Podcast Episode: How to Increase Your Market Presence

Chris Walsh

Welcome to Seed to CEO, the podcast about making your way in the cannabis business. I’m Chris Walsh, the CEO of MJBiz.

In this episode, my guest is Kristi Kelly, the chief strategy and government affairs officer at Sozo Companies, which operates cultivation, processing and retail locations in Michigan. Kristi has a wealth of experience in cannabis, having started a vertically integrated company in Colorado over a decade ago. She eventually sold it and went on to lead an industry trade group in Denver before taking on her current role.

Since day one in the industry, Kristi has made it a priority to develop deep connections with the community and work closely with government regulators. Not only has this been key to her success, but we’re finding that it’s an increasingly important ingredient for starting a cannabis company and building a sustainable one.

If you’re looking at entering cannabis, you might be asking, why is this important from a business perspective when I’m knee deep in a million other things, and how do I even go about cultivating these ties? We’re going to talk about all this next. But first, a quick word from our partner Headset.

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Chris Walsh

Hi, and welcome back to Seed to CEO the podcast about making your way in the cannabis business. I’d like to introduce today’s guest, Kristi Kelly of Sozo Companies.

Kristi was a staple of the Colorado cannabis business community. But she joined Sozo as a consultant in 2018 when it launched and then assumed her current role in late 2019, packed her bags and moved to Michigan last year.

Welcome to the show, Kristi.

Kristi Kelly

Thanks, Chris. Happy to be here.

Chris Walsh

So normally, we hear about people moving from Michigan to Colorado, but you bucked that trend – a pretty big shift in your path in this industry. What prompted it?

Kristi Kelly

So a lot of people look to states that garner a lot of attention, like Colorado or California, or states on the coast. But Michigan is really great. It’s got a population density that any aspiring business would be looking for in the cannabis space. It’s got a sophisticated market of people that really understand what quality product looks like. And as an added incentive, so that was formed by Aaron Rasty and Nathan Kelly, who happens to also be my husband – and my husband’s also from Michigan. So there was a little bit of while I’m not moving home, he is moving home. And so we’re we’re in it together.

Chris Walsh

All right, so what does Sozo mean? It’s a Greek word, right?

Kristi Kelly

Oh, you did your homework! Yeah.

So Sozo is, it’s an ancient word. It’s got Greek etymology. And it also has some references and other ancient languages as well. But it means to heal, and to make whole and to renew. And so we just really liked the application of that and the way that it applied to the cannabis plant.

Chris Walsh

Okay, makes sense. Well, you’re a true pioneer in the cannabis industry. You were doing it before it was cool. You’ve made community involvement and government relations a focus along the way. And that’s included everything from spearheaded and pure “driving awareness” efforts and public service announcements for the industry; social equity and diversity, homelessness services; really working with the community-focused Cannabis Doing Good organization, and a lot of other areas that you focused on, in addition to your work with regulators.

So before we talk about what you’ve learned along the way, and what advice you can give to new entrants in building a community connection and establishing relationships with regulators, let’s start with the why. I think some entrepreneurs might roll their eyes at this or at least put it on the backburner when they’re starting companies in this industry, kind of as in “Yeah, sure. That’s important, but I have to deal with to add or competition or complicated regulations and just running my business and figuring it out.”

Why is this particularly important in the cannabis industry?

Kristi Kelly

Well, the first and most important reason is because, regardless of what industry you’re in, it is absolutely crucial, in my opinion, that you understand what’s happening in the markets that you operate in. And the only way that you can really do that is by getting involved.

I think that it’s a misnomer to wholly try to categorize engagement with the places where you operate under that banner of community involvement, although that is a part of it. There’s also just really understanding what the pulse and priorities of the market look like.

The other part of it is that in the cannabis space, we’ve got a state-by-state legal system and regulatory system. Cannabis businesses are not federally recognized, and municipalities have a lot of control in how cannabis businesses operate inside of their borders. And so to poo-poo it or to sort of say, “Okay, well, yeah, but I’ve got to focus on 280E,” I think misses the mark, because you really need to understand what’s happening at the municipal level.

Does your municipality support the cannabis industry? How does the municipality support? If so, are they taking a people centric approach where perhaps community involvement and social justice are a part of that? Or are they taking a business-centric approach?

There’s also the public health and safety consequences of not participating fully, because not only do many markets have state regulations, but there’s a whole ‘nother layer of time, place and manner regulations that occur at the municipal level. And it just matters to get involved.

Chris Walsh

Yeah, we’ve seen that time and time again as a key differentiator and success for new entrants. Those who understand the climate, they understand the community, they develop these relationships and ties seem to have a leg up as they go forward. Sounds like you’re saying in many cases, this is actually a requirement of doing business and being successful, especially in today’s landscape. Can you talk about some of the business benefits of this? I think recently, or maybe it was a year or so ago, you posted on LinkedIn an infographic showing (how) being involved in the community benefits businesses, and I think it said 90% of shoppers are likely to switch brands to those that support a cause if there are similarities in price and quality.

Can you expand on some of these other business benefits?

Kristi Kelly

When we’re talking about retail involvement, consumers have an abundance of choice. And in the cannabis space, many markets have options so that you’re not going to the one provider of cannabis products and services in your community.

Typically, there are many. In markets like Colorado, there are very many in the adult-use retail space. And so with that comes the opportunity for consumers to choose, and you really need to differentiate your brand.

One way that we choose differentiate is by getting involved in our communities. How do we care? Why do we care? And the priorities that our company places upon the specific municipalities that we’re in are all driven by what the community tells us. We don’t go in with a prescriptive protocol on how we work inside of communities. We have a broad philosophy at Sozo about where we prioritize our own engagement as a company. And then we look inside of communities to hear what they’re saying, and then focus our efforts accordingly.

Chris Walsh

So community is a broad word and can encompass a lot. How do you define community involvement? You mentioned these priorities that Sozo has identified, can you give us an idea of what those are?

Kristi Kelly

Our approach really does include the concept of working with government as a part of our community-engagement approach. We also invest in issues related to food security, housing security, homelessness and the like, educational priorities, supporting small business through chamber activities and racial justice priorities, with an emphasis on cannabis.

Chris Walsh

So what type of cannabis businesses would you say this is most important to? I mean, we can say every business should have an element of this. But in cannabis, are there certain types? You mentioned retail before. Is that what you’d say is kind of the biggest part of the industry that should really, really embrace this and potentially invest more time and effort?

Kristi Kelly

Well, like I said before, I really think that all businesses should be aware of what’s happening in their own neighborhoods and have some sort of perspective about it. But that also comes from the fact that I’ve gotten very involved in community from a very young age, and all of my mentors and leaders and family members were very active in their own communities.

That being said, retail is a place that gets a lot of attention. And we saw that play out in Illinois, where, under the (adult-use) process, stores were looking to get community input and community support as a part of their approval process. So that’s part of it, right? We want to be in places where the community is going to be welcoming to us as an industry.

But the other part of it is the soft side, I think, of what you’re going for, and that matters for us because we are fortunate to be in a space where we have a privilege of being able to serve cannabis clientele. And we also want to give back.

And that’s as simple as that. It creates an environment where our employees are a lot healthier, they’re a lot happier, it makes it a little bit easier sometimes to come to work. And when you know that your company cares about what they’re doing, and that there’s a little bit of meaning behind what you’re trying to do. You’re not just trying to make a ton of money; you’re trying to do good and be successful operations as well.

Chris Walsh

Yeah, and I know it can help with hiring and as you said, retention, and morale and even customer loyalty. Obviously there are PR elements. But can you walk us through some of the first steps you can take to build connections or identify these areas of the community that you should support? And what’s a good use of your time? What are some of these first steps you take?

Kristi Kelly

Well, the first step when we’re looking at analyzing whether a market is a good market for us to participate in or not is to really sit down and understand who that community is made of. That includes talking to elected officials, understanding who and what the community priorities are, what is it that the municipality or township or city is interested in, what they are investing in. Because you want to understand that as a part of the competitive landscape and as a part of your business analysis.

Then what I like to do is look at the ways in which a community is prioritizing their investment, and then the ways that we as a company are prioritizing our investments, and look for synergies there. Sometimes that manifests itself in shared interests in helping to clear expungements. In other ways, sometimes that manifests itself in supporting a philanthropic goal of the community or helping to put food in the bellies of hungry people. And sometimes it’s an economic interest. So how many jobs can we create? How much investment can we simulate?

Chris Walsh

Yeah, and I’m wondering, every community is obviously different and every city and every state market is different in the cannabis industry. Sometimes dramatically so. So you have this intimate experience with Colorado in the community where you built your first business and the efforts you took for outreach and to be a real integral part of that community. Now you’re experiencing that in Michigan, too. Now, are there any differences in an approach to this that you see in Colorado and that you took here, where we’re based, or where you’re at now in Michigan?

Kristi Kelly

Because of the fact that cannabis is still very much a state-by-state and municipality-by-municipality process, participation looks really different based upon what that municipality wants and what the state wants. And so it’s really hard to say that there is a formula or that there’s a process, because the process is: Do your homework, understand what the local requirements and state requirements are, and do what you can to distinguish yourself and be the superlative example of what those requirements look like.

It is very localized. It’s why, in my opinion, there really should be a strong emphasis on local energy and local efforts and what local government wants to see. Because if you’re not paying attention to that, and you’re really dialing in on what the state requirements are, you might be missing important opportunities to further advance and distinguish your business.

Chris Walsh

Yeah, that’s exactly what I was getting at. I was wondering, can you shed light on a difference or two that you’ve seen in Colorado that required a different approach to what you’re seeing now in Michigan?

Kristi Kelly

Well, I think with Colorado, what we saw was that it is, as I believe everyone knows, it is the world’s first regulated market for cannabis. That is the world’s first taxed market for cannabis. It’s the world’s first licensed market for cannabis. And while other markets existed, none of those components in synchronicity existed together. So taxation, regulation, licensing, that created the structure, and what that did was create a mature market.

As an industry in Colorado, people were often experiencing business problems together first. Denver, for example, was an early adopter into legalizing cultivation facilities. And then a couple of years later, there were a lot of discussions about the zoning of those cultivation facilities, the density of those cultivation facilities, whether it was appropriate for those cultivation facilities to be congregated in certain areas of the city. Then came additional conversations about odor control and fire safety. And, well, this was originally built and approved as a grow, but now we’re adding on to it. And there are other functions that are occurring.

What are the impacts at the business level that need to be addressed in order to make sure that there’s a constant attention paid to, for example, fire safety and HVAC requirements? And how does the inclusion of CO2 or the absence of CO2 need to be addressed to retrofit their facility?

So these are the conversations that happened for the first time in Colorado because Coloradans were the first to really have a transparent regulatory environment.

What I have seen in other markets, including Michigan, is that the lessons learned from Colorado often serve as a blueprint for how other people are approaching their regulated environment. One of the areas that Colorado has had some trouble is in retroactively imparting requirements for businesses that have already been an operation. So you know, in new markets and emerging markets, you can say, “Okay, here are the 15 technical requirements of the cultivation facility, go build that, build to the specifications, and then operate your business.” In Colorado, the business impact was often an expensive retrofit in order to accommodate, which creates business interruption.

So that’s one area where you might see that.

The other is in the integration of concepts that were not part of the early conversations so much in Colorado that are part of current conversations today. Cannabis social equity being one. You know, when Colorado’s market came into bear, one of the primary questions that everyone was asking was, “How does this model get constructed in a way that the federal government isn’t going to seize all of the assets and shut down this industry that that was just legalized?” And that’s a very different paradigm than what we’re talking about today, talking about cannabis equity and cannabis justice issues, where the concept of inclusion and participation is almost in stark contrast to what the priorities were in early Colorado.

Now, what we see often, is that there is a real understanding of the impacts of cannabis prohibition and race-based cannabis enforcement in the justice system. And so there are very visible efforts to try to correct that in the markets that are emerging, but it’s very difficult to retroactively apply those same standards to businesses that have already been operating for some time.

It makes for exciting conversations about how to get businesses off the ground.

Chris Walsh

Yeah, and social equity has become a much larger focus in this industry than it’s ever been. And obviously, there’s a lot of work to be done on that issue and making this more inclusive. It is nice to see states and cities and regulators embrace this. A lot of trial and error going on, a lot of controversy around how these are playing out.

But this wasn’t a huge focus of the industry, from my perspective, when I was talking to people five, six years ago, and now, in almost every conversation, that comes up. Definitely seeing a lot of progress there – with a long way to go still.

I’m wondering when it comes to community acceptance – So you want to be a part of your community, you want to be more purpose driven than just about the dollars and cents. And so when we talk about acceptance, I remember, you know, nine, 10 years ago in the Denver area, some cannabis companies trying to give back and they were refused. That certain nonprofits or certain groups said, “No, we don’t want to be tied to the to the marijuana industry.” And I think that’s changed a lot.

But what have you seen in terms of working with the community? How are they feeling about this in Colorado versus Michigan? Is there a wider acceptance now? And that, you know, cannabis involvement in these bigger issues is more welcome?

Kristi Kelly

Absolutely. There’s wider acceptance for cannabis dollars in cannabis philanthropy. Groups like Cannabis Doing Good and KindColorado have done a lot of really hard work to try to bring the business community and the philanthropic community together.

That being said, as recently as just a couple months ago, our company was actively trying to identify community groups to participate with in specific markets. And we have been told very recently that the organization is not able to accept money, even unrestricted funds, from our organization by virtue of our business purpose and function. So being cannabis isn’t the roadblock that it once was.

I mean, back nine, 10 years ago, in the time period you’re talking about, Chris, there was a chamber that another company that I used to be part of had joined. We purchased the top chamber level membership, which was a multi-thousand-dollar investment and was supposed to be a privilege that granted us specific access and specific visibility as a part of that. And we were told after our money had been received that the organization and the board members of the organization did have concerns with our participation in specific events that the chamber had hosted. And that was really disappointing.

So today, we don’t have so many of those conversations and things are moving in the right way. But there are still plenty of people who have concerns or who bring with them the stigma of the “Say No to Drugs” era and cannabis prohibition, and are unfortunately, groups we just cannot work with.

Chris Walsh

Yeah, so if you’re starting a business in this industry, and you want to make this kind of a key pillar of your strategy and your platform, be aware that you can encounter challenges and barriers from an acceptance level. What are some of the specific things that you’ve done along the way? Maybe you can highlight a couple that you felt had a big impact in the community and for the business? Can you highlight a few things that you – that we can share these examples to say, this is how this can work in many different ways?

Kristi Kelly

One of the great things in Colorado was that we did have a very well networked community that included members of government, that included members of industry, members of community and community constituents and the activism community – and law enforcement and public health and others as well. And that really was an acknowledgement to the leadership of local government and state government and their willingness to put the right people in the room together to work through issues.

Well, one of those issues that was not on our radar but then became somewhat important is immigration. And our organization had been aware that there were some issues with employees who were either in some form of seeking permanent legal status in the U.S. or were part of households where people were seeking permanent U.S. status. By virtue of affiliating with and being employed by or even doing a social media check in at a cannabis entity, what we were starting to hear was that there were actions that were being taken against specific individuals. And these actions were not being very well promoted at the time, and so what was happening was, you think everything’s fine, you think you’re doing something that’s legal because everywhere in the news, everyone’s talking about how cannabis is legal. And then you go to your immigration interview, and only then someone connects the dots and says, “Hey, you’re seeking a permanent path to residency. Marijuana is not federally recognized. It is a scheduled substance. You took a selfie, or you checked in here at this legal dispensary. But you broke a federal law, and therefore, you’re coming with us.”

And to hear that happening was just devastating. And we started coalition-building with a number of groups, including Servicios de la Rasa and the city of Denver and others, to really try to get the word out and make sure that people understood that participation or purchase or possession of cannabis was not something that was fully extensible to everyone. It was something that did have immigration consequences.

It started and then about a year later, there was another sort of lift on that. But when I think about how quickly our communities were able to mobilize and how quickly we tried to get the word out, how accommodating local media was in participating with that, in different groups who came together who represented different immigration support organizations inside of the city of Denver, I just feel like those are the kinds of things that demonstrate real engagement and involvement in a way that has real world impact.

There are actively a number of different projects that we’re pursuing right now in Michigan. Some of them are fairly simple. You know, we have relationships with local community groups that provide food security and housing security. And we’ve, you know, during when COVID hit, we did something very simple, which was that we pledged to support beds for community members. And we pledged to support specific investment in food so that community organizations who were kind of feeling the economic impact of COVID, as everyone else was, were really reeling because needs were increasing and resources were decreasing.

Chris Walsh

Yeah, those are some good examples of how businesses can get active in their communities and give back. Do you have any suggested guidelines or insights for entrepreneurs who haven’t gone down this path before? How much of your budget or time should you devote to this? Or how do you, have you handled it? Maybe anything on these areas that you can share?

Kristi Kelly

Well, I think that when you’re talking about a startup, the percentage of your budget as a relative to what your revenue looks like, it looks different than for an established business that has been in an operations for a decade, right? So I think that really, the cost of participation can be time, treasure or talent.

If you are a startup, and you’re not able to do what you want to do by writing a check that can support the effort, then bring a couple of employees over on a weekend and dig some trees or help serve food or, you know, do what you can to do your part. Money isn’t always the currency that organizations need.

You can also use your network. Entrepreneurs, by design, I think are generally incredibly well connected. The networks and resources and creative problem solving that all come with most entrepreneurship can fully be extended into reconciling community issues and working within communities to help bring positive change or to participate in ongoing positive change.

Chris Walsh

Yeah, absolutely.

I want to shift into the government relations side, which is near and dear to your heart now in this role, and in your role at the Marijuana Industry Group previously. What are some of the steps that you’re taking, as a newer company in Michigan, to develop ties with regulators and help better shape where things are going?

Kristi Kelly

I want to take a step back and answer that question with an environmental reality, which is that our company began at the beginning of the pandemic. And so we have really been confronted with incredible business challenges, as any startup would, partnered with a global pandemic that is happening in real time.

What happened in COVID is that a lot of the rules of the rulebook got thrown out the window during COVID. What happened was a lot of municipalities stopped having meetings. And there was a period of time during COVID where municipalities were not sure that the decisions that they made through structured meetings, like Zoom meetings or GoToMeeting sort of format, were appropriate decision-making structures for a law-making body. And so they had to wait and go through the court process and really get some legal clarification on that. And so that had a dampening effect on the ability to really have some opportunities to engage at the local level.

That was exacerbated pretty heavily at the state level as well where people were asked not to come unless they had to unless it was a business necessity. So for example, a lot of lobbyists were not able to go to the capitol, and how do you lobby without being able to be at the place where all lawmakers are congregating?

And so there’s just a lot of creativity that has to take place in order for the business of government to continue. That is the environment through which this company launched in Michigan.

And so what I would normally do was a little bit constrained by the realities of the pandemic. That being said, we do what we can, and we participate where we can. We seek opportunity where we can, you know. People still have phones, people still have emails, and now that vaccinations are becoming more readily available, I think that that that may look a little bit different.

But we, you know, we had to really figure that out, and do it in a way that didn’t necessarily make it feel for the other party like we were advancing a meeting request in a way that was inappropriate in recognition of ongoing guidance on how to safely transact business.

Chris Walsh

Yeah, hopefully, we’ll never be in this situation again. And I can imagine how challenging that was.

What are some, whether it was during the pandemic, before in your experience of Colorado or what you’re going to do going forward, what are some specific ways that you can get in front of regulators, get in front of the government, help shape the conversation and give your input?

Kristi Kelly

Well, there are public processes, like for example, in Michigan right now, they’re about to go into rulemaking. And that is the case for many people. As legislative sessions come to a close, then the rulemaking periods begin across the U.S. That is a great time to engage in discourse with regulatory agencies. Michigan has been very accessible in that they have a number of different contact points, and they’ve organized their inquiry lines in a way that makes it easy. Is this an enforcement request? Is this a licensing request? Is this, you know, a regulatory request?  Etc., etc.

And so we have had the benefit of engaging with regulators over the course of the past year through both trade associations, public solicitation periods and direct outreach, and it’s a combination of all of them.

Also, a lot of government agencies, including marijuana oversight agencies, have specific opportunities for engagement outside of the regulatory process. And so paying attention, that can help. For example, in the state of Michigan, Sozo is one of two recognized social equity partners with the MRA (Marijuana Regulatory Agency). And so and in a short period of time, we will be launching our second education event for social equity applicants on the issue of expungement. And we’ll be providing resources to people who are looking to participate in the Michigan market and who are also looking to potentially take advantage of some upcoming clean-slate bills that have gone into effect and may allow for a lot more people to get their records sealed or expunged.

So there are a lot of opportunities that we look for to distinguish and support and align with our company’s goals that are already there. I find that so often people think about government and regulatory agencies as sort of the, as you know, man behind the curtain – a lot of mystery and fear of the unknown, right? And that has not been my experience at all. I have found in all of the places that I have been fortunate to engage that government and our regulatory oversight agencies and our elected officials have generally really appreciated the interest in participation in the public process.

Chris Walsh

And you’re finding that they’re actually listening to right? And it’s not just going into a black hole? And that they are actually interested in not just pretending in the industry’s take on regulations?

Kristi Kelly

Well, if the cannabis industry is one thing, it is not quiet. We are a very vocal industry. And we’ve had to be from the very beginning, right? And so with that, if something were not happening in the way that lawmakers, laws and ordinances intended, this has been an industry that has really had to fight for its right for a very long time.

And that fight has kind of gotten out of the grassroots and into the affairs of government, because we are now a licensed legal and regulated industry in most states in the U.S. It seems like the toolbox of advocacy and being able to share perspective can only make better policy. Policy created in a vacuum without having stakeholder input is, that’s the kind of policy that usually gets rewritten in a year or two.

So lawmakers, I’ve got to say, really, I think, have been very open and willing to hear. Does that mean that everyone agrees all the time? Of course not. But that’s OK. Stakeholdering doesn’t mean that you all agree and you execute to everyone’s whims, because that’s impossible. But finding common ground and finding that incremental progress to move everyone along that continuum, that’s something that can be very rewarding.

Chris Walsh

What have you found works best in this process, in terms of making a case? Providing input, presenting a lot of data? What have you seen work?

 

Kristi Kelly

Well, the harder the issue, the more you need data. There are some issues that are just sort of no brainers. They are just issues that come up because at the time when the laws were originally written, there was a lack of clarity about what was going to happen. Or perhaps there was some ambiguity about how a model might emerge. Or maybe it just was something that wasn’t contemplated and as a part of the original laws, and so that, that those kinds of things, business efficiencies, things that are sort of common sense principles of simplification.

Those typically are easier than perhaps a more polarizing issue, say an issue that that touches on science, you know. The issues of testing have been a very challenging process, because a lot of lawmakers are not scientists, most are not, right? And so creating a public safety package that is respectful of and recognizes the importance of scientifically sound, lab-tested cannabis products coming to market makes perfect sense. But there is definitely more in the drafting of bills, and then in the regulatory language that supports that a lot of debate, technical debate that needs to happen. So it really depends on the issue. And it depends on what kind of an issue it is.

Chris Walsh

Well, Sozo’s team includes people from highly regulated industries, such as pharma and spirits, that involve a lot of government affairs-related work. Have you seen differences in this process and these relationships in the approach between kind of mainstream industries and cannabis?

Kristi Kelly

In terms of the approach, the same people are making the laws, you know. The legislators are the legislators, whether they are legislating cannabis policy or they’re legislating energy policy or liquor policy. So in terms of that, there is a formula for that that is dictated by the procedures of a specific state or municipality.

But in terms of how cannabis policy can be different – one of the things that that I’ve heard from our guys is, “Oh, we didn’t, we didn’t know that you were in that, you know.” So we have a number of members of our executive team that came from other highly regulated industries that got very politically active as a business necessity. But there are definitely more emotions that come into discussions related to cannabis policy than there are in, for example, energy policy. There can be a lot more personal influences that can potentially affect the discussion one way or the other – positively and negatively, just depending on who you’re talking to.

We’re not making widgets. We’re making and cultivating and processing and selling a scheduled substance. So there’s going to be a much higher degree of complexity because of that, there’s going to be complexity because the laws are allowed to change from state to state because we don’t have federal oversight right now. And so the one thing that I do try to remember and impart upon those that I work with is that, you know, there’s a lot that’s the same, but we have to always respect the present status of cannabis and the way that it can be a very personalized issue.

Chris Walsh

Yeah, it can be. I think that’s why we’ve seen such a change in public perception, because those personal issues are increasing, and people are finding throughout their lives, throughout their networks, people they know are starting to use it for various reasons. People they care about. And they’re seeing the benefits firsthand, rather than hearing anecdotally or seeing a bunch of data.

I want to ask, can you talk about a big win on the government and regulatory relations side that you were involved with, or maybe that you believe led to a significant change?

Kristi Kelly

You know, Chris, I don’t even know how to answer that question. Because I feel like … First of all, I do personally abide by that philosophy of incremental progress, right? But then also with cannabis, everything has been a First. When we started having conversations around cannabis policy, every single piece of policy that was being drafted, every single bill, every single rule was being drafted for the very first time.

And so I don’t want to say this sounding like a mom who says “I love all of my kids,” but I love all of my kids. And I say “my” in a very, like, tongue-in-cheek kind of a way, because nothing happens in isolation.

Anyone who tells you they were the person that did x, y, and z is not talking about the hordes of people that came before them that made their position possible. All of the activists, for example. They’re not thinking about the legislators and stakeholders and constituents who came and participated and made phone calls and jumped in on that process. They’re not thinking about the first people to raise their hand and say, yeah, I’m gonna put my name on a cannabis bill. They’re not thinking about all of the people who really had to come together to make it happen.

I know this sounds like I’m being vanilla in my response, but I truly think that because cannabis, and so much of what we have done in the past, you know, 10, 12, 15 years has been new, that with each one of these iterations, that is important. Because what happens in in New York is going to potentially affect what happens in Nebraska, which may affect what happens in South Dakota or Tennessee or Texas. And so there’s so much interconnectivity and everything that we’re doing.

And so yeah, can I say I love them all?

Chris Walsh

Yeah, I won’t make you pick your favorite child. I only have one. So that’s easy. But I get it. And I appreciate that perspective.

Thank you very much for joining us today. That was very insightful and I think will give new entrants into the industry some good perspective and a good road map to follow as they chart their course in the industry.

Kristi Kelly

Thanks, guys. Have a good day.

Chris Walsh

Take care.

[MUSIC]

Chris Walsh

That concludes my conversation with Kristi Kelly of Sozo Companies in Michigan. Here are a couple takeaways from the discussion.

Both community and government relations should be a pillar of your strategy even in the early days, especially for those of you opening dispensaries. That means when you’re putting together a business plan and working through the licensing process if you’re a plant-touching company, not shoving it aside until later. It’s a crucial part of understanding the market you operate in and the forces at play that ultimately affect your business and your customer base.

Local and state governments also dictate cannabis regulations, so you have to understand the priorities of regulators and of lawmakers and the community overall, and develop the right relationships to help shape those regulations. Getting actively involved is one of the best ways to do that.

There are certainly tangible business benefits in this approach, including boosting recruitment and retention of employees, building customer loyalty, even helping you win a license. It’s been proven many times, especially in cannabis, that customers are attracted to companies that show they care about the community.

So how can you do it? It starts with analyzing and understanding the makeup of the community. What do they want to invest in and what are the major issues they’re facing? Is it job growth, reviving neighborhoods, homelessness, social equity? Center your efforts around what’s important locally and what your community needs.

If you’re applying for a license, identify what synergies you have with government agencies spearheading that process, showing that you have community support and are involved in areas that are important to them. Keeping the focus local, having a plan in place for community outreach, all of that can give your application a competitive edge.

If money is tight, the good news is that you don’t have to write a check to make an impact. Aside from organizing employee volunteer efforts, you can utilize your marketing arm to help organizations. Or you can use your network to promote specific causes and get others involved.

On the government relations front, the key again here is to get active early. Attend public hearings and rulemaking meetings, ask questions and speak up. Link up with local trade associations, conduct direct outreach to government officials and build relationships with not just policymakers but with others in the industry. Even if it’s your competitors, these efforts can make a huge difference.

Finally, think bigger than the pure business reasons behind this. You’re in a unique position to help address health and safety concerns, to give back, to get active to bolster the community that you and your employees live in. And ultimately, of course, to make a difference. So use those forces for good.

And that’ll do it for this episode. Thank you all for listening. Please share this with others and post a review on whichever platform you use to listen to podcasts. You can also follow us on Twitter. Our handle is @MJBizDaily.

Next week I’ll be speaking with Ben Williams, the CEO of Highway Vodka. Why vodka when this is a cannabis focus podcast? Well this vodka is made with hemp seeds. And Ben’s story highlights how entrepreneurs are finding new opportunities in cannabis.

Until then, make sure to check out MJBizDaily.com for the latest news and analysis on the cannabis industry. Be sure to sign up for our newsletter while you’re there. Take care and see you next time.