Financial Planning for an Unpredictable Market

One of the most common mistakes is chasing returns instead of focusing on goals.

Interview by Greg James

Darrin Farrow began taking a deeper look at the medicinal benefits of cannabis when a close friend committed suicide after just 10 days of being on a prescribed anti-depressant that had been approved by the U.S. Food and Drug Administration.

As he learned more about marijuana’s positive impact on people’s lives, he saw an opportunity to combine his knowledge of financial services with the emerging cannabis industry.

Farrow’s company, Pension Builders and Consultants, was founded to assist companies and individuals with a variety of needs, ranging from life insurance and retirement plans to wealth management and profit sharing.

The team at Pension Builders and Consultants has more than a hundred years of cumulative experience.

“We have an extremely strong team with backgrounds in behavioral finance, hedge funds, research, software, qualified plans, fund creation, etc.,” Farrow says.

Farrow recently shared some of his insights about financial planning and the cannabis industry.


Marijuana Venture: How have you used knowledge gathered in the investment world and translated it to success in the cannabis industry?


Darrin Farrow: We have been able to create systems, and specifically our own software that is very similar to analytics in investments, to mitigate risk and losses of harvests and also gather data and measure efficiencies.


MV: What are the most common mistakes people make with their money and financial planning?


DF: The most common mistakes are chasing returns instead of focusing on goals such as income needed for retirement. Most people are always looking at last year’s top performers, which means they tend to buy at the high.


MV: What specific issues do you see people in the legal marijuana business facing when it comes to financial planning?


DF: Banking is difficult, but there are a handful of banks doing business. The best way to get a banking relationship is by referral and/or going in dressed professionally and meeting with an account manager behind closed doors. If you call, they will almost always say they do not do business with the industry. There are also challenges in obtaining life insurance and other normal investments. We have done extensive research and have a protocol which we have designed that helps get through these barriers for our clients.


MV: What options should marijuana company executives/managers consider for themselves now that many states have legalized it?


DF: Efficiencies and scaling production without losing quality. Branding is very important. I would recommend diversifying your product line and also looking at ancillary offerings that can easily be offered agnostic to geography. For example, we recently received a Canadian patent on a vape pen design.


MV: What has been the most surprising aspect about entering the marijuana business?


DF: One of the most surprising aspects would be the lack of information or just plain incorrect information some legislators, law enforcement, medical professionals and the general public have in regards to the medicinal benefits of cannabis.

The U.S. government was issued a patent on the medicinal benefits of marijuana compounds in 2001, yet it is still a Schedule I drug with many government officials continuing to proclaim there are no medicinal benefits. This huge conflict of interest between law enforcement, pharmaceutical, alcohol and tobacco companies and legalization continues to facilitate the false narratives to the public.


MV: What misconceptions do people have about getting into either the investment business or the cannabis industry?


DF: Most people assume making money is easy in the cannabis business. It’s just like any other business in managing people, cash flow, etc. It is not always easy finding experienced people who have fully let go of the black market and can adapt to a structure needed to be compliant and having proper checks and balances.


MV: How are the cannabis and investment businesses similar?


DF: I would say that the biggest — or at least most pronounced — similarity is that both businesses are unpredictable. In the investment business, nobody can ever accurately predict what the market will do. Whether it will go up or down; which segment will be a bull or which will be a bear. The marijuana business is similar in that it is continuing to evolve. We simply can’t predict which products the consumer wants next. The research and development is amazing and exciting. So, the one constant for both businesses would be to continue to provide excellent customer service and put out the best product possible. Whether that is an actively managed portfolio, or the cleanest and most pure medicine, the consumer deserves our best.


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