Want Help With Your Medical Marijuana Business Application? Plan on Spending $15K-$100K+

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How much money should you shell out for assistance when seeking a medical marijuana business license?

It’s a question many entrepreneurs are asking in emerging cannabis markets such as Connecticut, Massachusetts, Nevada and Oregon, where the green rush is in full swing as locals look to capitalize on new business opportunities.

Consultants and law firms in these markets are aggressively targeting locals applying for dispensary and cultivation licenses, offering to guide them through the process – sometimes for a very high fee.

In Nevada, for instance, big-name lawyers and consultants are reportedly charging as much as $100,000 to help prepare MMJ business applications, which could put entrepreneurs in a deep financial hole right out of the gate. Applicants already have to pay a $5,000 nonrefundable fee to submit the necessary paperwork and up to $30,000 for the license if selected, as well as several hundred thousand more to get the business up and running.

Consulting fees vary, but they typically range from $15,000 to $50,000 for help with the application process and increase from there if an applicant needs assistance with other aspects of opening an MMJ business.

Determining what’s worth paying for – and how much one should reasonably expect to spend – is tricky for those without a good grasp of the industry. Several questionable consultancies have cropped up over the past year or so, preying on naive entrepreneurs.

“We definitely see gouging in new markets, especially early on,” said Kris Krane of Arizona-based 4Front Advisors, which offers consulting services to the medical marijuana industry. “There are a few groups in particular…that tend to hit the markets early and take advantage of people’s nativity on this issue. I’ve seen groups come in and sell template manuals, for example, for $35,000 or more. These are typically useless manuals based on no operational knowledge, but look nice enough to sell to people who don’t know better. They sell as many as they can as quickly as they can and by the time applications are due they’re basically nowhere to be found.”

Krane said he has several clients in Massachusetts – which passed medical marijuana legislation last year – who “got duped into this” early on and then ended up hiring 4Front when they realized the information wasn’t very useful.

Entrepreneurs also often need more help than they think, so the initial fee could just be the start.

“When someone hires an attorney, they’ll still typically need to hire other consultants to help with policies and procedures, security protocols, grow techniques, etc.,” Krane said.

In the end it all depends on exactly what is included in the fee, the expertise of the consultants offering services and the level of individualization/customization of the information. A consultancy providing help with retail, cultivation and infused products applications in addition to business plan development, property searches and landlord negotiations will obviously charge more than one that just offers help with filling out the application.

“We have charged more than $100,000 for the application process assistance and will do so again,” said Kayvan Khalatbari, co-owner of Denver Relief Consulting. “We’re talking about people applying for licenses that will be used to open stores that are going to be doing $10-$20+ million in revenue a year. There are very few consultants in this industry who can provide all of those services under one roof, with experiences in multiple states on a commercial level. We are pretty much telling them that whatever comes up…whatever they need, we’re here to provide that and give them the best chance possible at obtaining a license.”