Marijuana Business Magazine

120 • Marijuana Business Magazine • November / December 2017 attempt to capture a whole different market that has been frequenting the medical shops and may be done going through the headache of getting a medi- cal recommendation,” he said. Creating a rec brand from scratch, Van Roo said, requires “a lot of bounc- ing ideas off of creative directors and marketing pros,” as well as focus groups. “It’s a long-term process.” TIPS FROM ALASKA Make sure you have enough capi- tal to survive what could be a very long transition period. That’s the advice of Cary Carrigan, executive director of the Alaska Mari- juana Industry Association. His state is still dealing with the rollout of a new rec market, and there have been plenty of growing pains. “Part of what we’re going up against here is that people go and find a place to do their business and then they sit on that lease for more than a year, but still haven’t been able to open their doors,” Carrigan said. Why? Because government regulators hadn’t yet acted on their business license applications, leaving the owners to keep paying rent without any revenue. He knows growers who have spent well over $1 mil- lion in rent and other expenses and are still waiting for their licenses to be approved. “These prospective businesses spend a lot of money and time, and it’s broken people,” Carrigan said. Start off small and slow. Avoid starting off too big or grow- ing too quickly, Carrigan advised, otherwise you’ll incur more costs than anticipated while lacking the experi- ence to bring in sales. “Many people who are successful now started small.They started with small cultivations and didn’t overextend them- selves,”Carrigan said. “They just antici- pated being out of money for a certain amount of time, and living modestly.” ◆ KEY DIFFERENCES The new regulated market versus the existing unregulated market Startup Costs: Startup costs will likely be double or more, because the price of compliance on the state and local levels is going to be high and will probably increase as industry rules evolve, said Los Angeles attorney Hilary Bricken. Fees to get local approval can also be steep. “The fact that you must now secure track-and-trace systems,” she added, “maintain sophisticated security, engage in quality- assurance checks, have packaging and labeling that complies with state law, engage in third-party testing – in addition to having to comply with corresponding local laws that touch on the same and more – will undoubtedly increase the costs of getting started and even transitioning away from the (unregulated MMJ) market, which has none of these mandatory regulatory parameters in place and never did.” Operational Costs: Operational costs will also likely be double or more because businesses must remain in constant compliance to avoid local and state violations. Penalties may involve forfeiting local approval and/or state license. The old market being phased out did not mandate state-level regulators checking to ensure that businesses met any kind of regulatory standards for opera- tion, Bricken said. “All of that is going to change, which means time and money must be spent on ongoing compliance with local and state rules,” she added. Seed-to-Sale Tracking: In an unlicensed environment, seed-to- sale tracking was not required. The new law requires businesses to deploy seed-to-sale tracking software. Advertising: Advertising will be much more restrictive. The new law prohibits a technology platform or an outdoor advertising company from displaying an advertisement from a licensee on a webpage unless the advertisement displays the licensee’s license number. Edibles: Edibles will be more strictly controlled, requiring edible cannabis products to be marked with a universal symbol signifying that the product has THC. No single serving of an infused product can have more than 10 milligrams of THC, but so far there’s no set limit on how many milligrams are allowed per package. Such regulations have yet to be finalized and could be changed by November, especially with regard to medical cannabis products. C alifornia D reamin'