It might seem like an odd pairing, especially for an entrepreneur who’s fought against labor unions and Obamacare, but Mackey said that he decided to give a speech at the cannabis event, which was held virtually due to the pandemic, because “the world has changed.” Cannabis, especially after five more states legalized cannabis on Election Day, is no longer “seen as a radical thing,” Mackey said.
Also, Whole Foods, which was slow to sell CBD products due to fear of a federal crackdown, now cannot keep enough of the stuff on its shelves.
“It’s been explosive,” said Mackey, who admits to using CBD capsules to relax and infused salves during massages. “When I’m in our stores and I ask what’s hot, I’ll hear collagen and CBD.”
Mackey said that the cannabis industry is about to transform from its entrepreneurial roots into a corporate industry and urged business owners to take advantage of the opportunity.
“We are at the entrepreneurial stage for this particular business right now,” said Mackey. “But the entrepreneurial phase only has 10 to 15 years left, then it’ll move to become more professionalized.”
Once the entrepreneurial phase is over, it’ll be hard to start a company from scratch due to high competition from corporations awash in liquidity. He predicts that alcohol and tobacco companies will be the first industry outsiders to enter the market and start executing aggressive industry rollups. (Altria, the maker of Marlboro, and Constellation Brands, which makes Corona, have already made billion-dollar investments in the industry.)
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Until then, Mackey says entrepreneurs are building the next great American industry, which has been hampered by federal law since 1938.
“There is little doubt in my mind that the cannabis industry is changing the world,” says Mackey. “The people, the entrepreneurs are doing it, they’re living it. The most creative and imaginative ones will create products, they will create retail experiences that we’ve never seen before. The world will be a different place 10 years from now. No doubt about it.”
Mackey likened where the cannabis industry is currently to where the natural foods industry was when he started Whole Foods. In 1978 in Austin, Texas, Mackey, a college dropout, and his girlfriend at the time Renee Lawson Hardy borrowed $45,000 from family and friends to open a natural foods store called SaferWay. Two years later, they merged with a competing market, the Clarksville Natural Grocery, and opened the first Whole Foods. By 2017, Whole Foods had grown into the largest organic food grocery chain in the U.S. with over 500 locations and Amazon bought them for more than $13 billion.
Eventually, like natural foods, the cannabis industry will evolve from a retail-based market to a “product-dominated industry,” Mackey said.
In the early 1980s, if a customer wanted organic produce, they had to find a natural food store. Now, Walmart and Amazon (thanks to its Whole Food acquisition) sell organic food.
“The retailers are almost secondary because the products are being sold everywhere,” says Mackey. Right now, cannabis can only legally be sold in licensed dispensaries. But eventually, cannabis products might be sold through more mainstream outlets. (This has already happened with CBD.)
As Mackey sees it, the path to entrepreneurial success is to create brands.
“If you can create categories and get your brand out there and dominate that category, be the category king, I think you can create a lot of value for investors and a lot of value for all your stakeholders,” he said.
The best example of a brand that has dominated and reinvented its category in the natural foods space is Beyond Meat, the plant-based meat alternative, said Mackey.
Mackey also promoted his newest book, “Conscious Leadership: Elevating Humanity Through Business” (Penguin Random House, 2020), which explores the strategies he used to build Whole Foods. His keynote was also a defense of capitalism, which he says has been wrongly demonized. “The myth of capitalism is that it creates income inequality,” he said. “That is fundamentally not true.”
“Wealth isn’t the problem, poverty is,” he continued. “Capitalism is creating wealth for billions of people—it’s not a zero-sum game.”
For anyone who follows Mackey’s brand of capitalism and business strategy, it seems to be less inspired by The Art of War than by “Sgt. Pepper’s Lonely Hearts Club Band.”
“Can you build a business on love? I think you can,” Mackey said during the keynote. (In a 1988 Forbes profile, Mackey said: “We’re trying to build a company based on trust and love.”)
Mackey said that competition in the natural food space is nearly too great for scrappy entrepreneurs to find success, but the cannabis industry is still all horizon.
“The time of the small mom-and-pop shops in natural foods has passed,” Mackey said, “but for cannabis, it’s not too late.”