Medical cannabis business Sira Naturals is planning a transition to the imminent adult-use market in Massachusetts, but its executive staff hasn’t forgotten its roots. As the vertically-integrated company looks ahead, CEO Michael Dundas is taking the opportunity to lend a helping hand to upstart entrepreneurs hoping to gain a foothold in the commonwealth’s rapidly expanding cannabis industry.
Dundas and his team are setting up a small business “accelerator” that will provide commercial-grade equipment, manufacturing space and a supply of Sira's own cannabis oil to prospective operators interested in fine-tuning and scaling their infused product development. Business owners will be able to use Sira’s raw oil to experiment with dosing and consistency in their own product development. This accelerator is the first such experiment in the U.S., Dundas asserts.
The small business accelerator will feature a three-month program that includes executive mentorship, leadership skills training and general Massachusetts cannabis business advice that Sira’s team earned “through a lot of hard work and a lot of good luck,” Dundas says. He’s hoping to impart some of that hard work and good luck onto a future generation of new cannabis businesses in Massachusetts.
Now that the Cannabis Control Commission will be issuing a broader array of license types under new adult-use regulations, Dundas says there’s an opportunity to lift up smaller operations who may be going for, say, a craft cannabis cooperative license or a microbusiness license. (Microbusiness license holders may operate only a Tier-1 or Tier-2 cultivation facility, a 1,000-sq.-ft. or 2,500-sq.-ft. canopy limit, respectively.)
The main goal is to give new businesses the sort of assistance that Dundas would have been thrilled to have when he and Sira (formerly known as Sage Naturals) were starting out. For those who are serious about the business, this new program will allow entrepreneurs a space to scale up product development and guarantee consistency in dosing and ingredients.
“We're calling it an accelerator because we're going to be very selective about who we allow into the program,” Dundas says. “The idea here is to choose among entrepreneurs and small companies that actually have a product prototype. They've done a lot of thinking about what they want to produce and how they want to produce it. They already have a business plan that perhaps could be developed further—but there's something there. They have a marketing plan. They know what they want to do. They just need more time to put the finishing touches on their product development. We think that we can add a lot of value in that sense.”
Applications will be accepted starting on July 1, which is also the anticipated start date of the Massachusetts adult-use market.
Sira will hold a nine-percent equity stake in any new company that joins is brought into the fold. Prospective entrepreneurs will need to be well on their way to formal licensure in the commonwealth; Dundas says the Sira team is still working with regulators to determine where, precisely, an accelerator partner would need to be in that process.
Keeping in line with the state’s goals, Sira will match the commitment to Massachusetts’ “economic empowerment” program. The company will hold 20 percent of its accelerator business space for companies based in communities that have been disproportionately affected by marijuana arrests.
“At the end of the day, if you're going to compete in a sophisticated adult-use cannabis marketplace on the MIP side—on the marijuana infused products side—what you have to be able to do at the very least … is to produce consistent dosing from batch to batch to batch,” Dundas says. “And that can be very difficult if you don't have experience in the commercial production setting. If you're just doing this in your own kitchen at home or in a small kitchen, it's very difficult to control for dosing precision.”
Eager manufacturers with a unique edibles product prototype, for instance, will have a chance to perfect their process in Sira’s facilities—under a helpful, watchful eye. Successful business owners will come out on the other side of the accelerator with another major boost to their prospects: Their products will be distributed through Sira’s dispensaries in the greater Boston area.
Sira Naturals comprises three businesses under a single corporate umbrella, Dundas says, pointing to Sira’s agricultural production, products manufacturing and retail entities (dispensaries located in Cambridge, Somerville and Needham). The company’s 24,000-square-foot cultivation facility features state-of-the-art environmental controls and automated fertigation.
“It took a long time for us to raise the funds, back in the context of 2013, 2014, 2015,” Dundas says. “We were required at that time to be nonprofit, which made it extraordinarily difficult to raise funds when you can't sell equity in your organization and to gain the expertise to get folks onboard who shared the vision we did of building a state-of-the-art business in this industry.”
And that’s the underlying issue for so many businesses in this space: access to capital, especially in the early days of development.
“I just think it's going to be extraordinarily difficult for entrepreneurs and small businesses that are trying to build under these license types,” he continues, “simply because the financial and time constraints are extraordinarily high barriers to entry in cannabis, especially when everyone is sort of swimming among sharks as bigger and bigger financial institutions—not banks, but venture capital and angel investors and private equity funds—are dumping money into the space.”
Dundas connects his aspirations back to the last word of Sira’s mission: “to provide premium cannabis, sustainably grown and sold with integrity.”
“We believe that the time is ripe to give back a little bit of what we have been able to build,” Dundas says.
Top photo courtesy of Sira Naturals