If you are thinking about applying for an Illinois cannabis license, you are in the right place. I have helped a number of businesses with the application process for adult-use cannabis in the great state of Illinois.
As many of you know by now, January 1, 2020, was the first day of adult-use cannabis retail sales in Illinois. The sales numbers were staggering, no surprise there, and Illinois is just getting started.
The stores which are open now, effective January 1, were themselves fast-tracked as they were previously and currently medical marijuana stores and much like Colorado, they flipped a switch on 35 medical outlets and began the sale of “recreational cannabis”.
I despise the term “recreational” as it pertains to legal cannabis, but that’s a story for another day. Now, here is a quick summary of the work I’ve been doing recently with three different businesses in Illinois.
If this is a path you are interested in following, there are a few things you should consider. I’ll outline them below. If after reading these considerations you are still set on venturing into this complicated industry, let’s chat.
What you need to consider before applying for an Illinois cannabis license
As it currently stands, the window for adult-use cannabis applications in Illinois is open. Many early applicants have already filed all their paperwork, so you may be a bit behind the curve. But it is not too late, as the winners won’t be released until May of this year. Before you start filling out your application, consider these points:
Do you qualify for Illinois’ cannabis social equity program?
The cannabis industry has a bit of an ugly past when it comes to how people who possessed or consumed the plant were treated. Specifically, communities of color were disproportionately affected by the war on drugs.
Because of this, the state of Illinois is doing their part to right previous wrongs with their social equity program. 20% of available points are based on social equity status! Here are the qualifications:
- 51% of owners must live or have lived in a disproportionately affected area.
- 51% of owners must have an expugnable cannabis offense
- At least 10 employees must satisfy the previous two qualifications
If you are entering this industry, it’s on you to do your part to create opportunities for families, communities, and regions that were harmed by the war on drugs. But, if you or your team were affected negatively, you may have a leg up on the competition.
Can you get financing for your dispensary?
One of the toughest parts about starting a retail cannabis storefront is finding financing. We have an entire article talking about ways to acquire banking for your cannabis business.
If you don’t have access to startup funds, or even a way to store your cash and pay your bills, you shouldn’t consider applying for an Illinois cannabis license. You can reach out to me, Rob, if this is a particular area of your business plan you are struggling with, as I went through this myself.
Do you have any experience in the cannabis or retail industry?
Illinois is going to choose applicants that have the best chance of success. So, if you have any experience in the cannabis industry, or even with a successful retail business in general, that is going to go a long ways.
If you don’t have any experience, don’t worry. I was the exact opposite of the type of person that you would think would want to open an adult-use cannabis store, yet here I am, more than 5 years later.
It won’t make or break your success, as long as you check the last box of our considerations – passion.
Do you have passion to start a cannabis business?
At the end of the day, this will be one of your most trying, difficult ventures yet. This industry is still figuring itself out, and it won’t be easy.
Your “why” for getting into this industry needs to be big enough to help you get through the tough days. Because they will come.
But if you have true passion for helping people in your community, then you should definitely apply for an Illinois cannabis license.
Now, here is some of the work I’ve done in Illinois.
CCN Lends A Helping Hand To 3 Retail Cannabis Applicants In Illinois
The deadline for new applicants in the newly formed adult-use cannabis system was January 2, 2020. I had the great fortune to work alongside three (3) clients all vying for one of 75 new licenses to be decided upon by the State of Illinois sometime in May of this year.
In two (2) of these situations, I applied as a Principal Officer. This was an honor to be sure but it came with an enormous amount of responsibility and, given our lawsuit crazy society we currently live in, an extra measure of exposure as well. It means I am applying along with the applicants/owners themselves.
I have no ownership in said companies nor will I have any fiduciary rights or responsibilities but nevertheless, the real applicants are trying to present the most appealing package possible to the State of Illinois.
By having an individual thoroughly experienced in the world of legal retail cannabis operation, they are saying to the state in effect, “we are endeavoring to do the right thing”.
If these two applicants are fortunate enough to be chosen, then contractually I have insisted on being named as Compliance Officer in the companies going forward.
This is necessary in my view to protect myself and my company, Cannabis Consulting Nationwide. If they follow my counsel and heed my advice in the never-ending effort(s) to stay compliant, then I will stay on as their Compliance Officer.
If not, I have an exit strategy to legally extricate myself from a situation I am uncomfortable with moving ahead with and being a part of.
I also was asked by the above-referenced applicants to help by reviewing and in a few cases, actually writing elements of the application, known as Exhibits.
The range and scope of information and plans the State of Illinois was inquiring about was amazing. I felt I was a tremendous help in the tone as well as the content of the required writings contained with the many exhibits, all required elements of the entire application.
In the third application, I was not asked to be a Principal Officer applicant, but I was much more involved in the writing(s) required as part of the application. I wrote in their entirety or very nearly all of the following Exhibits:
- Floor Plan
- Community Engagement
- Diversity Plan
- Operating Plan
- Business Plan
I contributed in other areas pf the application but the above were my purview and frankly, they were right in my “wheelhouse”.
Are You Thinking About Applying For A Retail Cannabis License In Your State?
If you are applying in your state to garner a license to retail cannabis, please contact a qualified consultant to help. I have been licensed and open and operating in Washington State since August 2014.
I have been successful and very proudly, infraction and violation-free. I have the boots on the ground, relevant experience many states are looking for when applying for cannabis retail licenses.
There is much value being placed on the presence of experienced cannabis operators, operators that is who have been in operating in a legal, compliance-driven regulatory framework.
There are very few individuals in the entire US who can claim the length of legal, violation-free operation in the heavily regulated retail cannabis industry that I possess and present via CCN.
So, do not be fooled, and do not rush to hire someone for the sheer sake of having experience in your corner. Hire someone who can help you in a real sense. Vet any cannabis consultant you encounter thoroughly.
My clients will attest to the fact I am a roll your sleeves up kinda guy who is the real deal and knows the ins and outs, the good and bad, the ups and downs of this still controversial and misunderstood business world that is legal cannabis.
If you want someone with actual, useable experience on your side to help you obtain a retail cannabis license or any phase of starting your own cannabis business, reach out to me here.
Good luck to you all. Happy New Year!
Rob Hendrix, owner
Cannabis Central of Ellensburg
Cannabis Consulting Nationwide
This is Rob Hendrix. I am the owner of Cannabis Central of Ellensburg, a retail cannabis shop in Central Washington State. I have been open and operating, successfully and violation-free, since August 2014. I have had a wonderful relationship with the Liquor and Cannabis Board (LCB) here in the Evergreen State and recently, my good record and great relationship paid dividends.
Today, I want to share with you an issue we ran into recently that does a good job showcasing just how complicated the cannabis industry is, and how high the implications are if you make mistakes.
The Monthly Cannabis Excise Tax Remittance and Payment Procedure
My admin manager has been with me for more than three (3) years, having come to Cannabis Central via the pharmacy industry. She was a wonderful addition. Among her other duties, she is responsible for remitting our excise tax collected and sending it to the Marijuana Tax Unit of the State of Washington every month.
Usually, I prefer to send off the taxes earlier in the month although it is not due until the 20th of the month following the month completed. We have been perfect in more than 60 consecutive months insofar as handling the excise tax collected and tax remitted. It was like clockwork and I never worried about this particular aspect of managing Cannabis Central.
You can imagine my shock and horror at an email I received 12/31/2019 that indicated I was in fact late with November’s excise tax remittance. Further, I was reminded in this email that this tardiness was in fact a violation of both WAC 314-55-089 and WAC 314-55-092. I had inadvertently broken the law. Also mentioned in this email was a statement to the effect, “Please pay ASAP to avoid having to start the process of suspending your license”.
Now, in all honesty, we had paid the taxes but the WAC(s) referenced above had to do with the accompanying form that was missing. But in the eyes of the LCB and the Marijuana Tax Collection Unit, the fact we were missing the necessary form was as bad as the taxes themselves not being remitted.
How We Quickly Fixed The Issue At Cannabis Central
We jumped on the problem immediately upon receiving the alarming email. We called and emailed the Marijuana Tax Unit and also emailed, called, and texted our Enforcement Officer with the LCB as quickly as possible. In addition, we scanned and emailed all supporting documentation to the Marijuana Tax Unit and our Enforcement Officer in a show of good faith that proved the taxes themselves had been paid days prior to the December 20 deadline. After all, we were just missing the accompanying form.
My message here is simple; we reacted with an “all hands on deck” approach and attitude. We humbly approached the responsible parties to demonstrate our acceptance of the seriousness of the situation and most importantly, we took responsibility for it 100%. We did not attempt to blame others. We made no excuses and we braced for the consequences of our actions which could have included a 2% late penalty, amounting to a potential $700 fine.
We received word a day later that due in no small part to our perfect track record of excise tax remittance and the total absence of infractions and/or violations of any kind, the people in charge agreed we deserved a break. We were informed of their decision not to penalize Cannabis Central in this matter. I took this as a great compliment and I let it be known to all concerned how appreciative we all were. Whew!
What Can You Take From This Story For Your Retail Cannabis Store?
The lesson here is to be rule followers. Treat your regulatory agency and the men and women in it as partners, not as adversaries. Communicate, in fact, over-communicate with your enforcement folks. A good reputation is hard to create and it’s easy to lose. Build a great reputation, sustain it, work at it and never abuse it or over-rely upon it. Stay hungry and humble in running your business and this definitely should include your attitude towards your enforcement agency in your state.
Happy New Year to all. If you’re considering entering this still controversial and misunderstood industry, contact me, Rob Hendrix, owner, Cannabis Consulting Nationwide. We can help with state-legal retail cannabis set up, applications, vetting, build-out, hiring best practices, inventory and cash management, and most importantly, compliance. I am currently working with clients in Missouri and Illinois.
You can contact me here with any questions, or email me directly at [email protected] and I’ll get back to you quickly!
Dispensary branding is something that many entrepreneurs go about all wrong. This crucial aspect of starting your retail cannabis business will make or break your success in the industry. It can be easy to assume that you know how best to brand and position your storefront.
But, there are a lot of factors at play here, including your customer demographic, what nearby dispensaries are doing, and the image you as the business owner want to portray.
I’ll explain in depth why this is such an important area of your business, and then I’ll show you some examples of the best branding in the cannabis industry today.
What is branding?
Let’s quickly define “branding” in general.
Branding is the act of shaping your brand. It is what you represent, your values, and who you guys are as a company. Lots of things go into your branding, including:
- Store name
- Brand logo
- Store design
- Voice on social media
- How you conduct business (your marketing)
Your branding is what makes you, you. It’s what separates your dispensary from the dispensary down the street. Without branding, every store would look the same, and sell to the same demographic. Now, let’s discuss the importance of dispensary branding.
Why does dispensary branding matter so much?
Dispensary branding just as important as branding any other type of business. You need to be congruent with your branding at every level of your business. This means that your online presence/marketing, your dispensary design, and the interactions between you and your employees with your customers all need to be congruent.
One of the biggest reasons I preach branding so much is because you can get really specific with who you are talking to in your advertising and messaging. If you want your brand to represent young, social, hip people, you can communicate in their language and gear towards their interests. Or, if you want to speak to an older, more professional demographic, you can take that stance. It’s all about resonating with your market.
Know your market in the cannabis industry!
Let me paint a picture for you.
Let’s say there are two dispensaries near you.
One is called “The Pot Shop”, and you walk in to be greeted by loud Rastafarian music, and graffiti-covered walls. The employees are grungy, and appear to have no sort of dress code.
The other dispensary is called “Patient Care Collective”. You walk into a quiet, neatly designed building that is indistinguishable from a medical office. The employees greet you, and they are neatly dressed in matching uniforms that are consistent with the rest of the shop. The dispensary is well lit, and has a very modern look.
Which one are you more likely to go to?
The answer likely varies based on what type of customer you are. If you are a college student looking for cheap cannabis, you probably would prefer the more chill, laid back store.
But, if you are an older medical patient with a serious illness looking for legitimate care, you’ll choose the more professional setting.
That is why it’s important for you to do your research when branding your dispensary.
Use your branding to stand out in crowded cities
Think about the shops near you. If they are all geared towards the “stoner stereotype” you can really set yourself apart and resonate with a whole different market by entering as the “professional medical care” facility.
You need to do your research to figure out what type of cannabis users are going to be shopping with you and cater to their preferences. If you are in a small college town with tons of retail cannabis stores geared towards the “college crowd”, you can really set yourself apart by branding your dispensary to a different crowd.
Need help defining your brand?
If you are struggling with branding your dispensary, or any other aspect of starting or running a retail cannabis shop, let’s chat. My name is Rob Hendrix, and I am the owner of Cannabis Central, my licensed storefront in Washington State. We have been profitable, and more importantly, violation-free, for over five years. I started Cannabis Consulting Nationwide because I know how frustrating it can be on this wild journey. I help other entrepreneurs in this industry get their stores up and running, and keep them running!
If you have any questions about any part of the industry, please, don’t hesitate to reach out. I am happy to spend an hour on the phone with you for free, just learning about your business and figuring out a way to help you reach your potential. You can contact me here. Look forward to hearing from you!
Great news for those looking to start a cannabis business in West Virginia – the state will begin accepting dispensary applications. It has been long overdue, but entrepreneurs will be able to make their move beginning December 19, 2019. Medical patients will be able to access their medicine within 18 months.
West Virginia Cannabis Laws
West Virginians have been without medical marijuana for far too long, and people with serious medical conditions have needlessly suffered.
In 2017, a medical marijuana bill passed in the state. However, there was confusion and concern regarding how West Virginia would handle tax revenue but comply with Federal law.
Safe cannabis banking
In March of 2018, a separate bill was passed. This one was huge for clearing up how businesses would operate financially. The legislation grants protection to the treasurer and state employees for those involved in cannabis banking. This is huge because as you probably know, traditional banks are very wary to do business with cannabis businesses.
In West Virginia, there is a medical marijuana vertical integration bill. What this means is businesses can grow, process, and sell a product, assuming they have the right permits and licenses.
Money and jobs stay local
While some states have seen the cannabis market be overtaken by corporations, this will not happen in West Virginia. The very same bill permitting vertical integration states that only West Virginia companies are allowed to apply for a cannabis license or permit. This will keep jobs, money, and opportunity within the state, improving the economy of West Virginia.
West Virginia Cannabis Licensing
You can submit your application to the West Virginia Department of Health and Human Resources Bureau for Public Health for a growers license, dispensary license, or lab permits. The application process is online, which makes things easy. You can find the West Virginian Cannabis Application here.
How long is the application process open?
The state will leave the application process open for 60 days, closing the window on February 18, 2020. So, you if you don’t already have your documentation in place, along with a solid business plan for your dispensary, you need to act now.
If you are not sure what your next steps should be, you can reach out to me and I’ll point you in the right direction. This is going to be a hectic, but fulfilling process, and I can be a resource to you whenever you need. If you want to learn more about what we do at Cannabis Consulting Nationwide, give me a ring. I was able to secure my own licenses in Washington state, and Cannabis Central (my legal, compliant, violation-free dispensary) still operates today. You can contact me here – looking forward to chatting with you!
Sourcing high-quality products and maintaining stock is crucial to any retail business, and cannabis inventory management is no different. However, stocking a dispensary with product presents challenges other industries don’t face.
Maintaining compliance and your reputation is of the utmost importance. what you put on your shelves is essentially what your business is known as, and customers will make a first impression based on their experience with your products.
Further complicating this process, you can incur heavy fines if you encounter an inventory-based compliance infraction or even license suspension.
Why cannabis inventory management is so important
Regardless of which part of the retail cannabis process you are in, cannabis inventory management should be one of your main focuses.
If you are applying for a cannabis license you’ll need to provide evidence of your knowledge when it comes to this aspect of the business. Many applications require this.
If you already operate a dispensary, you can benefit from streamlining your inventory system. This will reduce costs, labor, automate data, and most importantly, boost profits.
There are essentially two cases of poor inventory management – not enough stock, and too much stock. They are both problematic in that they decrease sales at your retail storefront. In the cannabis industry, goods are perishable. This means that excess product may get thrown out, cutting profits. On the flip side, constantly running out of top-selling products will lower your sales.
To add another wrench into the mix, it is on you to remain diligent in your record-keeping and inventory control measures. You must track and report your inventory depending on the laws in your respective city/state. If you make mistakes here, you can be penalized, fined, or even suspended.
On top of that, a good cannabis inventory management system ensures a good customer experience. Many consumers in this industry have favorite brands, strains, and products. If they know they can count on you to have those products available, you’ll have a lifetime customer on your hands. On the other side of the coin, one bad experience can leave a lasting impression.
How to manage inventory at your retail cannabis store
To a certain extent, you’ll need to manually check stock. I recommend doing this often, at least a few times a week. This is obviously not scalable and does allow for human error, though. These days, the easiest and safest option is with a Cannabis POS and Inventory System. But, there are so many different options out there, how do you choose one?
Choosing a cannabis POS and inventory management system
There are tons of POS and inventory management systems out there for dispensaries. But, not every one of them will be right for your business.
If you have a super high product turnover rate in your store, and deal with high volume sales, your system needs to not only be reliable but also have swift transaction times to decrease customer waiting. You’ll also want one with offline backup in case your wifi crashes, especially on days like 4/20 or 7/10.
On the flip side, if you are looking to provide a super unique experience for your customers, maybe you want a POS service that allows for tablets to be spread across the store, and customers can add to cart on those and head to the cashier for a quick checkout.
Some POS and inventory management systems even include mobile-friendly features. This will allow you, the store owner and operator, to monitor sales and inventory activity remotely, freeing you from constantly being chained to your store! After all, the end goal is to work ON the business, not IN the business.
At the very least, you need to make sure your system operates well with common online platforms like leafly and weedmaps.
The basics of cannabis inventory management
Once you have a POS and inventory management system in place, its as simple as uploading your products and making sure everything runs through the system. This includes:
- Product Name – You need a consistent naming scheme to identify products. For example, Raw Garden (brand) Banana OG (strain) Cartridge (product type).
- Product description – short section about the product. What is it, what are the notable effects it produces, lineage, testing info?
- Product image – Some overlook the importance of product images, but it really is important.
- SKU – this is the “stock keeping unit” and will be the data point that actually measures your inventory. More than likely, the products your vendors send you will have barcodes associated with each SKU, allowing you to easily scan them into your system
- Cost – what you pay to get the product on your shelves
- Price – what the customer pays to get the product OFF your shelves! Make sure you have margin, this is pretty self-explanatory.
- Vendor information – Info about the supplier of the product
- Quantity – This helps you actually manage your inventory. It can give you estimations about when you need to reorder, which will become more accurate the more data you accumulate.
Your cannabis POS and Inventory management system will likely include more than just these metrics and data points, but this is the bare minimum you need to run a successful retail cannabis shop.
One important note I’d like to make is be consistent with your data logging. This is especially important when it comes to product naming schemes. Follow something basic, like Brand + Strain + Product Type. If you have any variations in your naming scheme, it will confuse not just you and your staff, but your customers. By the time you realize what a mess it is, you’ll have a lot of untangling to do.
Manually auditing your cannabis inventory
Just because you have a fancy POS and inventory management system in place, doesn’t mean you should rely on it 100% of the time! Its still important to conduct regular inventory audits to ensure there are no discrepancies between the inventory you have online and what is actually on your shelves. If you see this, it can be one of two things: human error entering numbers into the system, or theft.
Both of these are serious issues that you as the owner are responsible for investigating.
I know auditing your retail cannabis shops inventory sounds daunting. With an average of 500+ different SKUs at any given time, how are you supposed to do this efficiently? Its actually not that hard!
Schedule regular inventory audits
Creating a regular schedule makes the process more efficient and less chaotic. You can also use your POS system to audit inventory manually once it reaches a feasible point, such as less than 25 units.
This process should not be overlooked. In fact, many states require this process. Oklahoma requires a monthly inventory reconciliation report on the 15th of every month. California requires it every 30 days, and our friends up north in Ontario are requires to properly track, report, and submit a report on inventory by the 5th of each month. You’ll need to create a schedule that’s congruent with whats required by your state authorities.
Streamlining and Optimizing cannabis inventory management
Keeping track of inventory is one thing, but optimizing the flow of products through your store is important for longevity and profit maximization. So, you first need to learn how products move through your store. The KPI’s I suggest you monitor are:
- Inventory Turnover – how quickly you move products off your shelves. The quicker you can move the product, the better, because it ends up costing you less!
- Days of Supply– this KPI will display how much stock you have left in terms of days. This is a super important metric from preventing you from going out of stock. If you notice you have 10 days of supply, and you know it takes you 7 business days to get a new shipment, its time to order! Many POS systems can trigger alerts, which you set when its time to put an order into a supplier. Likewise, if you see your Days Of Supply is stagnant, at around, say, 90, you may have excess supply.
- Average Age Of Inventory – This metric tells you how long your product has been sitting on the shelf. The older your inventory, the more it’s costing you. Watch this KPI closely and if your inventory starts to become a few months old, try lowering the price, repositioning it on shelves, whatever it takes to move it.
- Product Performance – This might be on the most important KPI’s to your retail cannabis shop. It indicates your top-performing products at a given time and will help you understand how you should display your inventory to customers.
- Gross Margin – This is one you obviously need to pay attention to – the longevity of your retail storefront depends on it. If you cannot turn a profit, you are doing something wrong, and it’s up to you to look at other KPI’s to determine what exactly that is.
There are plenty more KPI’s, but it can be easy to get bogged down by the numbers. Focus on a few, and analyze them periodically (not daily).
Final thoughts on cannabis inventory management
This is a complex subject, far more in-depth than I can go into in a single blog post. Reach out to me, Rob Hendrix, with any questions you have about inventory management at your retail storefront – I’ve come up with a system that works for me, and has allowed me to remain infraction-free and successful over the past 5+ years! I started Cannabis Consulting Nationwide because You can contact me here, I’d be happy to chat with you.
Many entrepreneurs are wondering how to start a cannabis business, as this industry reminds some of the gold rush with everyone rushing to claim a stake.
But starting a successful cannabis business is not for everyone. Once you start to peel back the layers of the industry, you’ll have a better understanding of what you’re up against.
I say this not to scare you away but rather to help you manage your expectations. This can be a very rewarding pathway for the right person, but again, the legal cannabis business is not for the faint of heart!
Let’s get started.
What you need to know about getting into the cannabis industry
If you are wondering how to get into the cannabis industry, don’t worry, we will get there, but first its really important that you manage your expectations.
Prepare for an invasive vetting process
If you are hoping to open a retail cannabis store, or any other licensed cannabis business, you are going to need to prepare for an invasive process.
One of the first steps in the vetting process will be a background check.
In Washington State, we had to undergo two (2) separate background checks; our own Washington State Patrol and one administered by the FBI. There will likely be a “points system” of sorts, but this varies State by State.
So while you don’t have to be a Boy or a Girl Scout, you’ll have to be pretty darned squeaky clean. And, anyone who may have a financial interest in the business will be subjected to these background checks. This includes spouses.
The cannabis industry is unlike any other
Because you are operating a business that is illegal at the Federal level, you will run into issues with taxes, insurance, banking, mortgages, lease agreements, and more.
Many times these “issues” will feel unfair. After all, it’s legal in your state, right? Unfortunately it is not that simple, and in fact, very few things in this business are uncomplicated. You’ll face roadblocks, impediments, and bumps in the road that “normal” businesses wouldn’t.
Expect the unexpected
You’ll also need to expect the unexpected. This is still a relatively new industry, and things are constantly changing around us. Even in an established, relatively mature industry like Washington State, I need to be nimble and ready for almost anything at a moments notice.
If you are in a State just entering the legal cannabis industry, hang on tight while things shake out! You’ll want to be wary, especially if your state has just legalized adult-use cannabis in particular.
It could be a bumpy ride for a variety of reasons. Plan for the regulatory “goal posts” to be moved somewhat in the opening months with changes in rules, regulations, requirements, etc.
As the proud owner of a licensed cannabis retail store in Ellensburg, Washington for the past five years, I am here to tell you it is possible. If you are still reading, it means I haven’t scared you off, which is a great sign! Now, let’s dig just a bit deeper as to how to get into the cannabis industry.
The definitive guide on how to start a cannabis business
Just like any business, starting a successful cannabis business requires real work. You need a strong “why” to remind yourself of during the darker times.
If you have a strong purpose, good organization in the form of a business plan, and the right guidance, you can be very successful. Here are some recommendations on how to begin.
Do your research
This might be the most important step of all. We touched on it at the beginning of this article, but you need to be aware of what you’re up against. You can start by learning about cannabis in general, along with the history of the industry.
On a more specific level, you need to have a deep understanding of the regulations in your respective state. Starting a cannabis business will involve many of the same steps across state lines, but there will likely be intricacies in your state. You’ll need to be totally familiar and comfortable with these details. These include eligibility, how to start the application process, whether you will take the medical or adult-use route, and more.
Get familiar with which government entity is going to regulate cannabis in your State. In Washington, the Liquor Control Board (LCB) was selected to regulate cannabis. Knowing who you are going to be dealing with is very important.
Write your business plan
Next, you’ll need a business plan. This is not just for your sake, but for the application process. Most states require a business plan to even begin the application process, and it will need to be very detailed.
Make sure the business plan takes into account every law in your State; location, vendor relations, employment, funding, and more. Here are some of the most important elements to include in your plan for the highest probability of success:
- Develop a Mission Statement for your would-be business. This should speak to your goals and values you will want to embrace as the owner.
- All of your anticipated expenses, projected revenues, and profit
- Choose and secure an acceptable location, according to both the State’s rules as well as your local town or county’s.
- A key component in any business but of critical importance in retail cannabis will be sources of inventory. You will want to begin forging relationships with possible wholesale sources for product for your store(s).
- I strongly suggest a qualified accountant and attorney, along with an experienced consultant who has extensive experience in legal retail cannabis operation.
This is where things start to get tricky.
The licensing process can vary by state, but in Washington, the LCB took all of the qualified applicants and quite literally drew names out of a hat.
There were to be two (2) picks in our town, Ellensburg, and we were drawn #2. However, we were first to open in the city, as well as the county. We were #37 licensed in Washington, and the 23rd to open and begin reporting sales. We also, at the time of writing this, are one of just a handful of stores in the State with zero violations.
If you are selected, you will need to be ready to act. Your research will be essential here, as you prepare all the necessary documentation. You may be asked to work with a number of regulatory bodies throughout the licensing process. Although, in Washington State, I was assigned a Licensing Specialist. I worked with them exclusively for the entire vetting, pre-opening and grand opening phases over a six (6) month period.
Setting up your cannabis business at the state and federal level
Before you start operating your cannabis business, you will need to register your business with your Department of State. In my opinion, you need an accountant. They can help you set up your business in the proper fashion at the Federal level as well. This will be imperative in obtaining, among other things, an EIN (Employer Identification Number), also known as a business tax ID number.
Since cannabis is still a Schedule 1 controlled substance, normal business tax rules and tax deductions do not apply. The Department of Treasury will allow such a business, but they will tax very heavily. You’ll need to learn about a section of the US Tax Code, 280E. You’ll have plenty of things that may keep you awake at night when starting a legal cannabis business. Don’t let IRS worries be one.
Get funding for your cannabis business
Finding a source of funding for any business can be challenging, but this is further complicated in the cannabis industry (are you seeing a theme here?).
Because marijuana is federally illegal, banks will not offer you a loan, nor will many venture capitalists. The risk for them is too high in most cases, as the government could pursue legal action against them for their involvement in the cannabis industry if desired.
However, if your business plan is solid, you will eventually find an investor willing to work with you. My wife and I made 37 presentations to would-be investors, but I could never quite put a deal together.
The people I spoke with wanted too much for too little, so at the end of the day, we mortgaged everything and took the plunge alone.
Times are changing
It is a new day and time in the cannabis industry now; I was a sort of pioneer, a trailblazing guinea pig is how I always described myself! Nowadays it may be different, even a little easier for you.
But, I know one thing for sure: it will be substantially easier for you if you hire me to help you with this process! If I could have hired the Rob Hendrix of 2019 back during the Summer of 2014, that would have had a profound effect on my success, and more importantly my stress levels!
If in fact you decide to make a go of it on your own or with private and/or family funding, I can assist with that process as well. Bootstrapping a cannabis business is an area many typical cannabis agencies are sorely lacking in, but thankfully, I am not a “typical cannabis consultant”.
Bootstrapping, the idea of proceeding ahead into the cannabis business alone, is an area of expertise that is seriously lacking in the cannabis consulting arena. I have already done the hard work, and am familiar with the do’s and don’ts. Let me help you.
Banking for your retail cannabis store
Another facet of getting funding for your cannabis business is finding a bank willing to work with you. We have an entire article dedicated to cannabis banking.
In all likelihood, you’ll have a hard time finding a bank willing to work with you at first, especially in newly legal states. There are ways to function within these restraints, which we dive into in that article.
Need help starting a cannabis business?
I have been through it all, seen it all, dealt with it all. I have been a hands-on owner who has persevered through short supplies and crazy high prices. In fact, I have even worked with our regulatory body, the LCB, in our capital, Olympia, to effect changes so our industry can survive and ultimately thrive. After all, it is our responsibility as participants in the industry to see that we further it for everyone.
If at any point in your own personal process you are feeling overwhelmed, troubled or lost, I can help. I started Cannabis Consulting Nationwide to help people just like you, and now, you truly have a friend in the cannabis industry. (I know that sounds contrite and cheesy but is the truth!)
Having someone in your corner from the start can be a huge asset. I can help ensure you won’t be surprised by anything. If you have any questions at all, reach out to me and I’ll be happy to chat with you! The first hour of phone time with me is always free. Call me, there is no such thing as a dumb question and there is practically nothing I wouldn’t send you upon request. Looking forward to meeting with you.