(This post is the first in a series providing insights into the legal marijuana industry. It is a guest post from the staff at MedMen.)
While ultimately an exciting endeavor, opening a marijuana business can be a tedious process involving a multitude of legal and monetary procedures. A close eye for detail is required. Dealing with rules and regulations and licensing applications, meeting zoning requirements, preparing concise and detailed business plans and operational protocols, attending local and state meetings, planning to manage operations once certified, and so much more are big tasks. Think: 24-hour notaries, multi-disciplined organizational issues and consensuses, leaps of faith toward the long-term investment, preparing management deals, and accountability — and it does not stop there.
Starting a successful medical and/or recreational marijuana business typically requires commitments of hundreds of thousands — and at times even millions — of investment dollars. Some states are moving in the direction of merit-based oligopolies that require substantial liquidity in order to succeed and multi-million dollar bonds to further show financial security. Marijuana has graduated to a big-business process.
Securing real estate and building a qualified team for any marijuana industry venture are two of the earliest and most fundamental aspects of obtaining a license. Locking down locations that make sense demographically while still satisfying strict locational regulations is not cheap. Landlords realize the tight supply, so favorable terms are hard to come by, meaning substantial capital is necessary. The applying team must also be comprehensive. Building a solid team, not only financially but resourcefully, is crucial in legitimizing marijuana businesses. Solid teams include healthcare to business management professionals, legal experts to accountants, horticulturalists to those experienced in law enforcement and security, and beyond. Not to mention experts to manage the marijuana-specific aspects of the operation. This range of experience is hard to come by for a mom-and-pop operation.
The complications do not end once a license is secured. Banking in the marijuana industry is currently in flux. Many banks refuse to deal with marijuana-related businesses; however, recent federal protocols have safeguarded banks willing to commit to these businesses. Still, banks are looking into the financial histories of those applying for accounts. A mom-and-pop operation is at a disadvantage to a big-business operation whose members can show ties to multi-million dollar companies operating their finances spotlessly. Accountability is crucial, and past business practices are just about the only way to show it in the emerging marijuana industry.
Ultimately, every state is going to have different marijuana laws, just as every state has different alcohol laws. Some will be more conducive (or even limit) the marketplace to bigger businesses. Others will foster an environment that ensures smaller businesses can compete. There could even be some where marijuana sales are limited to state-run stores.
States are going to experiment, learn from their experiences, and learn from each other, just as we have seen take place with alcohol in the 80 years following the end of prohibition. In any case, it will be fascinating to watch it unfold.