What’s the Long and Short Term of Cannabis Investing?
For investors or people who are looking to get into the cannabis industry, what's the long term and the short term? So, I know that states try to prevent you from acquiring licenses so you can't turn around and sell those licenses to somebody else. Is that still the case? Is that kind of universal?
Oh yeah. Well I'm not sure if I'm getting the question completely, but I'll tell you this, you definitely cannot sell your license. It's not a commodity that's up for grabs. You have to sell the entire company that's attached to it. Some states, like Nevada, don't even allow you to sell the company. You have to gift your license away, you're not allowed to sell it off anywhere. So you need to buy into it or it has to be gifted to you. From a legal term, no, you can't just sell your licenses as a commodity of any kind. They're firmly attached, non transferable, to the company itself.
That brings up a question when you're applying for a license. Do you form one company and then acquire all the licenses under that one company? Or do you form multiple companies that each own their own license, this way you can sell off each individual one as one piece?
That is a kind of a double edged sword. If you are one entity applying for multiple licenses, you have a higher chance of being awarded those licenses because they know you're a single entity and they want to award them to you, because you’re in it for the long haul. Essentially, you're not doing it to flip the licenses. If you create a bunch of different entities where each one is getting a license, then they look at you like “ah this isn't necessarily for the long run, they might just be doing this just to get the licenses and flip them”. So you might not get awarded all of them, or any of them. It looks like you're not going to be trying to flip licenses if you put everything under one roof essentially.
Now, let's say that something happens at your grow and they shut you down. Does it affect your dispensary if you're vertically integrated?
From my experience and with clients of mine, it doesn't have any impact. What does have an impact? It’s your relationship with whoever shut you down. From my standpoint, personally it would be the health department. They control everything. If the health department shut my grow down, then they're pissed off at me because I didn't follow directions. I didn't listen to the regulation, I didn't adhere to their authority, whatever it is, so therefore they're going to be pissed. They're going to be overly watching my other facilities as well now.
If you lose your grow, isn't that like all of a sudden you lose all your licenses?
No, they're not all chained together or anything like that. This is why I lumped everything under one entity. I got the first grow license in Puerto Rico that they ever issued, the first license of any kind actually. We had such a great relationship with the health department, the inspectors, the fire inspectors, the police, everyone, from just cooperating. Just from being an open book with them and very transparent about everything, helping them in education and bringing them in with every prOcess that we were doing. Just lots of communication really. Because of that, when we applied for our dispensary, they were like, “oh, it's Caribbean Green. We know they follow the rules and they go above and beyond whatever is required”. So there was no doubt, and we got issued the licenses. In fact, every license we applied for, we acquired. I think it was heavily attributed to the fact that we had a great relationship with the board and the sense that they knew us and could say “Oh it’s Caribbean Green. Not only do they do what they have to do, they go above and beyond. And they listened to us about everything we say to do, no matter how trivial it is. And they always do it immediately. We know they're going to do everything right.” Therefore, we get kind of fast tracked through and there's no second guessing on whether or not we get our licenses.
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Cheers!
.: Adam
CEO