An interview with industry expert Charles Houghton, Esq., about marijuana legalization and the surrounding business opportunities … and risks.
by Noelle SkodzinskiCharles T. Houghton, Esq., has had a unique view of marijuana legalization. In fact, it's a view from inside the process. The Colorado Springs, Colo.-based lawyer sat on the Colorado Springs Medical Marijuana Task Force, which helped the city establish regulations around medical marijuana sales. He also represents dozens of marijuana businesses in Colorado and is hands-on with the legalities surrounding legalized medical and recreational marijuana in the state. Houghton's experience and interest in growing the marijuana landscape prompted him to co-found (with well-known marijuana-industry player and consultant KC Stark) the Marijuana Business Academy, which helps entrepreneurs, established businesses and investors find success in the MJ marketplace.
Cannabis Business Times sat down with Houghton to talk about about the legalization process–what surprised him and what he hopes will happen as the industry continues to evolve–as well as to get his advice for wannabe MJ business owners and investors.
Cannabis Business Times: So, Colorado has had a fairly smooth roll-out for legal MJ as far as process, accountability, revenue, taxation and security–although it hasn't been perfect. However, what surprised you? What didn't you expect to happen that did happen?
Charles Houghton: Our regulatory agency, the Colorado Marijuana Enforcement Division, or MED, did an exceptional job in preparing for and implementing the recreational, or retail, marijuana dispensing. So you are correct, the roll-out went about as smooth as could be imagined. What suprised me was the number of dispensaries that could have gone retail and chose not to. Sales have been good for medical marijuana and … [continue] to be strong.
What did not happen that I had expected, and that I hope will happen, is that cities and counties that have banned marijuna, either medicinal or recreational, will take another look at what is going on and see the industry as a positive addition to their communities. We bring jobs, tax dollars and business activity that many cities and counties could truly use.
CBT: What about the Colorado roll-out should Washington state have adopted or at least observed more closely as a best practice?
CH: Washington is doing just fine. Just because Colorado has a certain way of regulating and monitoring the industry, does not mean that Washington missed anything. It appears to me that going slowly, as Washington did, has a great deal of merit. I think Washington is doing a beautiful job managing the recreational side. They have not done anything that would enhance Federal scrutiny and have made the program in Washington work. Plus the people of the State of Washington have been very patient and willing to work within the regulatory framework. In all, Washington is doing what it needs to do to protect Washington and its residents.
CBT: With the amount of investors jumping into this market, and a true "Wild West" state of mind in the newly legal states, there's a bandwagon of mounting interest in MJ. What are the two to three things you'd advise an investor on before they jump in? Landmines? Risks?
CH: First, make sure that the people you are working with truly have some experience in the industry. There are way too many people claiming to know what they are doing that do not have a clue.
Second, make sure that what they want you to invest in makes business sense. Just because it has something to do with marijuana, does not make it a good investment. Look at any investment opportunity as you would any business deal. Does it make good business sense? Can the plan actually be implemented? Are all of the issues resolved–planning, zoning, availability of utilities, cost of build out, etc.? Are the income and expense projections realistic?
Finally, check and double check everything. There are so many things to consider when investing, make sure nothing gets overlooked.
CBT: Along the same lines, what's the one thing (besides money and lawyers) you'd want to be equipped with before you entered the industry?
CH: Information. You have to have all the information you can get. Is it zoned properly, can it get a building permit, how long and how much will it cost to build out, who is going to run it, do they have the necessary experience in the industry, does it fit within the regulatory framework at both the state and local levels? The list goes on and on. You have to have the necessary information about everything in order to make a wise business decision.
CBT: You've seen a lot of investor presentations. What section of the industry do you think is going to be the "one"? I am hearing the "ancillary-to-the-business" business will be the successful pitches that get funding. Do you agree?
CH: The old adage is that the people who sold the gold miners the picks and shovels made the money, while the miners went broke or died trying to find gold. There is a grain of truth to that. Ancillary businesses thrive in this industry because they have found a need and figured out how to fulfill that need. From builders to electricians to architects, lawyers and grow store owners, the industry puts a lot of people to work. Find and unmet need, and you will find yourself a business.
CBT: Crystal-ball me: What are the next three states that go recreational-legal?
CH: If I had that kind of a crystal ball, I would be sitting on the back of yacht. I am not sitting on the back of yacht. There are so many things to consider and overcome in the political process that I just cannot venture a guess.
CBT: Tell us a bit about your investor summits.
CH: We have people that come to us with either money or ideas, or both. We help them focus their time and energy on what works and steer them away from what does not. Sometimes we act as a conduit for investors to hook up with entrepreneurs. Sometimes we find great ideas and see which investors might be willing to step forward and fund the project.
[Anyone interested can] take a look at howtomarijuana.com or the medicalmarijuanabusinessacademy.com or mmjba.com to find our future seminar dates.
[Editor's note: Cannabis Business Times has just released a new report, "The Marijuana Industry: Growing Like a Weed," filled with information on the legalized cannabis industry, tips for "potrepreneurs," a view of the political and regulatory landscape and more. You can download the free Executive Summary or order a copy of the full report here.
