Growing A Nascent Industry
I am deep in the cannabis world, a new and ever-changing industry. I am watching from the sidelines and participating at the same time. The entrepreneurs are the dispensary owners, the farmers, entrepreneurs in their own right, are the products, and the Offices of Cannabis Management (the group that helps figure out the cannabis business) are venture people without cash.
It is similar to how technology has changed our lives over the past decade. The venture pushed for moving quickly and creating businesses, sometimes without guidance and sometimes with the perfect amount.
There are good things to this, yet I fear the wrong things. NY State has given the first group of licenses to make a social impact, and we should all applaud that. The rollout has been slow, and the farmers have been affected the most by this. They prepared for the openings with the product, but now much of their product is not up to speed. There are also countless illegal dispensaries around the town, so many you can’t even keep track. It is akin to whack-a-mole; one goes down, and three pop up. Going after these entrepreneurial store owners is part of the answer, but who they should be going after is the landlords. If landlords were heavily fined for allowing illegal retail with a sock-to-the-gut fine, they would think differently before renting out to anyone. Sock-to-the-gut is not $50k but $250k or more.
It will take a good decade to get this moving in the right direction. What I fear is that many of these new store owners who are placing all their bets on dispensary success are not up to par on setting up the foundations of these businesses while understanding the overwhelming cost of the Federal law 280E or being taken advantage of by the few banks willing to do business with a dispensary, or the Insurance companies needed to insure the employees, the product and the space, or the accounting that must be done off-line because Quickbooks can close shop on you overnight.
If we suppose this industry will succeed for the people, the owners, and the farmers first vs. the Government and all the peripheral businesses. In that case, we must educate the new license holders on how to succeed. Anyone in the start-up world understands how important the legal foundation is set up that first year; otherwise, it is a slow slog into an abyss.
This is an area that our team at Gotham is talking about daily. How can we help everyone rise, not just the savvy few?