MJBizMag October 2021 - 20

HempNotebook | Kristen Nichols
Hemp's Honesty Problem
F
ake it till you make it. It's a
concept that's foundational to
entrepreneurship, a mindset seen
not as a necessary evil but something
to celebrate and cultivate.
That's especially true in the hemp
industry, where entrepreneurs sell
their visions of markets that don't yet
exist (and sometimes aren't legal) to
win the investment dollars needed
to realize their dreams of a cleaner,
healthier (and, for themselves, more
profitable) planet.
But as this issue looks at
opportunities in hemp and
marijuana investment, we can't
ignore the potential dark side of
overembellishment, which includes
lawsuits, bankruptcies and broken
promises.
There's hardly space in an entire
magazine to discuss all the optimistic
hemp agreements that turned out to
be worthless.
Why the Lying?
To find out more about what makes
entrepreneurs inclined to fudge the
truth, I looked to Yale University
entrepreneurship lecturer Kyle Jensen,
who has uncovered great insights into
the causes of entrepreneurial lying.
Jensen and his colleagues who
researched the traits of entrepreneurs
say it makes sense why they are
inclined to braggadocio. The research
points to three factors:
* Entrepreneurs must always be
" on, " because their success relies
on sharing a business vision.
* Exaggeration can be handsomely
rewarded if entrepreneurs
succeed. Even if most startups
fail, entrepreneurs look up to
companies such as Amazon,
Facebook and Tesla-companies
18 MJBizMagazine | October 2021
that changed the entire economy
and made their founders quite rich.
* Entrepreneurs often borrow
from friends and family. The
temptation to bend the truth can
be irresistible when a business
founder feels his or her actions
are justified by a desire to repay
the people closest to them.
These pressures are made worse by
the sense that everyone exaggerates.
Entrepreneurs are fighting for the same
pool of capital, and the " fake-it-tillyou-make-it "
mindset is all part of the
game, right?
After all, we tell ourselves, investors
ought to expect a bit of hype around
new markets and not take on risks they
can't afford to lose.
Worse in Cannabis
Honest entrepreneurship is even more
challenging in the hemp and marijuana
sectors. That's because laws about
cannabis have been so flawed for
so long that entrepreneurs can be
forgiven for seeing injustice in every
regulation and assuming that laws will
change in their favor.
Take CBD, for example: The U.S.
government says the cannabinoid
can't be sold without a prescription.
But when that rule goes unenforced
and CBD is sold in every corner store,
is it not reasonable for entrepreneurs
to believe that rules will change,
unlocking untold profits?
Right now, countless CBD entrepreneurs
are selling investors on that
very belief. Investors, meanwhile,
see prominent members of Congress
promising reform, while the years slip
by without change.
It becomes a waiting game for all,
frustrating to CBD operators and
investors alike.
When entrepreneurial exaggeration veers into lying, the entire sector suffers
A Better Way
I liked one of Jensen's suggestions
for succeeding at early-stage
entrepreneurship without veering into
chicanery: He said to be bold about
what you don't know.
When hemp investors ask when a
market will materialize or when federal
law will change to allow a business to
achieve its goals, hemp entrepreneurs
should confidently reply, " I don't know.
But here's what I think ... "
Then, use all that hemp optimism
to sell your vision. Recognize
uncertainty-not just in the fine print
of a contract but even in your elevator
pitch. Don't make promises you can't
keep. Instead, promise to make your
vision something worth investing in.
Something about this young hemp
industry persuaded you to dive in and
try. Share your excitement and vision,
and people will want to follow you.
Kristen Nichols is the editor of
Hemp Industry Daily. She can
be reached at kristen.nichols@
hempindustrydaily.com.
MJBizMag October 2021

Table of Contents for the Digital Edition of MJBizMag October 2021
