Will the Cannabis Boom Be a Bust for Media Companies?

Cannabis-focused media outlets in 2018 find themselves in a precarious position

(Photo Credit: Oregon Cannabis Connection)

By Jeff Klingman, theBluntness Feature Writer

Cannabis-focused media outlets in 2018 find themselves in a precarious position, with novelty fading, resources ebbing, and supplemental streams of revenue becoming a primary concern. In other words ... they’ve got the same problems the rest of media does.

A miniature warning sign came this year with news that the Denver Post’s celebrated weed vertical, The Cannabist, was shedding all dedicated staff to become a ghost version of its previous self -- all aggregation and no dedicated reporting.

Ricardo Baca, who achieved mainstream recognition as the first cannabis editor for a major U.S. newspaper, left to start his own creative agency, Grasslands, citing poor signs for future investment from Digital First Media, the hedge fund who owns the Post.

In an interview with Merry Jane earlier this year, he said, “This decline in cannabis journalism is coming at the complete wrong time. This is the most important era in the history of legalization to date. We need more people on the ground covering the implementation of California and Canada than we've ever had, and instead we have less. I wouldn't say there isn't good work being done, but there's just not enough of it.”

There are similar warning signs from other papers who’ve followed suit.

Last year, The San Francisco Chronicle invited veteran cannabis journalist David Downs to launch their Green State vertical and cover the biggest weed market in the country. Downs moved on from the paper after just 18 months, eventually landing at the web-based Leafly -- and Green State hasn’t posted new content since the summer.

The fear is that as print cannabis coverage gets folded back into the fabric of a daily paper, it’ll only be as healthy as the newspaper industry itself. (Gulp.)

And then there’s High Times.

The magazine was founded in New York City in 1974, as a cheeky joke. But that joke has lasted 44 years, -- evolved into the original name brand of weed media -- and tangible proof that a large, present audience existed for cannabis content well before the idea of legalization became mainstream. If anyone was poised to boom from creeping pot legalization in the U.S., it was them. Now, the path isn’t so clear.

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Mike Gianakos has been with High Times for nearly 13 years, working his way up from a digital director role where his task was to establish the brand’s web presence, to his current position as EIC of the print mag.

Moving from web content, video shorts, and podcasts, into a role at the helm of a monthly print edition for a legacy media brand, is a rare trajectory in a modern media industry that’s trending the other way.

“The staff has definitely been reduced for the magazine from [when] I came on,” says Gianakos. “Years ago there was a very large staff, entertainment editors, several cultivation editors, managing editors, and all this stuff. We’ve relied more and more through the years on freelance writers and much smaller dedicated magazine staff. The resources have been diverted more towards the digital side and also events, which are a huge part of the company now.”

That might be an understatement.

Beyond the lucrative series of owned and operated Cannabis Cup events, High Times also hosts comedy tours, female-focused “Women of Weed” events, as well as cannabis business summits in L.A., and policy events in D.C. In 2017, $11 million of the company’s $14.5 million in revenue came directly from events. (“It used to be that the editorial ran the events,” Gianakos laughs. “I used to build the stages.”)

Other cannamedia players have dabbled in live events, too, to a lesser extent.

“Our approach to events has changed a bit,” says Leafly editor Bailey Rahn. “We in the past have owned a few, [but] we kind of reigned in events for a while. We’ve tried over the years, we’ve played around with that strategy, just seeing…what does it activate? New users of Leafly? That’s where we’re really trying to evaluate which of these events is most important, where do we have the most opportunity to really show who we are.”

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Importantly, Leafly’s owned by Privateer Holdings, the largest private equity firm in the U.S. cannabis market. And with a war chest well north of $100 million, Privateer can afford to play a longer game that’s less dependent on immediate events cash. But even within that relative security, there has been some painful contraction in the form of 2017 layoffs.

At High Times, a swirl of news paints the company’s current health in a muddled light.

In 2017, the company posted losses of $24.7 million, a huge bump up from 2016’s number of $2.9 million, with another $17.6 million in loan payments looming due in 2018.

One possible route to solvency has been the unusual move of launching an initial public offering directly to readers, for $11 a share. The hope is that long-term fans are personally invested enough to become actual investors in the company.

In the meantime, they’ve been aggressively acquiring smaller brands to improve their market share. They bought Green Rush Daily in April for $6.9 million and DOPE Magazine for $11.2 million, just this September.

Those acquisitions were buttressed by a subsequent report that Texas radio giant iHeartMedia, Inc. traded a $10 million dollar advertising commitment for 5% ownership in the company, in a cashless investment deal.

Taken as a whole, the flurry of corporate activity brings in new editorial resources that might set them up for the future, but casts additional doubt on a more liquid present. It’s indicative of a consolidation crunch in cannabis media that’s likely to continue.

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Despite the corporate uncertainty, Gianakos sees these piecemeal measures adding up to a sort of stability that lets the High Times editorial brand soldier on.

“The DOPE acquisition is really new, so it sort of remains to be seen how it’s going to pan out. Ideally, what’s going to happen is that we’re going to be able to lean a little bit on their content providers, because they have such a great handle on very specific regions, [like] Washington [and] California.”

And while the DOPE and High Times teams will continue to work, publish their magazines and do events independently, the relationship between High Times and Green Rush Daily is already more cozy.

“With Green Rush Daily, we actually moved into their offices and their staff works very closely with ours, so that’s been sort of a synergy. All the other companies continue to operate sort of as they had been,” Gianakos says.

“We’ve been fortunate in that for such a niche topic that people who are interested in it are still buying the magazine and checking out the website,” he says.

“We’ve been able to stay steady. Steady is sort of the new up.”

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