CFN Media Exclusive Interview with Tom Zuber, Managing Partner of Zuber Lawler
February 24th, 2019
For any business owner or investor, having trusted advisors on your side at all times is critical. No one knows this better than Tom Zuber, Managing Partner of Zuber Lawler, who represents Fortune 500 Companies, global funds, government entities, across countries spanning 90% of the world’s languages. The firm entered the cannabis industry over 12 years ago as a function of close personal friendships with the founders of some of what are now the largest companies in the space.
For over a decade, Zuber Lawler paved the way as the only firm offering high-stakes litigation, mergers and acquisitions, intellectual property, and other vital services for the nascent marijuana market. With offices in New York, Los Angeles, Chicago, and Silicon Valley, and practice areas ranging from compliance to finance, Zuber Lawler is a top-notch firm able to tackle the entire vertical.
CFN Media recently sat down with Zuber in order to get his inside take on what’s next for the multibillion dollar global cannabis industry – and how his firm is poised to be at the center of it all.
CFN: What sets your firm apart from others and what specialties do you focus on?
Tom Zuber: I’ve been doing this work in the cannabis state for longer than just about anybody else that actually focuses on intellectual property, or M&A, or high-stakes litigation. That experience has allowed us to come up with very unique strategies for achieving success.
As an example: federal trademark protection for cannabis brands. Not in relation to clothing or in relation to online educational services, but products that actually matter to cannabis companies that will actually facilitate the protection of cannabis revenue streams. Meaningful federal trademark protection is not theoretical anymore. It’s past tense. We’ve obtained meaningful federal trademark protection for our clients in relation to their cannabis brands.
As another example: patent protection relating to cannabis technologies. We’ve just obtained, for instance, a notice of allowance for a plant patent application that upon issuance will become, to our knowledge, the second plant patent ever issued for a cannabis strain.
As other examples, we’re doing leading litigation in this space, and we’re preparing companies to go public.
On a general note, our experience working with Fortune 500 companies and global funds, coupled with over 12 years representing leading cannabis companies, certainly gives us a great deal of insight as to what cannabis companies need to do in order to go from below the table to above the table and beyond. This dual background – Fortune and global funds on the one hand, and cannabis-related work on the other hand – allows us to be a true value-adding partner to our cannabis clients.
CFN: It seems like mergers and acquisitions is the hot topic in cannabis. Will this trend continue in the upcoming months?
I think that consolidation in the cannabis space is inevitable, and M&A activity will not only continue, but it will increase. It’s going to have a major uptick when other non-cannabis companies decide that they’re going to jump into the cannabis space. Pharmaceutical companies and so on and so forth. They’re already starting to wade into these waters.
Where you’ll find people backtracking is in relation to IPOs. The valuations that are being obtained in the IPO context are not real. There’s a bubble, much like the internet bubble, and that bubble will burst.
But like the internet, this bubble is on top of something that is very real, which is the untapped potential of this plant to dramatically contribute to the global economy.In other words, what’s real underneath the bubble is the value inside the plant, and the effect that the plant has on the human physiology, and the technology that lies not only within the plant, but between the plant and human physiology.
That’s all real and that’s going to change the world just like the internet did. It’s going to be interesting to watch these things play out: the deflation of the cannabis bubble, and at the same time the growth of the real value proposition underneath it.
CFN: Are some cannabis companies too eager to go public?
TZ: Yes, in many instancesSome of our clients, as examples, are wisely wading cautiously into this territory. Several of our clients have decided to not go public yet, because, well, it’s a bubble up there. Some are waiting to go public in the U.S. after federal prohibition ends.
On the other hand, some companies are making wise decisions to go publicin Canada now, but they’re doing so fully cognizant of the fact that there is a bubble, and they’re going public with a particular strategy to increase liquidity to pursue some short term capital need. So they understand that the bubble is real, and that the liquidity is real. They weighed the cost and benefits of going public now, and have decided to go public, but they do so with a self-awareness, so to speak.
We do see companies that are just going public just because, “Wow, we like that valuation. That sounds pretty neat.” We’re not sure that that’s the wisest strategy, and we tend to caution companies to really reconsider things if that’s the reason they’re going public.
CFN: Where do you see the cannabis industry heading in 2019?
TZ: Intellectual property issues will take on a greater urgency. You’ll see more brand wars, you’ll see more patent wars. And that’ll really increase in 2019 and into 2020 and beyond.
Acquisitions will continue to increase. I am not sure that the cannabis bubble will burst in Canada in 2019, but if it doesn’t burst in 2019, I think people will start to increasingly anticipate that it will burst in 2020 or ’21.
On a related note, I believe that President Trump will remove cannabis from Schedule I to capture the cannabis vote prior to the end of the current presidential term. I think that he’s going to make a political decision, and I think that it would be a smart political decision. He’ll likely to it closer to the election to gain the full political benefit of the effect that ending prohibition will have on the cannabis voting population. If the end of prohibition doesn’t happen this presidential term, I think that it’s all but certain to happen in the next one.
CFN: What advice do you give to accredited investors curious about the cannabis space?
TZ: I think the way to look at it is that there are really two categories of expertise that should be consulted in the context of answering the cannabis market. And that’s oversimplifying things, but I think it’s useful to oversimplify things for this point.
The first category, of course, is the raw financial expertise, the corporate and deal work expertise, that you would find in a law firm that does this sort of work and in an accounting firm that does this sort of work for public companies and large funds outside of the cannabis industry. for reasons that I think are obvious. The second category of expertise is familiarity with the cannabis industry. If you’re going to enter the cannabis market as an investor, then the assets that you’re acquiring or investing in consist substantially of cannabis-related brands, technologies, real estate and licenses, and it’s important that your team be fluent in this cannabis-focused subject matter.
So as an example, our law firm recently handled a very large loan from a fund to one of the more prominent companies in the local industry. This fund was backed substantially by a large portfolio of cannabis licenses. What happens if there is a non-payment of the loan. How can those licenses assets come into play? What are the issues relating to transferability, and how do those issues affect the rights of our clients? You can imagine that having both categories of expertise is essential to doing a full and quality job for clients doing such deals. Our dual background allows us to issue spot and problem solve for our clients in a way that others can’t.
One of the reasons that our law firm is so excited to be in this space is because we have both categories of expertise as a function of our background representing fortune companies and global funds, and also this intimate familiarity we have with the cannabis industry going back over 12 years as a function of our buddies starting seminal cannabis companies and referring their work to us, and the work of their friends who also started cannabis companies.
CFN: You mentioned above that intellectual property will become of greater importance this year. Can you explain why?
TZ: This issue is partly a function of the way that the cannabis industry grew up. It’s not like blockchain where somebody created a cryptocurrency, bitcoin, and then it grows up like a funnel. It starts small and then gets bigger over time, and the sophistication of business expertise and legal expertise and accounting expertise and consulting expertise can almost keep up with the growth of the blockchain industry.
The cannabis industry existed as an illegal market for decades and decades before becoming legal on a state-by-state basis. As a function of that history of cannabis, there is a lack of corresponding sophistication from business, legal, accounting, and consulting expertise. This leads to a lack of appreciation for the dominant assets of global companies, and the dominant assets of most global companies is comprised of intellectual property.
CFN: What’s the future of cannabis retail?
TZ: I think that brick and mortar dispensaries, in a general sense, are going to fade in importance, with two exceptions. The two exceptions are, first, retail shops that are components of end to end control of the user experience. Apple retail shops are components of an end-to-end control of user experience, as per the vision of Steve Jobs. Those retail shops will continue to thrive.
Second, retail shops that are about the experience of existing in the retail space – physical spaces in which people come to enjoy the space as much as to enjoy the product. Like coffee shop chains. Of course there are regulatory issues now with selling products in the space. But those regulatory issues will be addressed over time. And, in the long term, that’ll be the second category of retail shop that continues to thrive. Aside from that, brick and mortar dispensaries may fade in importance, and to give way to an Amazon-like distribution mechanism or mechanisms, which will allow people to receive their cannabis product in more direct and convenient ways.
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This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.
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