Marijuana Business Magazine · Marijuana Business Magazine is currently published six times per...
Transcript of Marijuana Business Magazine · Marijuana Business Magazine is currently published six times per...
Edibles Regs
New States
MergersStocks
Nat’l BrandFed Action
Legal IssuesLarge Grows
TourismBanking
Trend Watch:2015
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MarijuanaBusiness Magazine
Insights for America’s cannabusiness entrepreneurs & investors VOL 2 • ISSUE 1 • JAN-FEB 2015
Also in This Issue:Investing & Funding Corner ....p. 21Persistence Pays O�...............p. 30Lessons Learned FromCannabusiness Pros ...............p. 40State at a Glance: AZ ..............p. 45
page 12
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Volume 2 • Issue 1 Jan-Feb 2015
President & Publisher
Managing Editor
Contributors
Ad Sales
Marketing
Technology
Graphic Design
Subscriber Services
Customer Service
George [email protected]
Chris [email protected]
Tony [email protected] [email protected] [email protected] FarringtonAnne Holland
Aimee [email protected] [email protected]
Kendra Branch-Brett
Jeff FarringtonLaura Femino
Ron Perry
Bridget Faria
[email protected](401)354-7555 ext. 1
Marijuana Business Magazine, Volume 2, Issue 1, Jan-Feb 2015. ISSN 2376-7375 (print)ISSN 2376-7391 (online) Marijuana Business Magazine is currently published six times per year by Marijuana Business Media, a division of Anne Holland Ventures, Inc. POSTMASTER: Please send address changes to Marijuana Business Media, 1005 Main Street, Suite 2130, Pawtucket, RI 02860.
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MarijuanaBusiness MagazineInsights for America’s cannabusiness entrepreneurs & investors
About This MagazineBrought to you by the editors of Marijuana Business Daily – the most trusted professional news source for the cannabis industry – Marijuana Business Magazine is the first and only cannabusiness trade journal.
Comments & letters to the editor should be emailed to [email protected].
Subscriptions are currently free-of-charge to qualified professionals and major private equity investors in the U.S. Sorry, print subscriptions are not available outside the U.S. or to individuals outside the industry, but you can always read the latest issue in digital format online at MJBizMagazine.com.
• To Start a Subscription: Apply for a complimentary print subscription at MJBizMagazine.com. It’s quick and easy. If you qualify, you will start receiving your issues within 60-90 days.
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Edibles Regs
New States
MergersStocks
Nat’l BrandFed Action
Legal IssuesLarge Grows
TourismBanking
Trend Watch:2015
SUBS
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Jan-Feb 2015 $12.95
MarijuanaBusiness Magazine
Insights for America’s cannabusiness entrepreneurs & investors VOL 2 • ISSUE 1 • JAN-FEB 2015
Also in This Issue:Investing & Funding Corner ....p. 21Persistence Pays O�...............p. 30Lessons Learned FromCannabusiness Pros ...............p. 40State at a Glance: AZ ..............p. 45
page 12
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Jan-Feb 2015 • MJBizMagazine.com 7
Volume 2, Issue 1 JAN-FEB 2015
Table of Contents
In This Issue8 . . . . . . . . . . . . . From the Publisher Happy New Year, Indeed!
11 . . . . . . . . . . . . Letters to the Editor Gender Bias?
12 . . . . . . . . . . . . Cover Story Trend Watch: 2015
21 . . . . . . . . . . . . Investing & Funding Corner 5 Investing Tips
22 . . . . . . . . . . . . Dispensary Business It’s All in the Numbers
29 . . . . . . . . . . . . Cannabusiness by the Numbers Marijuana Business Fees
30 . . . . . . . . . . . . Ancillary Spotlight Persistence Pays Off
34 . . . . . . . . . . . . Niche Overview Industry Snapshot: Edibles
40 . . . . . . . . . . . . If I Had to Do It Again Lessons Learned From Cannabusiness Pros
45 . . . . . . . . . . . . State at a Glance Arizona
47 . . . . . . . . . . . . Map Cannabusiness Opportunities Across the Country
48 . . . . . . . . . . . . Notable Quotes Insightful Observations From Industry Insiders
Edibles Regs
New States
MergersStocks
Nat’l BrandFed Action
Legal IssuesLarge Grows
TourismBanking
Trend Watch:2015
SUBS
CRIB
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Jan-Feb 2015 $12.95
MarijuanaBusiness Magazine
Insights for America’s cannabusiness entrepreneurs & investors VOL 2 • ISSUE 1 • JAN-FEB 2015
Also in This Issue:Investing & Funding Corner ....p. 21Persistence Pays O�...............p. 30Lessons Learned FromCannabusiness Pros ...............p. 40State at a Glance: AZ ..............p. 45
page 12
CA●
WA
OR●
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NV
AZ
MT
WY
NM
ND
SDID
UT
NE
KS
OK
TX
MN
WI
IA
MO
IL IN
MI
OH
PA
NY
KY
WVVA
TNNC
SC
GAALMS
AR
LA
FL
CT
MA
RI
VT NHME
NJ
MDDC
CO●■
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DE
AK✶
HI
- States that have passed medical marijuana laws- States that have passed both medical marijuana & recreational cannabis laws- States with operating medical marijuana dispensaries- States with planned medical marijuana dispensaries- States with operating recreational marijuana shops- States with planned recreational marijuana shops
Note: This map does not include states that have legalized only CBD-based oils.
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© 2015 Marijuana Business Media, a division of Anne Holland Ventures, Inc. All rights reserved.
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From the Publisher
We are extremely excited to ring in the new year with the marijuana industry rolling forward at an incredible pace.
Cannabusiness developments are happening so quickly that a few months seem to equate to a year or more in any other business. Internally, our staff has coined the phrase “marijuana years” to refer to how rapidly this industry continues to accelerate. So in that context, we wish you all a prosperous 2015.
Here at Marijuana Business Media, the marketplace acceleration finds us ramping up to deliver even more trusted content, networking and market opportunities to the industry in the calendar year ahead. Some highlights:
• This issue of the magazine represents our previously promised shift to a six-times-a-year publishing schedule instead of quarterly.
• Marijuana Business Daily has significantly increased editorial coverage to include a full-length feature article plus several news briefs every business day, providing a more regular and steady flow of original and expert industry- specific content.
• Surveys supporting the 2015 edition of our industry-leading data publication, the Marijuana Business Factbook, are scheduled for release in early 2015. Complete yours as soon as it arrives in your inbox!
• We’ve committed to hosting a second national industry gathering: the Spring Marijuana Business Conference & Expo. Join us from May 19-21 in Chicago for an event featuring the highly curated educational content and unparalleled marketplace opportunities you’ve come to expect from Marijuana Business Media. As part of that event, we’ll also host our 5th Year Kick-Off Celebration to celebrate the success of the industry and our own business.
• In the fall, we will all return to Las Vegas even bigger and better than before. I want to thank the over 3,200 industry professionals who made the 2014 Marijuana Business Conference and Expo a testament to the strength and purpose of our community.
As I often say to our staff, onward!
Sincerely
George JagePresident & Publisher, Marijuana Business [email protected]
Happy New Year, Indeed!
Jan-Feb 2015 • MJBizMagazine.com 11
Letters to the Editor
GENDER BIAS?We read your feature on gen-
der bias in the cannabis indus-try with interest; we hold many of the women you spoke to in high esteem. We salute their work as employees, executives and owners of marijuana dis-pensaries, gardens and canna-bis businesses. And as female compatriots in the marijuana industry, we feel the need to respond to comments made in the article.
High Times is celebrating its 40th anniversary, and we are doing so as a stronger, bigger, better team than ever, with 13 women as full-time employees, and many more working with us as freelancers. Women make up almost half our staff. Our publisher, managing editor, director of digital media, direc-tor of digital marketing and event designer, our lifestyle editor, our licensing man-ager—all are women, in posi-tions of power at a magazine celebrating 40 years in print, and still growing. We are proud of what we have accomplished, and while we don’t deny that there is always work to be done to combat sexism, and ensure equality for men and women, we take issue with Dr. Lakisha
Jenkins’ comment in the article:
…She was incensed after she attended the Medical Cannabis Cup in Los Angeles sponsored by High Times magazine. One of the events at the Cup was a wet T-shirt contest, which obviously has nothing to do with medicine.
Dr. Jenkins is mistaken about where she was when she witnessed this. There has never been, nor will there ever be, a wet T-shirt contest at one of our Cups, though they certainly do occur at other can-nabis events. Cannabis Cups are held to celebrate the gift of cannabis, the growing can-nabis industry, and the march towards legalizing marijuana for all responsible adults. High Times is not in the business of censoring our advertisers. Our vendors, who purchase booths at Cannabis Cups and ads in the magazine, are free to promote their product any way they like. However, although High Times gives people the means to promote their prod-ucts, our editorial and event staff is not responsible for vendors’ actions. A controver-sial Benetton ad in Vanity Fair does not justify accusing the
magazine of racism; the issue is with the ad itself, created by Benetton. Do not use an advertiser’s actions to depict High Times as sexist. We are a proud team of strong women and men, working together for a great cause. Forty years at the forefront of that fight has given us great strength, and we draw on that to carry on with our heads held high. Untrue and unfair accusations will not stop us. Fair journalism practices require you to investigate Dr. Jenkins’ allegation and print a retraction. - ROXANNA ALLEN, CATHY BAKER, KELLY BARBIERI, JEN BERNSTEIN, AUDREY BULLARD, ANN MARIE DENNIS, MARY JANE GIBSON, CORI KIDNEY, ELISE MCDONOUGH, MARY MCEVOY, SARAH MUHLRAD, ZENA TSARFIN, NOORE YAZIGI
Want to comment on a story or topic you read about in Marijuana Business Magazine? Submit a letter to the editor by email to [email protected]. You must submit your first and last name – no anonymous letters will be considered.
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MarijuanaBusiness Magazine
Insights for America’s cannabusiness entrepreneurs & investors VOL 1 • ISSUE 5 • FALL 2014
FORMERLY CANNABUSINESS MAGAZINE
page 18
2014
SHOW AGENDA
SEE PAGES 3-5
Also in This Issue:Marijuana Stock Trends .......... p. 27Election Preview......................p. 38How I Entered the CannabisIndustry.................................... p. 52State at a Glance: CT............... p. 57
BattlingCannabusiness
Sexism
12 MJBizMagazine.com • Jan-Feb 2015
Cover Story
Those who fear change shouldn’t own a cannabis company. The marijuana business undergoes more shifts, twists and turns in several months than other industries experience over the
course of several years. This creates unex-pected challenges and new headaches for cannabis companies. But it also creates new opportunities. So what can you as a cannabusiness professional expect in 2015? More change, of course. But also more progress and growth as the industry takes its next steps toward legitimacy.
by Tony C. Dreibus & John Schroyer
From banking to cannabis stocks to cultivation,a look at what’s in store for the year ahead
Jan-Feb 2015 • MJBizMagazine.com 13
MMJ effort – has promised an attempt to get the state Legislature to legalize medical marijuana. If that fails, Morgan said Sunshine State voters will see MMJ on the ballot again in 2016.
Beyond that, it’s anyone’s guess in terms of which states will legalize MMJ or rec in 2015.
“You never know with state legislatures,” said MPP spokes-man Mason Tvert.
Regardless, 2015 will still shape up to be an important one even if no states legalize, as activists across the country will begin laying the serious groundwork for important measures in 2016. MPP is sup-porting recreational marijuana pushes for 2016 in a handful of states already, including Ari-zona, California, Maine, Mas-sachusetts and Nevada. Sepa-rate campaigns have also begun for ballot measures legalizing recreational cannabis in Missis-sippi, Rhode Island and other states. The momentum built in 2015 could have a direct impact
To help you get an idea of what’s coming down the pipeline, Marijuana Business Magazine dusted off its crystal ball and asked several indus-try leaders to read the tea leaves for the year ahead. We then came up with a list of 10 important trends to watch in 2015.
Some of these trends arise every year or started in 2014 and will likely gain steam in the coming months, while others are relatively new develop-ments that we expect to crop up soon. All will have a big impact on the future of the industry and your business.
Trend #1: New MMJ, Rec States
Which states will legalize medical or recreational mari-juana next? It’s an annual ques-tion of massive importance to the cannabis industry. The more states that legalize, the bigger the overall market – and the more business opportuni-ties in general.
Last year was a good one on this front: Minnesota and New York legalized medical mari-juana, while voters in Alaska, Oregon and Washington DC approved recreational mari-juana. These moves will create hundreds of millions of dollars in revenues and pave the way for thousands of new startup companies.
So what’s in store for 2015? Given that it’s not an election year, any movement would have to come via state legis-latures. The Marijuana Policy Project (MPP) – a leading lob-bying group working on legal-ization measures – estimates that there might be enough support among lawmakers in Rhode Island and Vermont to push through recreational marijuana laws this year. Wash-ington DC’s city council could move in that direction as well.
On the medical side, Florida could be back in play after voters sunk a legalization measure in 2014. Orlando trial attorney John Morgan – who largely bankrolled last year’s
14 MJBizMagazine.com • Jan-Feb 2015
on whether these measures qualify for state ballots – and ultimately gain enough voter support – in 2016.
Trend #2:Banking Progress
Banks will likely become more familiar – and comfort-able - with cannabis-related guidance issued by government agencies last year, leading to a potentially dramatic increase in the number of financial institu-tions willing to service canna-bis companies.
The federal guidance in essence allows banks to open accounts for the marijuana industry if they take a host of specific steps, such as verifying that the businesses are prop-erly licensed and informing the government if they suspect any wrongdoing. The guide-lines didn’t have an immediate
positive impact, and in fact some banks actually stopped serving the industry because they felt the guidance was vague. However, the situation began to loosen up later in 2014 – setting the stage for this year.
While the guidelines are stringent, companies that want to “get banked” will be able to do so in 2015 if they follow the policies set forth by the agencies, said John Sullivan,
the chief executive officer at First Security Bank of Nevada, which has opened accounts for marijuana companies.
“I am very hopeful in the next six months any members of the industry who want to go through the pain of the forensic process - you will be able to get banked,” he said at the recent Marijuana Business Conference and Expo in Las Vegas.
Many banks remain hesitant to work with cannabis com-panies. But more are doing so (an estimated 100-plus in 2014). And some, such as First Security in Nevada, are even willing to talk about it pub-licly. If these banks are suc-cessful, expect many more to follow their lead.
“Cannabis banking is going forward despite the tension” with federal laws, said Paula Givens, owner of Industry Assurance & Oversight LLC, which works with banks to service the marijuana industry.
We also could see movement on the federal level in regards to banking. Read more on this in the next trend below…
Trend #3:Federal Action on Marijuana Issues
Is 2015 the year we’ll finally see the federal government move on key marijuana legislation?
Some observers think so. Don Murphy, a federal policy
analyst with MPP, sees reason to be optimistic when it comes to the 2015 Congressional ses-sion. Especially when it comes to cannabis banking.
“The banking thing has got to be resolved sooner rather than later. I think it’s the first thing that’ll get fixed,” Murphy said. “If the Senate passed a bill over to the House, I think the House would pass it, and I
think that’s the first thing that will happen.”
Murphy said the Republican takeover of the Senate is no reason for marijuana activists to be concerned. Many conser-vatives in Congress support not just states’ rights when it comes to governing the mari-juana trade, but also individual choice on the matter.
There are at least a dozen marijuana-related bills hover-ing in limbo in the U.S. House of Representatives. As of late
2014, not one of those bills had been voted on by a committee or even a subcommittee, let alone the full House or Senate. And many date back to early 2013 – which means they’ll have to be re-filed.
But the federal government has shown it can move forward with marijuana-related mea-sures. President Barack Obama signed a federal Farm Bill in 2014 that included a biparti-san provision to allow states that have already legalized
Invest in the Next GreatAmerican Industry
16 MJBizMagazine.com • Jan-Feb 2015
industrial hemp to grow the crop for research purposes. In addition, the House passed an amendment to a Financial Services Appropriations bill to make it illegal for the govern-ment to penalize banks that work with legal marijuana businesses, though the Senate has yet to take action on that measure.
That bodes well for the potential of federal action on at least one marijuana measure in 2015.
Trend #4:Mergers, Acquisitions & Consolidation
Mom-and-pop businesses, beware: Bigger companies are coming for you.
Growth in the cannabis industry will lead to further merger and acquisition activity this year as larger established companies – particularly on the ancillary side of the industry - seek out smaller, underfunded businesses to gain leverage and expand.
At the same time, some marijuana markets are matur-ing, and only the strongest are able to survive. Dispensaries, edibles companies and culti-vation sites in these markets are starting to gobble up their weaker competitors or push them out of business com-pletely. Additionally, some companies in the edibles space are looking to expand nation-ally, and it’s possible two of them will team up via a merger.
Smaller companies tend to
thrive in heavily regulated industries because larger firms are afraid to enter volatile markets, said Leslie Bocskor, managing partner of the Las Vegas-based advisory firm Electrum Partners and chair-man of the Nevada Cannabis Industry Association. That’s especially true in the cannabis sector, which has long been a cottage industry.
But the industry in general has become more stable, and the sheer volume of small, local companies makes the mari-juana business ripe for M&A activity down the road.
Everything from software providers and security com-panies to human resources firms focusing on the cannabis industry have opened in recent years. These types of busi-nesses will become targets for larger, well-funded companies looking to expand.
The industry “will gradually see bigger and bigger players” move into the market as they feel the rewards outweigh the risks, Bocskor said.
We’re already seeing this play out with some publicly traded companies. Viridian Capital & Research data shows that of the 70 companies in its stock index, 21 completed a total of 33 acquisitions in the first three quarters of last year. That trend will continue in 2015 as marijuana businesses become more mainstream and larger firms look to expand the size and scope.
Investment money is also rolling in, giving companies the ability to swallow up their competitors.
Trend #5:Cannabis Stock Activity
Volatility and fluctuation will define the market for publicly traded cannabis companies.
Last year saw a surge in the number of companies trad-ing on the over-the-counter markets. Many of them will likely sputter this year, as they have no real business model to speak of and are simply trying to capitalize on a hot new mar-ket. However, we’ll likely see a new wave of public cannabis companies take their place.
Institutional investors are beginning to test the waters, while average stock investors are clamoring to put their money in marijuana given the industry’s continued growth, prominence and mainstream acceptance. These trends will lure many cannabis compa-nies – both legit businesses and shady operations – to the public markets.
Businesses involved in licens-ing, real estate, compliance and technology will likely crop up in the next year, and some will likely seek a move to over-the-counter markets. And several companies that actually handle marijuana themselves – or do so through subsidiaries – will roll the dice and go public.
Moving from a private company to one that’s publicly traded won’t be without its hurdles – regulations by the Securities and Exchange Com-mission could make the shift difficult. Most dispensaries, growers and infused prod-ucts companies will probably
Jan-Feb 2015 • MJBizMagazine.com 17
continue to operate privately because it’s unclear how the SEC will respond.
Still, with the market evolv-ing so quickly, more companies will look to go public in 2015. And don’t be surprised to see a cannabis company debut on a major exchange such as the Nasdaq or the New York Stock Exchange.
Trend #6:National Expansion & Brand Growth
As marijuana legalization expands, established dispen-saries, makers of edibles and infused products, and ancillary companies will increasingly attempt to grow nationally.
Companies in mature marijuana states are poised to expand into some newer mar-kets, including Illinois, Mas-sachusetts and Nevada. Others are hoping to get involved in Minnesota and New York on the MMJ side and Alaska and Oregon on the recreational
side.One trend helping pave the
way for this type of expansion: Regulators in many states are looking for businesses that have a proven track record in the cannabis industry to avoid fly-by-night firms that may not have the know-how to navigate rough legal waters, said Kris Krane, the managing partner for the cannabis consultancy 4Front Advisors. The goal is to bring experienced players into the fold and boost the chances of success, rather than have only those who have never done it before control the industry.
Established firms have and will continue to partner with locals who want to get in on the business opportunities, while some will license their products to startups in other states, Krane said.
“Since most licensing pro-cesses tend to favor locals over folks from out of state, but also award points for cannabis experience, it tends to be a winning combination to team
an established brand with local applicants,” Krane said.
Despite the industry being in its infancy, some companies are already getting a foothold using branding and expansion.
Edibles companies like Bhang Chocolates, Dixie Brands and G FarmaLabs serve multiple states and are racing to further expand. Dispensary own-ers and experienced growers in Colorado, California and Washington State have been part of teams that won licenses in Nevada and other markets. Testing labs are expanding into multiple markets. And ancil-lary business – such as soft-ware companies and legal firms – have built household names in the industry.
Trend #7:New Legal Issues
For years, the biggest legal threat to the industry was the fact that marijuana businesses were essentially illegal from the federal perspective. With
that worry abating, a new host of legal issues - from product liability and asset protection to human resources and trade-marks - could arise this year.
While these legal issues are prevalent in many tradi-tional industries, they haven’t cropped up too often in the cannabis sector. But that could change this year.
Attorney Manny Singh said that a lack of liability insur-ance and asset protection is a “gaping hole” in the cannabis
industry, and that either businesspeople will wise up, or they’ll eventually get sued for some reason or another and learn the hard way.
Additionally, publicly traded cannabis companies could be the target of shareholder lawsuits, while edibles manu-facturers could face legal action by customers tied to potency, labeling or safety issues. Plenty of cannabis companies are also ignorant on the legal differences between patents,
copyrights and trademarks. This will set up some interest-ing legal battles over intellec-tual property.
Another problem: Many cannabis companies don’t have drug testing or consumption policies, given the cultural side of the industry. “There are some policy changes that will have to happen” regarding personnel management, said cannabis industry consultant Todd Mitchem. “There are probably 1,000 HR violations flying around the industry, and that’s just within one week.”
The legal issues facing the industry go far beyond what’s discussed here. There are many, many more that could arise in the year to come.
Ned provides an operational system structure that helps clients establish bank accounts to receive electronic deposits of the money collected from customers’ purchases, as well as, create ready to use backup accounts to avoid banking disruptions.
With these accounts his dispensary owner clients are able to conduct normal business banking activities (i.e. check writing, wire transfers, debit card access with a Visa or Master Card branded debit card).
“I more than advise - I guide clients to financial programs tailored for them. That support includes help in setting up systems for taking non-cash payments from customers, and help in establishing the needed business bank accounts to assure continuous banking services.”
“If you are one of those owners, I am happy to discuss your operations. We can talk about primary or essential backup bank accounts, as well as, explore asset protection strategies.”
Ned Frisius Attorney at Law
Let Ned’s California Law Practice coordinate all the details Ned Frisius, Attorney At Law Phone: (925) 254-2200 Email: [email protected]
Jan-Feb 2015 • MJBizMagazine.com 19
Trend #8:Emergence of Large Grows
Behold the era of the mas-sive grow.
Cannabis cultivators in some key markets are poised to grow significantly this year as they look to capitalize on economies of scale and mass produce marijuana - lowering prices and making it harder for little players to compete.
Colorado, which recently opened up its market to wholesale cannabis, could be on the forefront of this trend. The state recently adopted new regulations that allow indoor producers to increase the number of plants they grow,
depending on their license. Cultivators in some states
are also moving to green-houses or even outdoor grows, where they can produce many more plants, more efficiently. In states where sunlight is abundant, a large operation won’t spend as much money on electricity because it could take advantage of the sun-light. Outdoor cultivation also means producers won’t be lim-ited by the amount of ware-house space they can procure.
While there will always be room for smaller growers, larger producers will begin to dominate in areas with a robust wholesale market. Large growers will improve profitability as they sell on
volume, which could lead to true vertical integration in the industry becoming a thing of the past, industry experts said. That might not play out for years, but we’ll likely see some strong signs of this in 2015.
“I may not have to have my own marijuana facility because someone can do it for me,” said Tripp Keber of Dixie Brands, which makes infused products and grows some of its own cannabis.
Keber added that growers should “go big … or you’re going to get pushed out of the market.”
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Jan-Feb 2015 • MJBizMagazine.com 21
Investing & Funding Corner
Investing in the cannabis industry isn’t for the faint of heart. Even experienced investors who have pumped millions of dollars into companies in other sectors make missteps when they turn their attention to marijuana. Here are �ve tips for investors interested in placing bets on cannabis companies, courtesy of Leslie Bocskor of Electrum Partners:
5 Investing Tips
Speak to customers and vendors of the target company. Prepare your questions. Find out if the business provides good, great or poor service. A key question: Do they pay their bills in a way that is satisfactory?
Look for companies that are: recession resistant, counter cyclical, have a “razor blade” factor (think Gillette) when possible, or have a ”cookie cutter” component (think McDonald’s).
Bet on the team �rst. It’s often said that an “A” team with a “C” project is preferable to a “B” team with an “A” project. Do not be afraid to conduct background checks on all C-level executives, and even controlling/major shareholders.
If you do not get references that support the underlying assumptions that are being made, ask for them. These can provide critical insight into the market, opportunity, challenges, and the business at large.
Team, market, project, exit: all pieces have to be in place. Do you trust the team with your money and have they gotten to liquidity for investors (ideally) before? Is the market big enough and can they compete? Does the project have the necessary extensibility to make the risk/reward ratio make sense? Is the team thinking about exits?
22 MJBizMagazine.com • Jan-Feb 2015
Trevor Smith believes tracking, analyzing and comparing numbers is the key to success for dispen-saries – and that neglecting them can lead to failure. “If a business is not using analytics, it won’t survive the long-term,” said Smith, vice president of Herbal Wellness Center of Phoenix.
A former private equity financial analyst and accounting soft-ware entrepreneur who creates spreadsheets as easily as most people breathe, Smith got the chance to prove his theories work in reality when he joined an existing Arizona dispen-sary as a partner in April 2014. The founder, a real estate and construction entrepreneur who won a license from Arizona in 2012, knew his dispensary could be doing better… but wasn’t sure how.
How to raise profits using business analytics
Dispensary Business
by Anne Holland
It’s All in theNumbers
Jan-Feb 2015 • MJBizMagazine.com 23
First, Smith sifted through the dispensary’s historic patient data and carefully observed operations. Then he sprang into action, revamping systems, processes and reports from stem to stern. In just 30 days, the dispensary reduced asset losses by 85% and increased EBITDA (earnings before interest, taxes, deprecia-tion and amortization – aka the bottom line) by 10 times.
Here are four key numbers-based strategies he employed:
Budtenders help customers inside Phoenix-based Herbal Wellness Center, which aims to cater to the “perfect” patient that will help the business thrive.
Trevor Smith
#1 . Track Two Key Logs to Secure Assets
The dispensary now requires staff to update two critical activity logs on a daily basis:
#2 . Compile Critical Daily Reports to Measure Success
Smith used small business accounting software to pro-duce a series of reports that
• The Cash Log: Anytime cash changes custody – for example from a register to a safe – it must be noted in the cash log along with two on-site employee signatures. • The Inventory Log: Product inventory is kept in numbered jars that have been pre-weighed when empty. That way it’s easy to count the store’s entire inventory in just 20 minutes, of which roughly five minutes may be used to account for discrep-ancies – such as weight changes due to moisture loss.
give him almost a 360-degree view of all dispensary activi-ties, even when he’s not on-site himself. He made the input as efficient as possible, so store managers spend no more than 75 minutes per day on admin-istration and reporting, includ-ing cash and inventory logs. His favorite reports include:• Average ticket price by budtender• Discounts by budtender• Total take per store per day• Number of first-time vs. return-ing patients per day and week
…continued on page 25
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26 MJBizMagazine.com • Jan-Feb 2015
#3 . Give Your Staff PowerOnce systems and pro-
cesses are set up, Smith is firmly against staff micromanagement.
“You have to empower them,” he said. “Store managers can handle 99% of things. We hire good managers and budtenders who show a willingness to make a career out of this. We hire through referrals and look for trust, accountability and dependability. Typically our staff have some prior affiliation with the industry, with a clean criminal record.”
Smith also noted that building a successful company involves having the right team in place so that when you step away, every-thing still runs smoothly.
“If your business can’t run itself, it’s not a business. It’s work,” he said. “You want pro-cesses, systems and staff that don’t require a uniquely gifted person to be the one pulling the strings all the time.”
An outside shot of Herbal Wellness Center, which has grown in part by putting an emphasis on business analytics.
Herbal Wellness employees pose for a staff photo. The dispensary credits some of its success to empowering workers and avoiding micromanagement.
…continued from Page 36
Jan-Feb 2015 • MJBizMagazine.com 27
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Smith’s Advice for Dispensary Startups
What the most critical element for an upstart dispensary?
Ensuring steady inventory, Smith said.
Like others in the industry, Smith has horror stories of master growers who could talk a big game but not back their words with actions – leaving the dispensary with half-full shelves.
“If your grower doesn’t have proof they can perform on a large scale, keep looking,” he said. “Ask if they have an overall process, how they optimize water use, spot theft, understand the difference between bad versus helpful bugs, etc. Ask about supply chain optimization.”
Smith cautioned that basement growing experience does not necessarily translate to success in a larger warehouse.
Product quality is also a critical concern. In most regions, the entrenched black market will be your biggest competitor – and well-run, licensed dispensaries can’t beat black market prices. However, Smith noted that dispensaries can beat the black market with quality.
#4 . Focus on Your Best Customers
One of the success metrics Smith is proudest of is that he was able to reduce the dispensa-ry’s customers by 18% during his first 30 days on the job. That’s right, reduce.
The old saying “quality over quantity” applies to the world of dispensaries, Smith said.
“To be successful, you need to understand who your perfect patient is, how to find those people, which products they pre-fer, what the trigger points are to gaining their loyalty and how to get them to tell their friends about you,” he said.
If you are focused on increas-ing foot traffic, but not con-cerned with customer quality, you may not attract the best customers. And you won’t stand out in any way vis-à-vis the other dispensaries that are com-peting for their business.
Next steps… Smith has grand plans for
Herbal Wellness.“I could see a franchise as a
long-term strategy,” he said. The Arizona cannabusiness commu-nity is a tightknit group that has been watching Smith’s tactics with a great deal of interest. He and his business partner have already merged with a second dispensary in another area, and they’ve acquired a commercial cultivation license. They antici-pate further acquisition in 2015 as they develop a larger brand.
Smith even pitched the inves-tors affiliated with The ArcView Group at a summer pitch event in Chicago. ❧
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Jan-Feb 2015 • MJBizMagazine.com 29
Cannabusiness by the Numbers
Marijuana Business FeesBy Marijuana Business Magazine sta�
Cannabusiness entrepreneurs in many states have to deal with mountains of red tape before starting their companies. Part of this often includes hefty charges to apply for and maintain a license. Here are a few expamples of medical marijuana business fees for dispensaries and cultivation sites from across the country:
ColoradoApplication fee:
$6,000 - $15,000 for dispensaries depending on size$1,000 for cultivators
Initial license fee:$3,000 - $13,200 for dispensaries
$2,200 for cultivators
Annual renewal fee:$3,300 - $13,800 for dispensaries
$2,500 for cultivators
ConnecticutApplication fee:$1,000 for dispensaries$25,000 for cultivators
Initial license fee:$5,000 for dispensaries$75,000 for cultivators
Annual renewal fee:$5,000 for dispensaries$75,000 for cultivators
IllinoisApplication fee:$5,000 for dispensaries$25,000 for cultivators
Initial license fee:$30,000 for dispensaries$200,000 for cultivators
Annual renewal fee:$25,000 for dispensaries$100,000 for cultivators
NevadaApplication fee:$5,000 for dispensaries$5,000 for cultivators
Initial license fee:Up to $30,000 for dispensaries
Up to $3,000 for cultivators
Annual renewal fee:$5,000 for dispensaries$1,000 for cultivators
Washington, D.C.Application fee:$5,000 for dispensaries$5,000 for cultivators
Initial license fee:$10,000 for dispensaries
$5,000 for cultivators
Annual renewal fee:$10,000 for dispensaries
$5,000 for cultivators
30 MJBizMagazine.com • Jan-Feb 2015
After signing a petition to get medical marijuana onto the Massachusetts ballot several years ago, serial entrepreneur Dorian Des Lauriers immediately began to consider the business opportunities. “I looked at the dispensary model,” he explained, “but the
three worst words for a business are ‘not-for-profit.’” While some states allow for-profit dispensaries, the measure Des Lauriers backed – which voters ultimately passed in 2012 – stipulates that medical marijuana cen-ters operate as nonprofits.
Persistence
by Anne Holland
Ancillary Spotlight
Testing lab turns local challanges into multi-state business
Pays Off
Jan-Feb 2015 • MJBizMagazine.com 31
Des Lauriers then spent months researching other opportunities, networking and developing a business model. The result: He founded ProVerde Laboratories, a million-dollar facility to handle extrac-tions, formulation and testing.
“On the medical side, it makes absolute sense because everything you put in your body is tested and should be tested,” he said.
The only problem? He got moving a little too early.
Although the state made medical marijuana legal in 2012, the licensing process for dispensaries has been bogged down by controversy and delays. As a result, the first dis-pensaries aren’t slated to open until well into the first quarter of 2015 – months later than initially planned.
“We were ready to go, but you could hear crickets outside the door” of the original Mas-sachusetts facility, he said.
Shifting GearsDes Lauriers, however, has
a temperament suited for entrepreneurialism.
“I’m persistent. I can jump off a cliff and then make a parachute, or find someone to help me before I hit bottom,” he said. “I am a problem solver – I go over, under, around or through it until I reach my objective.”
In order to keep the busi-ness alive while Massachusetts meanders its way toward opening day, the ProVerde team sought out every pos-sible alternate market, including:
• Selling services directly to local patients and caregivers.
• Retrofitting a used ambu-lance as a mobile extraction lab to travel around the state of Maine.
• Opening full-time branch offices in both Maine and Rhode Island.
• Serving as extraction and formulation consultants to MMJ companies located in other regions of the United States.
In fact, the delay in dispen-sary licensing has opened up long-term business opportuni-ties that Des Lauriers hadn’t initially considered.
“We would not have spent our time expanding north and south if Massachusetts had been ready for us,” Des Lauri-ers admitted. “Now we plan to expand nationally.”
Dorian Des Lauriers
ProVerde Laboratories - founded to provide cannabis testing in Massachusetts - has branched out into other business areas as it awaits the launch of the state’s dispensary program.
Plus, he sees opportunities to expand services: “There’s a whole world of testing – edi-bles, soil, etc. There’s all this need,” he said.
“To compete, keep your eye on the ball, not necessarily on every-body else,” Des Lauriers said.
For example, ProVerde is built around high-end services
efficient – samples only take five minutes to run.
The lab is also extremely environmentally friendly.
“We use green technology that uses CO2 instead of nasty chemicals that are hard to store or dispose of,” Des Lauriers said. “We wind up with two to three gallons of waste after two or three years versus five gal-lons a week.”
Stop Fundraising and Get to WorkAs a member of cannabusi-
ness investing circles, Des Lauriers also has a first-hand view into what some describe as a funding feeding frenzy.
“I see more and more inves-tors pouring money into the space. Investors have a fear of missing out, so they’ll pour in
Beating the Competition by Being Unique
Aside from persistence and flexibility, Des Lauriers shared others insights for success as an MMJ entrepreneur.
An important one: Seek out and focus on key differ-ences that make your business unique in its field.
and is a member of the Mas-sachusetts Biotech Council as a drug development company.
“We put technology at the forefront. The science is mind-blowing,” Des Lauriers said. The lab is ISO-certified for a variety of tests and can extract CBD at the molecular level. Its equipment is unusually …continued on page 43
34 MJBizMagazine.com • Jan-Feb 2015
Data, trends and challengesby John Schroyer
Afew years ago, the word “edibles” was little-known outside cannabis circles. But the term has recently worked its way into the general lexicon in many states – due in part to the rising popu-larity of cannabis-infused goodies but also to some controversy these products have generated.
Edibles now rank as a top-seller at many dispensaries and retail stores. The variety of products on the market is increasing daily, with companies churning out everything from standard brownies to infused sodas, gummy bears, pills and oils. Edibles makers are also expanding into new states as they try to create national brands, signaling immense opportunity in the market.
Niche Overview
IndustrySnapshot:
Jan-Feb 2015 • MJBizMagazine.com 35
As the popularity of edibles has skyrocketed, however, manufacturers have had to adapt to ever-tightening regu-lations, evolving markets and constant barrages from can-nabis opponents worried about child safety.
Here’s a closer look at this seg-ment of the marijuana industry:
Market DynamicsThe estimated market for
general marijuana-infused products hit between $650 mil-lion and $850 million in 2014, with the lion’s share of that tied to edibles specifically, accord-ing to data from the Marijuana Business Factbook. Many dispensaries report that edibles account for at least a quarter of their overall sales, though that percentage can be much higher. Some recreational stores in
Colorado, for instance, say edibles make up nearly 60% of their total revenues. A handful of dispensaries and shops have even made edibles the center-piece of their businesses, focus-ing more on infused products than traditional raw cannabis.
Colorado currently ranks as one of the biggest edibles mar-kets in the country (both in its medical and recreational mar-kets) alongside California. Some MMJ states coming online in 2015 are also expected to have a robust edibles market. Nevada, for instance, could see a surge in demand for edibles, as it will allow registered patients from other states to buy cannabis and related products when dispen-saries open this year. Tourists might be more inclined to pur-chase edibles over raw cannabis – as we’ve seen in Colorado’s
recreational market – because they are less conspicuous and easier to consume.
“Nevada’s going to blow it up,” said Chad Tribble, the CEO of Mountain High Suckers in Colorado.
Illinois is expected to be a hot market for edibles products, too. Some of the biggest opportuni-ties in the edibles market going forward will be in Minnesota and New York. Both states legal-ized medical marijuana in 2014 but will bar sales of raw canna-bis. That will open the door for a robust edibles industry.
On the recreational cannabis side of the equation, edibles are gaining traction in Washington State after initial licensing and regulatory issues delayed their arrival on the market. Addi-tionally, the new rec markets of Alaska and Oregon are ripe
for edibles companies, though it will all depend on how final regulations turn out.
Business HurdlesChallenges for edibles mak-
ers differ from state to state, largely depending on the scope of regulations.
In some states like California there are no statewide regula-tions, so the edibles market is a free-for-all. In others, regula-tions are very strict, covering everything from testing, adver-tising and packaging to what types of companies can actually make edibles. This is especially true in states that have legal-ized medical marijuana more recently, such as Connecticut and Massachusetts.
These regulations can drive up costs and introduce logistical
issues, which cut into profit margins. On the other hand, strict regulations can help stabilize the market, ensuring that companies are all operating on the same playing field and producing safe and consistent products. This helps improve the image of edibles among the general public and strengthens business conditions.
Some markets have unique hurdles. In Washington State – where rec sales began in July - edibles companies initially found it difficult to secure a reliable supply of cannabis trim to use in their recipes. That in turn drove up prices of available edibles to the point where many recreational shops decided not to stock them.
In New Jersey, meanwhile, edibles are excluded in the state’s MMJ law. The governor approved
a measure to allow dispensaries to sell them – but only to minors with certain conditions.
Edibles companies also face political battles and perception issues in some markets. In Colo-rado, for instance, the Denver Police Department warned parents this past Halloween to be on the lookout for marijuana edibles masquerading as regu-lar candy. No incidents were reported, but the warning cast edibles in a negative light.
Colorado and other states are also taking a much closer look at edibles, so the possibility of regulatory fluctuations is high.
Trends to WatchLooking forward, keep an eye
on these emerging trends:
…continued on page 38
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…continued from Page 36• Lower Potency Products As recreational marijuana began to stand on its own two feet in 2014, many edibles manufactur-ers realized that highly potent products popular with heavy users are just too much for the newbies flooding the market. Stories surfaced of tourists ingesting too much and having horrible reactions, increasing scrutiny of the industry. The same trend is playing out in various medical marijuana markets, with older patients in particular complaining that edibles are just too potent these days.
With that as the backdrop, the industry has started looking at weaker products that cater to a broader client base. This is particularly true in Colo-rado, where new regulations on edibles manufacturers are helping fuel the trend toward
lower-potency products. Expect to see a greater selection of edibles with, say, 10 milligrams of THC vs. 100 milligrams.• Health Foods As the edibles market expands, plenty of manufacturers are looking outside the traditional brownie/cookie/chocolate scheme to sugar-free options that consum-ers still find tasty. One example: Morsel Bakery in California is planning on rolling out an infused granola bar, and it’s working on a vegan no-bake cookie as well. Owner Kyle Marshall said many customers are looking for healthier options than just candy that gets them high. Other trends on this end include gluten-free and low-calorie offerings.• Single Dose Servings A new rule in Colorado that goes into effect this year is a require-ment that all edibles come in single-dose 10 milligram
servings, which makes it harder for edibles newbies to eat too much in one sitting. There can be much more than a single dose in a single package, but the doses themselves will have to be parceled out. Many in the edibles market see that as a regulation likely to be picked up by other states, whether for medical or recreational rules.• “Shape” Branding As edibles companies expand into multiple states, plenty are starting to think about how to make their products more easily recognizable. Several are toying with the idea of stamping logos on their edibles or creating new brand-specific shapes for their foods, following in the foot-steps of popular candy products such as Hershey’s Kisses. That also means a likely downturn in edibles makers parodying more mainstream candies, and instead trying to establish their own identity.• Liability Lawsuits One likely trend that’s not as posi-tive for edibles manufacturers is the chance that a patient or consumer will ingest too much of an infused product and then sue either the manufacturer, the retailer, or both. Unless edibles companies are very careful, they might find themselves the target of such a lawsuit. Hilary Bricken, an attorney with Canna Law Group, warned hundreds of industry insiders during an edi-bles symposium in October that liability lawsuits are a very real danger. She said that it’s only a matter of time before an edibles maker is sued, which could open the litigation floodgates. ❧
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If I Had to Do It Again
Find the Right Balance…
Heather Manus, RNMedical director, Sacred Garden of Santa Fe; president, Genesis International Cannabis Solutions
When transitioning from a traditional career into the cannabis industry, it’s important to understand that you must cover your back at every turn. Remem-ber that safety nets do not yet exist in this industry. As a Registered Nurse, my
Hire for Cultural Fit…
Derek A. PetersonCEO/President, Terra Tech
Entrepreneurs in the can-nabis industry face unique hurdles from other busi-nesses. We must navigate political issues, weigh the risks of federal legality, and manage complex taxation, to name a few. In order to thrive, a cannabis business requires a team of special-ists to operate it smoothly
instinct to care for others before myself was a flaw in my business plan when it came to financial issues.
Kindness and compas-sion will always be character strengths, but must be bal-anced with a sensible busi-ness plan, financial struc-ture and contracts.
A healthy balance of pas-sion, curiosity, and business sense is vital for success in this emerging and rapidly growing industry. Recog-nize when you are providing more than you are receiving and evaluate your reasoning.
Be extremely careful about the people you choose to partner with; it could mean the difference between get-ting your big break, and breaking you in a big way.
LessonsLearned
From Cannabusiness Pros
Jan-Feb 2015 • MJBizMagazine.com 41
and ensure its continued growth.
Early on in my career in this industry, I thought a sound plan was to iden-tify the top people in each respective field and amal-gamate that group in order to achieve our goals. What sounded good in theory, failed in application.
Through experience I have found it is far more important to hire a team that integrates well. A single weak link can cause the entire system to collapse. Today when we add someone to the team, we first make certain that they function well within our culture and consider secondarily how their resume stacks up.
Take Active Role in Legalization…
R. Michael SmullenExecutive chairman and co-founder, AltMed
The failure of Amend-ment 2 in Florida (which would have legalized medical
Don’t Underestimate Your Financial Needs…
Matt WalstatterOwner, Pure Green
Make certain that you request and secure enough money from your investors to execute your business plan. This may seem obvi-ous, but it can be tricky.
We initially asked our investor for about $100,000 less than we ultimately needed. We had a business plan, but after we got the initial yes, we revisited the numbers and realized we were at least $50,000 short.
We had to go back and essentially re-pitch the investor. After we got roll-ing, we realized we needed an additional $50,000. We were able to return to the well once more, but not everyone will have that option. To avoid the same mistake:
• Make sure you have a business plan with projected expenditures for getting started, as well for monthly
marijuana) forced the execu-tive team at AltMed to step back and re-evaluate our business plan.
We knew that before we could determine our next steps, it was critical to evaluate our efforts to date and determine, what, if any-thing, we might have done differently.
The biggest lesson learned for AltMed is that we should have been more aggres-sive in helping to shape the narrative for the Vote Yes campaign.
One of the major reasons for the Amendment 2 short-fall was that the other side ran a strong campaign with a barrage of TV ads that were highly deceptive and filled with fear mongering. Very little was done in the last few weeks to counter those claims.
With our deep experience in healthcare sales and mar-keting, we could have taken a stronger position with United for Care in helping to shape the campaign, more than just making a financial contribution.
AltMed did participate in several debates, talks and interviews with several local TV news stations and news-papers, but these did not have the reach necessary to impact the other areas of the state.
42 MJBizMagazine.com • Jan-Feb 2015
operating costs.
• Include a sum for unanticipated contingencies in your plan. I recommend taking your total start-up budget and adding an addi-tional 30%.
• Make sure you have a plan to cover your operat-ing expenses for a sufficient interval going forward. Start with at least six months operating expenses in the bank.
Funding a new business can be complicated, but with enough foresight and plan-ning you can assure that you are financially prepared for whatever challenges arise.
Brace for Unique Challenges…
Jennifer BeckCEO and co-founder, Cannabase
If you’re exploring starting a cannabis business, remember that every opportunity comes with a price tag, and the cost of cannabis is steep (and not just for recreational users!).
If you choose to take the plunge, be prepared to have both your problems and oppor-tunities limited by cannabis’ federally illegal status. Access to banking, restrictions on out-of-state investments, and the lingering social taboos will play a large role in shaping your decisions throughout your company’s growth.
Today, marijuana is still a small town where powerful partnerships are being formed and businesses are popping up in untapped spaces. If I had to do it all over again, I would give up the sleep, freedom, and san-ity to build Cannabase all over again … but I would appreci-ate my final days with a bank account a little bit more. ❧
Jan-Feb 2015 • MJBizMagazine.com 43
good money after bad,” he said. “Some businesses that will ulti-mately fail are being artificially propped up.”
Given this reality, a fair share of entrepreneurs are infatuated with the idea of raising money over building a business.
“They have great pitches about what the future will be like. There’s an adrenaline rush, a thrill in pitching,” Des Lauriers said. “Unfortunately they may have an idea but they don’t have execution. They keep pitching but not spend-ing” the money they raise.
The take-away: Be prepared to turn your attention to the business after your initial capi-tal raise.
“At some point you have to stop telling your story and start doing the work,” Des Lau-riers said.
As for investors eyeing the cannabis market, Des Lauriers’ advice is to look for experi-enced entrepreneurs who not only have a defensibly unique business idea, but have proven they can “go over, under, around or through challenges” when inevitably reality doesn’t match plans. ❧
…continued from Page 32
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Trend #9:Stricter Edibles Regulations
Edibles producers could be in for a rough ride.
While the long-term pros-pects are as bright as ever – edibles demand is growing rap-idly in many markets – stricter edibles regulations are on the horizon in some states.
Colorado and Washington State have already been mov-ing down this path on the recreational side. In Colorado, edibles manufacturers were handed a new set of rules to follow in July, after they’d already been operating for months in the new rec market. The regulations included rules on potency, packaging and serving sizes.
In Washington State, the Liquor Control Board approved regulations in June, less than a month before its rec market began selling raw marijuana and cannabis products. Every edible in Washington and the package they’re sold in has to be approved by the state Liquor Control Board. Both Colorado and Washington also require
child-resistant packaging.Some industry leaders
say these are knee-jerk reac-tions to fear-mongering by police and those opposed to marijuana. Regardless, edibles requirements are likely to get tighter in other markets as edibles become even more mainstream.
More states will likely decide to err on the side of caution and either adopt similar laws to Colorado and Washington or come up with their own. Expect to see Alaska and Oregon grapple with this issue in 2015, too, as they look to develop rules and regulations on their emerging recreational marijuana industries.
Trend #10:Cannabis Tourism Wars
Competition for the canna-tourist is about to heat up.
Recreational marijuana busi-nesses in Colorado and Wash-ington State have seen an influx of customers from across the United States and as far away as South Africa and New Zealand. Some retail cannabis sales even generate the bulk of their sales from tourists. A host of new
marijuana-related companies – from those offering tours of retail stores to cannabis-friendly bed and breakfasts - have cropped up in both Colorado and Washington as well.
Expect these businesses to ratchet up their marketing, advertising and special deals – possibly on a national scale - to attract this demographic as the recreational marijuana indus-tries in these two states vie for tourists.
Another player is emerging as well. In Nevada, a reciprocity rule implemented this year will allow those with medical mari-juana permits from other states and countries to buy cannabis from local dispensaries, giving tourists another reason to visit a state built on selling vice. This could sway some tourists with MMJ cards in other states to visit Nevada over Colorado or Washington, if cannabis is top of mind.
Nevada even could play up the marijuana angle in a bid to lure a new type of tourist.
“We’re going to advertise it,” Nevada state Sen. Richard “Tick” Segerblom said. “It seems like a natural fit.”
This competition will only increase over time, as Alaska and Oregon develop their rec-reational industries and other states legalize cannabis for adults. ❧
…continued from Page 19
Jan-Feb 2015 • MJBizMagazine.com 45
State at a Glance
An initiative to legalize medical marijuana in Arizona barely squeaked through in 2010, with the measure passing by just 4,340 votes out of roughly 1.678 million cast. Since then,
though, the industry has set a steady pace of growth, with dozens of dispensaries and related businesses opening. In the state’s most recent fiscal year, which ended last June, the number of certified medical marijuana patients increased by over 40%.
Main initiative:Proposition 203
Cannabis business regulations: Heavy. Both dispensaries and edibles manufacturers must go through an extensive licensing and approval process and abide by numerous regulations. The state allows only one dispensary in each pre-defined area, and licensees were selected via a random lottery from among pre-qualified applicants. Dispensaries are the only operations allowed to grow medical marijuana for sale. There are no wholesale-only cultivation operations, though dispensaries can sell excess cannabis to each other.
Dispensary Structure: Nonprofit
Number of Dispensaries Allowed: 126
Estimated Number of Dispensaries Currently Operating: More than 80
Estimated Number of Patients: 55,332
Anticipated Annual Revenue From Marijuana Sales: $80 million to $100 million
What to Watch: • Cannabis advocates will begin building support in earnest this year for a 2016 ballot initiative to legalize recreational marijuana. One group is working on a broad initiative that would allow for the legal recreational use of marijuana by adults, as well as establish an industrial hemp industry in the state.
• Arizona is expected to open the process for a new round of dispensary applications by mid-2015. As part of the move, the state will allow operators in rural areas to move to more densely populated ones, which is expected to pit existing operators in high-density areas against ones wanting to move into their territory.
• Beginning Jan. 1, 2015, Arizona became the 10th state in the U.S. to allow the use of medical marijuana for the treatment of post-traumatic stress disorder. Medical cannabis cannot be used as the primary treatment for PTSD – it can only be used to help relieve symptoms tied to the ailment. But the addition of PTSD to the list still could boost patient numbers noticeably in 2015, which will lift revenues across the state’s MMJ industry.
Source: Marijuana Business Factbook and Marijuana Business Media staff
Arizona
Jan-Feb 2015 • MJBizMagazine.com 47
Cannabusiness Opportunities Across the Country
CA ●
WA
OR ● ✶
NV
AZ
MT W
Y
NM
ND
SDID
UT
NE KS
OK
TX
MN
WI
IA
MO
ILINM
I
OH
PA
NY
KY
WV
VA
TNN
C
SC
GA
AL
MS
AR LA
FL
CTM
A
RI
VTN
HM
E
NJ
MD
DC
CO ● ■
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DE
AK ✶
HI
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tes t
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■ ■ ● ◆ ■ ✶
© 20
15 M
ariju
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usine
ss Me
dia, a
divis
ion of
Anne
Holl
and V
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res,
Inc.
All r
ights
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48 MJBizMagazine.com • Jan-Feb 2015
Notable Quotes
“�e way it creates consumer loyalty is o� the hook.” Ben Cohen, co-founder of Ben & Jerry’s Ice Cream,
on how businesses that engage in socially conscious endeavors can create lasting bonds with customers.
Source: Keynote speech at the 2014 National Marijuana Business Conference & Expo
“We’ve had triple the amount of business we used to. Never a dull second now. We keep having to hire new people.”
Employee at a head shop in Maine on how the legalization of medical marijuana
helps stores that sell paraphernalia.Source: Marijuana Business Daily
“If you don't want us prosecuting [marijuana users] in your state, then get your regulatory act together.”
U.S. Deputy Atty. Gen. James M. Cole on the need for California to establish statewide regulations on the medical marijuana industry if it wants to avoid federal intervention.
Source: Los Angeles Times
“We’ve had to move to all-cash today. It was pretty frustrating. We lost some business when that went down and customers didn't have any cash on them.”
Kayvan Khalatbari, co-founder of the Colorado marijuana store Denver Relief, on how his shop was a�ected when a
provider of “cashless” ATM services abruptly deactivated hundreds of dispensary accounts across the U.S.
Source: Marijuana Business Daily
“I expected to see a bunch of stoners in rose-colored glasses and instead I saw doctors, medical professionals, and scientists and entrepreneurs.”
Mark Bradley, CEO of a company that won one of 55 provisional dispensary licenses from the state of Nevada, on his
expectations when entering the medical marijuana industry.Source: News 3
“�ere’s an old Japanese proverb – if you get knocked down seven times, get up eight times. We lost the �rst battle, but we’ll win the war.”
Attorney John Morgan, who pumped several million dollars into Florida’s medical marijuana ballot measure, on how supporters
will attempt to legalize MMJ again after the initiative failed.Source: Marijuana Business Daily