Question: Write a 1 paragraph recommendation for this scenario Assessing the Cannabis Opportunity The DGI team began evaluating potential entry into the cannabis industry. Melissa Potdar
Write a 1 paragraph recommendation for this scenario
Assessing the Cannabis Opportunity The DGI team began evaluating potential entry into the cannabis industry. Melissa Potdar (HBS 2007) was selected to lead the team within DGl, and she designed a rigorous evaluation process to consider the strategic and tactical issues bearing on an entry decision. Through periodic briefings over the following year, her team guided Molson Coors executive leaders through a phased evaluation of the size of the opportunity, the potential cannibalization impact of cannabis beverages on the beer business, the options for market entry, and the best business-model and partnership options. The team targeted Canada as an initial market because of the advanced legal status of cannabis in the country as well as Molson Coors' long heritage and established position in the market. (In 2018, the firm generated C\$1.85 billion, or roughly 13% of total firm revenue, in Canada.) Their work culminated in a business case that incorporated their recommendations and an operating model for the Truss management team to follow as it stood up the JV. (See Exhibit 6 for the original business case.) Aside from the commercial issues related to the opportunity, the most challenging part of the evaluation process involved building support among the leadership team even to consider market entry. Anand recalled, "It's been quite a journey that Scott and Melissa have led. The company had a lot of people at the outset who said, 'No way will we ever enter cannabis.'" Hunter agreed, recalling his initial reaction upon hearing the proposal as, "'Really? You want me to get into what?' I was definitely in the skeptical camp, and I came to the idea with what I would say was not an unconscious bias, but a conscious bias, thinking that cannabis is bad for society. It took lots of learning to realize that my assumptions weren't grounded in reality." The process to garner support moved slowly. DGI spent three months bringing Anand's enterprise growth team up to speed. Anand recalled, "We were also talking to leadership at the time. There was a lot of skepticism and negative reactions. Not so much on the effects of cannabis, but just the idea that Molson Coors would ever get involved with it." Cooper pointed out, "At the time, even just a few years ago, cannabis was much less mainstream than it is today." Behringer added, "We pushed the scientific side of cannabis, and, once leadership saw that, they slowly came around." By October 2017, Hunter had accepted the idea after visiting the same cannabis laboratory that had motivated Cooper and Behringer the previous spring. Cooper lamented, "The first seven months in cannabis was an example of bureaucracy at Molson Coors working against DGL. We lost a lot of time by not going straight to Mark." Anand believed the company's location helped change minds. "Since cannabis became legal in Colorado in 2014, we have seen the positive impact here in Denver, which made it easier to get approval with leadership." With Hunter's support, DGl proceeded to research cannabis legality and market-entry strategies. Cooper said, "Before we went to have conversations with cannabis companies, some on the leadership team expressed concem that even just exploring cannabis could damage our reputation. However, there was never an explicit mandate not to explore a cannabis opportunity, so we went for it - that was the moment we were most over our skia." Cooper described DGl's activities in spring 2018, when the team spoke to more than 50 cannabis companies: We leamed about the cannabis value chain, and we observed that, while all the value was currently in cultivation and cultivation capacity, we believed that would devalue over time, while marketing, branding, and packaging would become more valuable. We also concluded that cannabis was too different from brewing beer to try farming the product ourselves. So we decided not to invest there. Combining all of that with the legal intricacies, we knew we needed to find a local Canadian partner with licensed production capabilities. Hunter emphasized the importance of agreement at the top: "We took our board members on a process through everything, from a basic education in cannabis to the details in our proposed business plan. After that, I required every board member to share their opinion. By the end, we had a few board members in the neutral to negative camp, but we had convinced the majority. It was a bit laborious, but also necessary, to hear each and every voice." Ultimately, company leadership were persuaded as much by the opportunity for Molson Coors to be a voice of moderation and responsible consumption in a category currently lacking a leader as they were by the commercial opportunity that entry into the category represented




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