Revolving Door at Cannabis Programs Creates Uncertainty for MJ Entrepreneurs

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By Omar Sacirbey

Turnover of key personnel at state marijuana agencies has become relatively common across the country, creating uncertainties for cannabis entrepreneurs already operating in an unpredictable environment.

Over the past two years, several top marijuana regulators in various states have departed – either voluntarily or because they were forced to step down.

In some cases, the moves have created delays in the licensing and approval process – leaving MJ business owners who are plotting their spending plans in the lurch.

At the very least, such turnover leads to question marks about how the program will be run down the road. Even seemingly routine personnel changes can hamper a state’s cannabis industry if the wrong person is chosen for the job.

So it behooves MJ entrepreneurs to keep tabs on who’s who in their state’s regulatory hierarchy, especially at a time when regulators are departing for higher paying private-sector jobs.

Alaska Example

Consider the case of Alaska. Cannabis entrepreneurs there fretted after Gov. Bill Walker recently fired a cannabis industry representative on the state’s Marijuana Control Board.

Uncertainty reigned. Would Alaska’s new recreational marijuana program whither on the vine? Would the replacement board member be pro-cannabis?

“You didn’t know what was going on. There was concern that someone who was opposed to legalization would be selected and then try and kill the program,” Cary Carrigan, executive director of the Alaska Cannabis Business Association, said.

Even if Walker tapped a pro-cannabis replacement, how long would he take to decide? What impact would any delay have on the fledgling rec program’s licensing process?

These were important questions for license applicants who were spending money on commercial property rents and other expenses necessary to open a business.

“We don’t have the luxury of time. We’ve got to get our retail businesses up and running,” Carrigan said.

So MJ entrepreneurs breathed more easily when Walker announced Aug. 25 he had chosen the head of the Anchorage Cannabis Business Association, Nick Miller.

“It’s safe to say the industry here breathed a collective sigh of relief,” Carrigan said. “He chose somebody from the industry, which was the most important thing for us, and he chose quickly.”

Shake-ups at the top levels of state government marijuana programs – either medical or recreational – can be particularly difficult for MJ entrepreneurs when the change is controversial as in Alaska, where the outgoing board member, Brian Schulte, accused state officials of conspiring to undermine the rec program’s rollout.

Greener Pastures

Aside from Alaska, several state cannabis programs have recently undergone significant personnel changes:

  • John O’Brien resigned in April 2015 as the head of New Jersey’s MMJ program. Two months later he was named chief compliance officer at a company that was applying for a medical cannabis license in New York.
  • Manny Munson-Regala, a former assistant commissioner with the Minnesota Health Department who helped decide which two companies would receive MMJ business licenses, left his post in June 2015 and was hired by one of the firms as CEO. (He resigned as CEO in February after less than a year.)
  • Hannah Byron resigned as the executive director of the Maryland Medical Cannabis Commission on Jan. 27 of this year.
  • Joseph Wright resigned in late June as head of the Illinois medical marijuana program, saying he wanted to pursue a job in the private sector – possibly with a medical cannabis company. He followed in the footsteps of lawyer Bob Morgan, who left the agency last year and is now a private attorney and president of the Illinois Cannabis Bar Association.

Kayvan Khalatbari, a principal at cannabis consulting firm Denver Relief Consulting, said higher paying jobs in the private sector are why many marijuana program officials leave.

“That’s a big reason behind why so many state officials leave their jobs, because the pastures are greener in the private world,” Khalatbari said. “You get more money.”

In fact, two of the first three directors of Colorado Marijuana Enforcement Division left the public sector for the private sector: Matt Cook, who decided to focus on a regulatory consulting company he founded, and Laura Harris, who became a client advisor for Denver Relief Consulting and is now on the executive management team of a Massachusetts MMJ company, New England Treatment Access.

In The Know

Regulators are important because of their role overseeing a state’s cannabis program.

“Continuity and institutional knowledge are essential to implementing programs,” Darrell Carrington, executive director of the Maryland Cannabis Industry Association, said. His state’s medical cannabis program went without an executive director for about three months, from late January to late April.

Luckily, Carrington explained, the executive director position isn’t a policy-making post, but manages the commission’s day-to-day operations. Also, the three-month vacancy came when the state’s reviewers were considering applications, and the program couldn’t move forward until they were done. So the executive director wasn’t really missed.

“It didn’t stop the program from moving forward. So I guess the timing was the best that it could have been in that particular situation,” Carrington said.

Still, the absence of a program director created added stress for MJ entrepreneurs.

“It raised the level of anxiety in a situation that didn’t need any additional anxiety,” Carrington said.

Time and Uncertainty

While personnel changes can cause turbulence in any industry, the cannabis industry feels it more because it is still a new industry. But as programs mature, establish their rules and regulations, and have precedents to follow, personnel changes will have less of an impact because the greater environment will be more stable, observers said.

“Earlier in the program it was harder for businesses to adjust to the changes in personnel because the rules and regulations still weren’t in place. So when there were changes in personnel, it slowed up the regulatory process much more,” Khalatbari said of Colorado’s experience.

“Now we have a pretty well defined set of best practices. There’s a huge track record of enforcement now; precedents have been set with a lot of the issues they’re dealing with,” he added. “That wasn’t the case two years ago when we were seeing a lot of things happen for the first time and seeing a lot of judgment calls.”

Omar Sacirbey can be reached at omars@mjbizdaily.com

Correction: The original version of this story said that Matt Cook left the Colorado Enforcement Division to work for River Rock. Cook never worked for River Rock; he left the MED to run his consulting business full time. 

Daily News | Legal & Regulatory News for Marijuana Businesses

 1 Comment

  1. pam August 30, 2016

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