Risky Business

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August 3, 2016

If one message speaks loud and clear from this issue, it’s that more challenges and risks face cannabis cultivators than many people realize. It’s not an “if you build it, they will come” scenario, to say the least. Of course, if you’re in this market, you know this all too well.

In this issue’s Guest Column, “The Green Rush Fallacy” (page 26), cultivator/business owner David Bonvillain outlines a boatload of these challenges. We’ve all talked about them, and written about them in bits, but to see them all listed together should give wannabe business owners a better idea of the landscape ahead of them, and could even change the phrase “green rush” to “green risk.”

To learn that the second-highest revenue generator among Tier 2 producer/processors in Washington makes a marginal profit some months, and zero in other months (see the Guest Interview, page 32) — and largely the profits are just enough to dump back into the business — along with the fact that many cultivation businesses in Washington are barely staying afloat, is not only disheartening, but should sound an alarm to those looking to launch cultivation businesses and to states working on regulations surrounding newly legal (or soon-to-be-legal) markets.

Regulations can change direction faster than the wind, and business owners can be … well … completely screwed. As Avitas Agriculture’s Adam Smith explains in the Guest Interview, state regulations and local zoning regulations changed, shattering his business’s plans to expand with a greenhouse build-out. Random zoning shifts not only can dismantle a business’s development plans, but also can threaten to shutter thriving businesses (think: Pueblo, Colo.). Cannabis businesses contribute millions of dollars in tax revenues to states and municipalities, and create tens and tens of thousands of jobs (more than 20,000 jobs were created in Colorado alone, based solely on licensed businesses and their employees, and not considering ancillary businesses — per the Colorado Dept. of Revenue), and yet can be voted out of existence.

If we could speak to legislators and marijuana control boards that are and will be developing regulations, we would say that if they want to create a viable marketplace and help business owners thrive (and continue to generate major tax revenue), they need to work hand-in-hand with these businesses to ensure the regulations serve everyone.

We’ve said before how important it is for cannabis businesses to be involved in regulatory planning meetings. More than ever, this seems imperative. Also, joining groups like the Cannabis Farmers Council (Washington), California Growers Association and Cannabis Commission (see the Guest Interview) can give cannabis businesses a stronger, collective voice.

While notions of a “Green Rush Fallacy” are not uplifting, it can be affirming to hear reality vs. the media hype we hear so often. All this said, some businesses are thriving. And lessons to be learned lurk around every corner. In this issue’s Cover Story, for example (page 44), in my opinion, Scott Reach shares insights that should be heeded by every cannabis cultivation business. It is not helpful to operate in a vacuum. Read, and talk to your fellow business owners and cultivators. You are part of one of the fastest-growing, craziest, most exciting and challenging industries ever to exist. Don’t go it alone.

Noelle Skodzinski, Editor nskodzinski@gie.net | 856-979-2081 | Twitter: @editorCBT