Marijuana Business Magazine - January 2017

January 2018 • Marijuana Business Magazine • 73 Raise More Money Than You Think You’ll Need To build a fully integrated mari- juana business in a highly regulated state, you’ll need to deploy about $10 million, according to Pete Kadens, CEO of Green Thumb Inter- national. His Chicago-based medical mari- juana holding company owns licenses for 19 vertically inte- grated MMJ businesses in five states. Kadens also offered this advice: Be prepared to raise more money than you think you’ll need. Some of your potential investors will no doubt get cold feet for one reason or another. “I always say that for every $30 million we raised, only $10 million ended up in our bank account after people who committed talked to their lawyers, CPA, financial adviser and spouse,” Kadens said. In one typical example, he noted, an investor will promise money but then condition it with this caveat: “I have to talk to my spouse,” Kadens said. Translation: “Yeah, he’s out.” Kadens’ advice: Be prepared for rejection. “You cannot get upset easily or overly dramatic about people falling out,” he said. “It will happen. You need to build a very robust investor pipeline just like you would a sales pipeline, and you need to track and manage that pipeline methodically.” Get the Right People With all the demands of getting a marijuana company up and run- ning, it’s easy to overlook the one aspect of your business that’s prob- ably the most important – building your team. You’ve heard this advice before, but it can’t be stressed enough. “Surround yourself with people who are experts and trust them to help you build your business,” said Lynn Hondred, CEO of Colorado- based Mary’s Medicinals, a multistate provider of pharmaceuti- cal-grade can- nabis products. “Know what you know, and know what you don’t know.” Shon Wil- liams takes a simple approach to hiring: “I have a no-jerk rule.” “It’s cancerous to your overall business and can destroy the culture of your business, and culture is key to your success,” added Williams, director of portfolio management and design at MJardin, a Colorado consultancy specializing in cannabis cultivation. “Position plus personality, char- acter, integrity and overall diversity – including from a background standpoint – is important. …You must trust the people around you.” And, lest you forget, Williams stressed: “Make sure YOU are not the jerk.” KnowYour Customer Up to a third of adults in California, Colorado, Nevada, Oregon and Wash- ington state use marijuana. That’s over 11 million potential customers for mari- juana businesses just in those five states, according to an August 2017 study by Ana Hory, the CEO of California- based Enlucem, a wellness community where users share how cannabis has helped them. Though Hory’s study was specific to those western states, it shows the impor- tance of business intelligence in running a marijuana company. Among her findings in those states, Hory uncovered these stats about can- nabis customers: • 61% are male • 61% are 41 or younger • 43% are married Hory’s study also found that the overwhelming preferred product type for heavy cannabis users is loose flower, followed by edibles, pre-rolls and vape cartridges. At the bottom of the list: infused topicals, drinks and tinctures. She also found that the vast majority of consumers – 78% – are looking for relaxation from their marijuana products, with relief from pain, anxiety and insom- nia also comprising purchase motives. Perhaps one of the more significant findings is that affordability is by far the biggest driver behind retail cannabis purchases.While potency, strains and other considerations still figure into the equation, a whopping 84% of survey respondents said price point was their top priority. 1 2 3