Editor’s note: There is no denying that the cannabis industry is rapidly evolving and developing, which means that many players in the industry must constantly adapt to an ever-changing landscape. I interviewed three well-educated cannabis professionals who shared their experiences, lessons learned, ideas and tips for working in the cannabis industry.
Advice from Crystal Oliver, executive director of the Washington Farmers Association (WSIA), co-founder and former owner of Washington’s Best Cannabis. Oliver shares with Cannabis Business Times his personal experiences and lessons learned as a small business owner in the cannabis industry.
LIABLE : 6 Lessons learned too late from the cannabis case.
I would like to know…
1. The value of hiring a professional lobbyist versus the price of bad policy.
The adage If you’re not at the table, you’re on the menu comes to mind when I think about the evolution of cannabis policy in Washington. In the beginning, other farmers and I focused on organizing and standing up for the community. What we lacked in experience we made up for in passion, but that did not always translate into successful policy. We often knew why a policy proposal would harm our business, but it was incredibly difficult to get legislators and regulators to listen to us and change their approach.
Independent cannabis growers in Washington, D.C. were hurt by multiple legislative sessions passing laws that hurt our business prospects before WISA held its first Sun Bowl fundraising contest/event in 2018 and hired contract lobbyist Bryan McConaughy. The difference a professional and experienced lobbyist has made is that our ability to prevent bad bills from becoming law and to change other bills in a positive direction cannot be overstated.
If I knew how influential the presence of a professional is, I would immediately go out of my way to fund a lobbyist. I would consider this a cost of doing business, not a pleasure. As a growing industry, winners and losers are often decided in the boardrooms of government agencies and state capitals. If you want to secure your future, you must have effective representation in these areas.
2. The challenges of living without access to affordable and traditional funding.
When I started my business, I knew I couldn’t get money from my bank to start a small business. So I decided to use my savings and the income from my daily work in the business. I then quit my job to devote myself fully to growing cannabis. In doing so, I didn’t realize that if I relied solely on income from cannabis cultivation, I wouldn’t be able to get a loan from a traditional funding source. It was a shock to learn that my credit union would not give me a loan to buy a new car, even though I have a good credit rating, low debt and sufficient income. Since becoming a cannabis grower, I have had to save money and pay cash for the cars I have purchased. In retrospect, I should have put more effort into keeping the flow of non-cannabis related income going.
3. The reluctance of policy makers to address market inequalities.
For example, by allowing direct sales on the farm, the economic benefits of the sector could be better distributed along the supply chain by strengthening small independent artisan producers. Yet politicians are reluctant to distribute power to those who already have it. I have been told repeatedly that in order to bring about political reform I need the support of those who profit from existing market inequalities.
Those who benefit most from an unjust system cannot be forced to accept changes that would help others. In Washington D.C., we have been fighting for direct marketing of agricultural products for years https://www.cannabisbusinesstimes.com/article/washington-cannabis-growers-direct-sales-customers/> without making much progress because our legislators are afraid of upsetting the status quo. I naively thought that the legislature would place more importance on equity and I thought that in a few years we would have direct farm sales. I remain hopeful that a direct focus on equity for BIPOC communities can lead to a rethinking of the overall structure of our markets, which are at the center of market power in the hands of a few well-capitalized interests.
Courtesy of Crystal Oliver.
Oliver and his daughter
4. The difficulties of owning and running a small business when your children are not allowed to set foot on the property.
I was pregnant when I planted my first official cannabis plant in 2014, and my daughter was born a month before our first official harvest. When we decided to have a baby, shortly after we applied for our license, I envisioned farming my hemp field with my baby in a sling or carrier like other organic farmers I knew. I knew farming would be hard work, and that it would be a dream to work where I lived with my family in rural Washington. Unfortunately, Washington’s marijuana cultivation regulations prohibit anyone under the age of 21 from being on a licensed premises. My children were not allowed to enter the building or the fenced portion of our property where our cannabis business was located. Over the years this has caused our family many problems. My husband and I had to take shifts at work so one of us could take care of the kids, which meant we both had long days. Our children began to dislike our business because it took up so much of our time and separated us from them.
It was only after schools were closed during the COWID-19 pandemic that we were able to convince the Washington Liquor and Cannabis Commission (WSLCB) that children and grandchildren of permit holders under the age of 16 may be present in permit classrooms because they would not be performing work. Being able to have children there has been a blessing for farmers, but a painful reminder of how much time we’ve missed in the past six years. I regret that I don’t think it’s right not to involve my children in my work as a small business owner.
Advice from David Holmes, founder and CEO of Clade9. Holmes began using cannabis nearly 20 years ago, when cannabis was just beginning to be medically legalized in several states. His self-affirmation and self-education have helped him, but he tells the Cannabis Business Times that he wishes he had done some things differently before entering the ever-changing cannabis industry.
I would like to know…
1. The advantage of education in business.
I am a qualified mathematician, as I have a master’s degree in mathematics, but I have never taken traditional economics courses. Others have been my mentors in the business and taught me things, but I have had to learn everything myself. I wish I had more support. That would be super strong. Especially since I was in the cannabis industry in the late 1990s, I never had the great advantage of having both skills: learning how to grow cannabis and having a commercial education.
I’ve had to learn a lot over the years and I’ve learned a lot. The first time I had to formally negotiate a business agreement with cannabis entrepreneurs, I thought I would have liked to have had a formal education in business management. I think everyone learns by doing, but that said, it would be very helpful to have formal training or maybe just work in a different industry.
Thanks to David Holmes.
2. It is valuable to gain experience as a farmer.
As a farmer, I would love to go to school. I am happy to have graduated in mathematics, there is no doubt about that, but I would also like to study agriculture, more specifically controlled organic farming, as my focus is on crops. It took me many years to learn farming in a controlled environment in Canada without any formal training, so I became self-taught.
For example, I didn’t understand the variables I needed to take into account to obtain a crop of consistent quality: Oh man, next time I’ll have to watch the humidity, I wasn’t paying attention the first time. Through a lot of bad luck, the light bulbs went out: I need to know more because that’s what hurt me last time. If you do it in 15-20 years, you learn a lot, but if I had had a formal education, I would have figured it out right away instead of learning along the way.
3. The advantage of entering the market with a different attitude.
I wish I had known that cannabis would become an industry, because when I started it wasn’t really an industry. If I had known that, I would have handled it very differently. In California, it was medical, but it was a complete gray area, and it stayed that way until 2017 or 2018. Most cannabis entrepreneurs in California have been in the industry much longer than in other states, particularly on the East Coast. In many of their thoughts, they must think: I wish I had known ten years ago that there would be such a thing.
Advice from Lauren Pickard, CEO of High Desert Flower Inc. in Oregon. Picard began his career as a financial and business consultant in the cannabis industry nearly four years ago. After a few months, he was asked to become CEO of his client company. He shares with the Cannabis Business Times what he has learned over the past four years in the industry.
APPROPRIATE: 6 other lessons learned from our work on cannabis
I would like to know…
1. Inadequate preparation of states for cannabis legalization.
I’ve been in the industry for a little over four years now. I started in late 2016, when other states were legalizing before and after, and I didn’t have a long trajectory to get up to speed. About a year after each state legalized its licensing requirements. There seems to be ample time for states to learn from the successes and failures of other states, which should lead to some consistency among states’ legal systems. Unfortunately, this has resulted in a plethora of rules and regulations within and between states, resulting in most states being extremely ill-prepared to initiate their respective permitting processes. We had an operation in California that we sold, and then we built a vertically integrated operation in Oregon, and the way the regulators in the two states looked at the cannabis world was very different.
Thanks to Lauren Picard.
2. The difference between the economies of closed and unclosed states.
Oregon was originally a runaway state, but in June 2018 it stopped accepting nominations and suddenly became a runaway state. Looking back, until June 2018 I had to think about the very idea of licensing as a way for a company to create value. You could create a lot of value by taking control of a small site (rented or purchased), requesting different licenses and granting them only when it makes sense; some licenses may not have been granted on this site. This gives you the flexibility to move licenses to the optimal location, with or without partner intervention.
Of course, there are nuances to this strategy that need to be thought through to make it worthwhile, but it was a viable long-term strategy. That would be a strategy I would employ today in an undeveloped state if the cost of the permit was reasonable. If they cost a hundred thousand dollars each, no, but if they cost a few thousand dollars each, it might be worth it. Even if the state never limits licensing, there are only a limited number of suitable locations in each state for cannabis businesses with good real estate. Ultimately, permits will be limited by the lack of suitable sites.
3. Misunderstanding of the economic tax authorities.
The idea that you can’t apply combined tax rates of up to 50 percent, even at the local level, to the retail price of cannabis and still expect to see some movement in reducing the [illegal] market, I think is a mistake. I think the minimum fees should have been sustainably increased to fund the regulatory and enforcement efforts, in addition to the filing and licensing fees already collected, and then increased over time as the [illegal] market declines in size.