Readying for Rec

Immediate steps to take if your state legalizes adult-use cannabis

by John Schroyer

Numerous states with medical cannabis programs could wind up legalizing recreational marijuana this November, giving MMJ business owners in these markets an opportunity to pivot to a completely new customer base.

Marijuana Business Magazine reached out to seasoned industry insiders in Colorado, Oregon and Washington – three states that have already made the transition to recreational – to get their advice on how to prepare for the adult–use market.

We tapped: William Simpson, the founder and president of Oregon-based Chalice Farms, a marijuana cultivator and retailer; Luke Ramirez, the owner of Colorado-based Premium Pete’s Cultivation; and Patrick Devlin, co-owner of Washington State-based edibles producer Db3.

Here’s their advice:

Get Involved

Many of the business-related rules and regulations for recreational marijuana will be hammered out during the rulemaking process well after the election, so make sure you’re represented.

“A lot of these rules will not be set in stone the day after it’s passed. In fact, none of them probably will,” Ramirez said. “So I highly recommend either hiring your own lobbyist or joining a trade group that will lobby for your interests.”

The rulemaking process often addresses a host of critical issues, such as the number of permits available for cannabis businesses, zoning requirements, product packaging and labeling rules, allowable hours of operation and licensing fees. Having a voice in those discussions is key to getting business-friendly rules in place.

Reach Out

Develop relationships with local politicians, regulators and officials.

“Getting politically involved is the first thing you should do,” Simpson said. “Talk to the local commissioners, your house reps, your senators. That’s super important. Those are going to be really big pieces to your whole world.”

Devlin agrees.

“Before you can do anything, you have to have a decent understanding of how they view the industry and how they’re going to treat it.” Devlin said. “It’s in everybody’s best interests that the regulators see those coming out of the medical marijuana industry as being experts in what will make things work.”

Study Up

Read and understand the laws, both at the state and local level.

“I’d certainly understand what the new law would require to be part of the business. Whether that’s getting a consultant or an attorney, (you) should start that process yesterday,” Ramirez said.

“I see a lot of newer people not pay enough attention to that, not diving enough into local laws and what the city and county are going to require, and that takes a lot of diligence,” he added. “It’s not like you can just Google it. You have to make a real effort to attend local city council meetings and really figure out how that area is going to approach recreational marijuana.”

Settle Up

Make sure all the taxes for your existing MMJ business are paid and up to date. Otherwise, decision makers at the licensing level could nix your chances at a recreational business.

“Make sure, from a business standpoint, that you’re good, because what happens is that during the licensing process, the bureaucrats decide who the good actors are and who the bad actors are,” Devlin said. “And some of the regulators get fed up with some players as opposed to others. If you don’t follow good business practices there’s potential that they’ll find a way to filter you out of the licensing process” for the recreational industry.

Look for Locations

Scout locations immediately.

“To find a property that qualifies is extremely difficult, so you need to get on that process right away. Don’t take that process for granted,” Ramirez said. “You’ll get a lot of hurdles like landlords not wanting to lease to you because you’re in the marijuana business.”

He added: “If you’re going to buy a property, you’ll have to keep in mind that you won’t be able to get a loan for that, so it’ll need to be an all-cash transaction.”

Reconsider Your Current Space

If you’re looking to open a retail location, consider the difference in atmosphere between classic MMJ dispensaries and more mainstream shops – and think about how to appeal to a broader demographic. Design and plan accordingly.

“What does your retail space look like? Is it a retail shop or is it a hangout zone for people who get really, really buzzed?” Devlin said. “What will happen is competitors will come in that understand retail sales and create a very different experience than most dispensaries look like now. So be prepared for that.”

Figure Out Your Finances

Immediately start trying to put numbers around how much it will cost to start your rec business and where you’ll get the money. More than anything, plan to keep costs low, such as growing for under $1 a gram, Ramirez said. Otherwise, the competition will kill you quickly.

“If you’re bootstrapping a company in a new, hot market, you’re likely to get priced out because there are people with a lot more money and investors than you, Ramirez said.

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