Rob Hendrix’s Thoughts On COVID-19 & Keeping The Economy Alive

I am sure most if not all of the readers and visitors to my website are sick and tired of this pandemic. And I will not take this opportunity to get political with y’all. But I will address some real concerns I have regarding our economy; national, regional as well as local. 

I have not been able to get a professional haircut since late February, in fact my hair hasn’t been this long since high school. People in my life are telling me they like it “longer”. But not this long. 

But my long, out of control hair situation is not a real issue. The lady who normally cuts my hair and whose business is on life support is the real issue. 

The friends of mine who own a lovely and local Italian restaurant and really cool bar are running at 25-30% of normal revenue. That is unsustainable for any business so I am concerned for their well-being and that of their employees. 

And the gentleman who owns the building I lease that houses my cannabis shop is also struggling mightily. His primary business is a really cool old diner with fantastic salads, wraps and of course burgers. He also had only fairly recently opened a bar in what was our first location for my shop and it has been almost totally shut down by COVID-19. 

No business can operate for long with these types of roadblocks and the resulting loss of business and life giving revenue.

My point is that real people who are “small” business owners and who employ millions and millions of Americans all across our country are in serious straits and they need our help. 

But its tricky as these people, for the most part, are not accustomed to asking for help. No, most are the type who GIVE help, not receive it. So, its a bit foreign to many of these true blue Americans whose businesses are the engine that truly drives the US national economy, not Amazon or Costco or Walmart. 

Small business collectively dwarf these “giants” insofar as the contributions they make to our local, regional as well as national economy(s). 

I for one resent the term “essential” businesses, in fact all businesses are essential to the folks who work there and the people who own them. To them and their livelihoods, it is quintessentially essential! 

The corona virus is a real threat, especially to certain members of our society, namely the elderly along with the medically compromised. 

There is no doubt the disease is deadly in certain circumstances, but I am afraid our response and policies have not been balanced in the efforts to deal with this pandemic. 

In fact, we are creating public safety issues in the process of trying to thwart the spread of corona.

But before I really dive off into the “weeds”, pun,  I will leave you with this; if you have a job and a paycheck coming in, you are fortunate. Give back to the local business owners in your respective town(s) you know, like and patronize regularly. 

Order online and take out or call for delivery, many of these business owners and their managers are really thinking outside the box, cliche’ warning!, and they’re really trying to take care of themselves, their employees and their customers. 

So give back, spend some money and when it comes to calculate the tip, be generous. If the restaurant in question for example is running at 30% of normal revenue, I am betting the tips are even less and many of the servers and hostesses and cooks are making much less than normal. 

Have courage and be kind. 

Sincerely, 

Rob Hendrix, owner

Cannabis Central of Ellensburg

Cannabis Consulting Nationwide

Do Big Cannabis License Fees Lead to Corruption?

My name is Rob Hendrix and I own and operate a state legal retail cannabis shop in Central Washington State. Washington State passed Initiative 502, the legalization of adult use cannabis, in November 2012. During the course of 2013, the powers that were to be at the state level worked on the rules, regulations, restrictions in order to create a workable regulatory environment for this new and controversial industry.

And while there were errors, miscalculations and many mistakes, the state and by extension, our primary regulatory body, the Liquor and Cannabis Board, or LCB, did a couple of things really right. I will not in this article attempt to review every RCW, WAC, rule and/or regulation, but I would like to discuss two things that occurred that I believe have created a much smoother path for us here in the Evergreen State.

The first was the rather modest application and license fees. Our application fee back in 2014 was $269 and our license fee was only $1100. Other states fees are huge by comparison; $60,000 application fees and upwards of $200,000 license fees in other states. In Washington, I believe the regulators discriminated IN FAVOR of small operations, Mom and Pop type shops, such as my business. 

My wife and I, sole investors and owners of Cannabis Central of Ellensburg, were incredibly easy to vet. We had a home, a couple of cars, a pretty pathetic savings account and a 401K, of sorts. No overseas holdings, no stock portfolio except in our 401K, no other businesses.

Neither of us had a criminal record of any kind, we had never been arrested, not even any outstanding parking tickets. Incredibly easy, right? Now, did the state and the LCB feel it would be easier to check people like us out?

Of course. In order to be qualified for the retail “lottery” drawing, we had to be able to check the myriad of boxes and fulfill the seemingly endless parade of requests, demands, and Docusign processes at the beginning of each month, along with much more.

That brings me to the second thing the state did that I believe has made a huge difference in making Washington a success story in legal cannabis; the aforementioned “lottery”. 

What is the “cannabis license lottery”?

The idea of a lottery to pick “winners”, that is to decide which of the qualified applicants actually are chosen to have the opportunity to obtain a cannabis license, on its face sounds really simple and maybe even dumb. The criticisms of using a lottery system to award cannabis licenses are legitimate:

  • Does the state care if a person has ever run a business previously?
  • Has this person or persons ever balanced a checkbook, processed a payroll, ever been in retail, ever been in management?
  • Do they have the tools necessary to successfully run a business that is regulation-heavy and fraught with opportunities to be tripped up and quite possibly lose their state-issued license?

All real questions and real potential problems. 

Now, lets take these two steps in the process and bring them together to bring my story “home” so to speak. Low application fees and license fees mean many of us can get into this. It doesn’t take a millionaire or a large corporation to get started given Washington’s reasonable costs of applications as well as license fees.

Millionaires and/or corporations are complex and have many layers and components. In addition, they have banks of lawyers who thrive on operating dangerously and are constantly on the lookout for loopholes in order to justify their fees. Will a state regulatory agency in charge of compliance have the resources to watch these organizations and keep them under control? I would say emphatically the answer is NO. 

When states set up their fee schedule they are making calculated judgments about the applicants, especially when those fees are high. The bureaucrats feel the licensees are being given the very real opportunity to get rich, Therefore, they feel justified in getting their government tax and spend hands on some of that money upfront.

The fact is many even in our own LCB, our cannabis regulatory body, are personally against legalizing adult-use cannabis. It seems to reason other states’ cannabis agencies may feel the same way. State-level politicians understand nearly half of all constituents are not in favor of the legalization of cannabis and therefore need the ability to go back to the doubters in their respective districts that while he/she shares their concerns, by God we are going to tax the Hell out these businesses!

So even in my State of Washington, there is a prevailing feeling among lawmakers that the right move is to:

  1. Tell the public you are wary of the unintended consequences legalization brings
  2. Tax the industry heavily so the licensees will pay for their self-created problems.

The politicians need cover and this provides it. Of course, if they’re speaking to a pro-cannabis crowd, then of course these same politicians will praise the industry and the people in it and sing the virtues of legalization proudly as if they themselves created 502! 

Why the cannabis license lottery works so well

Finally, the process of picking winners in Washington was by lottery, and I have outlined the negative aspects of such a simple process above. But there are desirable outcomes by using a lottery to determine who obtains the licenses and it has eliminated many problems.

There can be virtually no cheating, no one can hold their thumb on the scale of choosing. Lottery knows not what color, age, religious background, health history, business background, political leanings, associations, etc. It is a perfect way to pick licensees to avoid discrimination and pay to play schemes.

Low application and license fees in conjunction with a lottery system have helped to keep it all simple, easily controlled and perhaps most importantly, have been extremely helpful in adhering to the stated principles outlined in the August 2013 DOJ “Cole Memo”.

However, having huge fees invite large corporations and wealthy individuals who quite honestly are harder to “deal with” insofar as remaining absolutely sure things will be done according to the rule of cannabis law(s). 

In my State of Washington, we have very reasonable fees across the board. However, the LCB makes up for this by having the highest excise tax rates in the US. So the licensees collect excise and sales tax at the point of sale.

The fees are a relatively minor source of income but the steadily increasing sales numbers which are growing much faster than originally forecasted are at the core of our success. Business has been slow to grow and thrive not weighted down by huge business fees the absence of which has created the cash flow you see now in our state.

The tax revenue flowing into the state’s coffers is quite large and is a relatively new revenue stream which is always attractive to all politicians. Successful businesses, solid financial returns for the state, and a spirit of cooperation and commitment to run our cannabis stores in a transparent and safe manner for our respective communities. 

Good job Washington State. Other states, look to the Great Pacific Northwest for answers. I am already reading where there are big problems in several states’ applications, vetting, and license granting processes. These ugly issues and problems will become ever more apparent and will only get worse and more prevalent if you maintain these large, out of reach for most, application and license fees. 

Applying For An Illinois Cannabis License? Here Is Cannabis Consulting Nationwide’s Advice

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
509-833-5556 (cell)

What To Do If You Have Issues Paying The Cannabis Excise Tax

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!

Fake ID’s , The State’s Burden… Your Burden.

Teenagers and those under legal drinking age have been using fake IDs, borrowing or stealing friends or family members’ IDs since prohibition ended in the 1930s. It is not a new concept but we are in an industry that is growing, processing and retailing a Schedule One Controlled Substance so here we go.

To be fair, the burden is not totally on retail, State licensed Cannabis stores nowawdays to root out those with alternative and ultimately illegal forms of identification. But there will be responsibility and as a result you’re likely to hear that dreaded phrase, “Use due diligence”.

There are essentially two problems for store owners to be aware of when it comes to this issue; firstly, borrowed or stolen ID or the outright forged ID, typically known as fake ID.

Again, the good news is that the former situation mentioned in the previous paragraph is not difficult, certainly not “rocket science”. A substitute or borrowed ID, typically a State issued drivers license, is the first of two situations of which we will need to be aware.

Goes like this: an individual, we’ll say a male, enters the shop, presents his ID when asked and it’s obviously not the same individual you see before you. Caucasian vs African-American, 5’10” vs 6’6, blue eyes vs brown, etc, you get the idea. Due diligence means you catch this obvious situation and refer the would be patron to the front door. Take a second or two, or longer. Do not allow yourself or your employee to feel rushed. Taking your time is actually a good idea; the possible fake ID holding person trying to pull one over on your staff may begin to sweat. Seconds can seemingly feel like minutes, minutes like hours. It’s ok, make him/her sweat while you do your “due diligence”.

What this individual is attempting is a serious crime, and the same is true for the person associated with the borrowed ID, assuming of course it was borrowed with the individual’s knowledge and permission. At the end of your mini investigation you can feel absolutely free to decide against proceeding with a transaction. In fact you would definitely be within your rights to refuse service.

As for the latter situation mentioned earlier, the forged or fake ID, that is a different matter entirely. We have, in our shop in Ellensburg in Washington State have purchased a book with every State’s proper looking ID. There’s a lot of information and insights as to what constitutes a legitimate ID in these respective States. We also have a black light so we can further evaluate the authenticity of the ID in question. Plus, I strongly suggest investing some time with a representative with your State’s Cannabis enforcement agency to be trained to some degree as to what to look for in real vs fake IDs. Could be time well spent.

Also in both circumstances, fake IDs or borrowed or stolen IDs, as part of your overall strategy in dealing with identification problems/issues, reach out to local law enforcement and inquire as to how they would prefer you handle these various situations should they occur. In our little town, the local police department is eager to work with us to nab these bad actors. We have formulated a process with our local cops and I believe it works very well.

Remember we want to be a good neighbor. We’ve been very fortunate due to our good citizens policy(s) to be on very good terms with our local law enforcement and first responders.  This can never hurt, it can only help.

Rob Hendrix, owner

Cannabis Consulting Nationwide, LLC

Cannabis Central of Ellensburg, LLC

www.cannabisconsultingnationwide.com