. Amazon and other big retail companies such as Walmart and HomeDepot are also providing growing equipment. 

While big companies continue to grow their interest in the green rush, it also presents a good opportunity for start-ups and small business owners as fewer companies are willing to take the risk of investing in an industry that is relatively new. This might span from new business opportunities such as packaging to the software as well as dispensaries, delivery services, edibles, medical usage, cultivation, and CBD oil. Founder and CEO of a cannabinoid research firm, Ebbu, Jon Cooper agrees saying that “If your goal is to eventually be bought out, it is critical to think about what big companies would want to buy versus build. If the goal is not to get bought out, there is still going to be plenty of room to carve out a niche in the industry.”

Before leaping into the green rush, experts advise to first learn as much as you can., For founder and CEO of PrØhbtd Media, a leading cannabis media and marketing company, Drake Sutton-Shearer said “Read, go to conferences, and ask people for advice. It’s important to get to know local policymakers and law enforcement officials where you want to start your business. 

While the cannabis industry can be relatively new, there is a whole new range of entry points for budding entrepreneurs, especially as legislation is opening more doors for the green rush. 

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Big Change Ahead: Facebook On Monetizing WhatsApp

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Just 14 months earlier, the management of WhatsApp stated that the company’s main monetization mode will be advertising. But at present, there are plans to put the ads in WhatApp on hold. The advertising team was disbanded and their code was also deleted. 

Facebook planned to begin placing ads in the WhatsApp status which is similar to Instagram Stories. The prototype was supposed to be previewed in May. But with the hold status of this plan, it is no longer certain when the feature will be released. 

The WhatsApp Status ads are comparable to Instagram Stories and both features almost have the same number of users. However, Instagram users are much more focused on the North American market. 

One of the challenges here is that the ability of the marketers to target ads on the app and they may not get similar results to that of Instagram. WhatsApp is more private while on Instagram, users share and basically broadcast what their interests are. 

It’s possible for Facebook to use its existing user data from other apps. But there’s a good number of WhatsApp users who are yet to connect their Facebook account to the ones they have in WhatsApp. 

The company acquired the messaging app in 2014 for $19 billion. Its investors are probably wondering how Facebook will monetize the service which has over 1.5 billion users. Instead of adds, Facebook is exploring on enabling businesses to connect with their consumers using WhatsApp. 

One of the efforts toward this direction is the WhatsApp Business. The app was launched a couple of years ago. A paid API was then added after a few months. WhatsApp Business encourages businesses to quickly respond to clients. It also makes it easier for businesses, both big and small, to get in touch with their consumers using the messaging app. 

Facebook gave its investors an update last year. It stated that WhatsApp Business already has 5 million active businesses. Since then, the iOS version of the app was released. The most recent feature of WhatsApp Business is Catalogs. With it, users can discover products from businesses and merchants that they correspond with on the app. 

Another thing that Facebook is working on is developing a payment platform on the messaging app. They’re going to start it in India. However, this feature has been delayed because the Indian government is concerned regarding data localization. At present, Facebook is looking into other ways that it can extend Facebook Pay to the company’s other apps. 

The focus of Facebook is providing businesses with more tools so that they can connect with their clientele better and easier. This step away from invasive ads will most likely pay off for the long term. What the company needs to create is the habit of learning, discovering, and purchasing products on WhatsApp which is common with Instagram users. 

The company can provide paid tools for various businesses so that this habit may be facilitated. After making the messaging app a place for commerce, it may have a more significant opportunity in advertising with the WhatsApp Status. 

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What Defines A Small Business & A Large Business?

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According to the U.S Small Business Administration or SBA, a small business is a business that comprises of independent owners and is an entity that is not dominant in its respective field. The size of a business is essential because there is an array of laws that applies to large companies — also, the size of business assists in determining the company’s entitlement for federal contracts and programs.

To determine the size of a business, the average number of employees, as well as the average of annual receipts, are taken into account by the federal government. Usually, a company that has 500 or more employees and have an average of $7 million in annual receipts are considered to be under the large business category. However, there are exceptions to these standards in some industries.

Based on the SBA guidelines, some manufacturing companies which employ 1,500 individuals can still be determined to be a small business. While on the other hand, in the construction industry, a business that has an annual receipt of $33.5 million is defined to be a large business. In the dredging industry, if a company has a total average revenue of $20 million or less, it is a small business; this also applies to specialty trade contractors who have an average annual receipt of $14 million or less.

Research & Development Businesses

Businesses who are in the research and development industry are the only service businesses where the government considers the size of employees to determine whether it is small or large. Commonly, retail companies who have an annual receipt of $7 million or more is a large business. Although, a grocery store, car dealer, electrical appliance business can be considered under the small business category if it has an average annual receipt of less than $35.5 million.

Foreign & Domestic Affiliations     

International and Domestic Affiliations are also subject to classification. If an affiliation has over 50 percent of voting stock, then it is considered a large business.

The SBA says that a large business entails a CEO having power over a company due to widely distributed stocks, several people who have the same business interests, or an economic dependency upon a company.

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Apple’s Services Business Is Expected To Be Valued At $650 Billion This Coming Year

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The 2019 year marked the success of Apple’s services business as the company introduced a bunch of new services last March of 2019. Offerings like Apple Card, Apple TV, and Apple Arcade are aimed to latch consumers into patronizing the brand. 

Dan Elves, a Wedbush analyst, had expressed his expertise and said that Apple Services could be worth $500 billion to $650 billion by the year 2021. The anticipated worth of the company’s services business will be similar to Facebook’s value in the present day. 

Having said that, the company is still expected to grow over the next coming years, especially if the 5G iPhone supercycle hits the market; this will also increase the company’s sales as users will upgrade their units to take advantage of the 5G wireless networks. 

Today, there are an estimated 350 million iPhone users in the upgrade window, and that number is expected to increase by 50 million over the next two years. 

Growing Out Their Gross Margin 

Apple just recently broke down its cost of sales, and the numbers did not disappoint. Experts predicted that the gross services margin would be about 55%, but in the year 2018, the company’s services gross reached over 61% and rose to 63.7% in 2019. Those numbers still have the potential to grow over time; however, investors should still remain cautious because the company is making long-term investments with its services business. 

A business worth $60 billion with a gross exceeding 60% is undoubtedly a precious asset. 

For a clear standpoint, Facebook has garnered $66.5 billion in revenue with a gross margin exceeding 80% over the past 12 months, and the market presently values the company at $630 billion. Its revenue is also increasing at a faster pace than Apple’s services business. 

Nonetheless, Apple’s services business has no comparison, as each business is unique. With its high-margin and fast-growing source of revenue, it’s vital characteristic is in the Apple ecosystem. This feature is an advantage for the company because Apple device owners are likely to purchase devices and subscriptions from the tech company. 

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