What Happens When The Market Isn't Ready for a Cannabis Industry?
What happens if you're in a market where they don't have infrastructure for the security and transportation of the product? I've heard people say that they’ve started multiple businesses to get this one business going. Is that why?
When a state passes a law saying they’re going to approve cannabis, first they get the regulations done, then they start the application process and then they start awarding applications. None of the tertiary businesses that everyone needs exist, at all. People are definitely afraid of entering the industry because of two parts. One - cannabis is illegal and they don't want to go to federal prison, which is a very convincing argument as to why someone wouldn’t want to work with the cannabis industry. The second part is banking. People say “I can't take your money because my bank says if I take money from a cannabis company, they're going to close my account”. So it's very tricky to build the cannabis industry.
One of the biggest problems I had in my first start up was my CO2 supplier for my grill. I was actually friends with one of the largest CO2 suppliers and I said “I need a heavy supply steadily. I'm going to be one of your best clients because I'm going to burn through CO2 like crazy. I just want you to come and refill all my stuff and I'll pay you in cash every time”. My friend/supplier asked what it was for, I told him it was for my cannabis grow, and he said he couldn’t work with me because of the nature of my business. So your best friends, your contacts, the business people that you use for all your other companies are going to disappear because you're in the cannabis industry. You have to either prepare your contacts and get them on board, or figure out a way to do it for yourself in the interim until people start getting on board.
I wound up hiring and training my own security guys until we got security consultants that would come out and do it. We did our own transportation. My partner and I drove the first pound of cannabis for sale in Puerto Rico to a dispensary ourselves in my car at 11 o'clock at night, in the ghetto of Puerto Rico for the delivery. Officially we had our transportation license, so it was all legit. But talk about scary, because at that point in time, the cops didn’t even know it was legal. The gangs didn’t care and they're all coming after you. You definitely have to be ready for that, so a lot of preparation is highly recommended.
I definitely recommend that you start building up these relationships with the companies of things you're going need. Even the simplest things like accounting, “hey, could you be my accountant? You're my accountant for three of my other companies. I need you to do the accounting for my cannabis company”. Nope. Now you have to find a whole new accountant and it’s such a pain because you've spent years finding good service providers in all these different facets. Now you have to go find new ones because they don't want to touch the industry.
Start planning ahead of time, it'll save you a big headache. But also get ready to do it yourself. We did all our own accounting internally initially simply because we had to. You just have to be prepared for the reality of doing it all yourself, but hopefully after building strong relationships and people getting more comfortable with cannabis, you won’t have to.
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Cheers!
.: Adam
CEO