The #1 Reason Most Cannabis Businesses Never Get Off The Ground
Updated: Feb 12, 2020
This article was originally featured at 420businesses.com
Green Consulting Partners is one of California’s top boutique cannabis compliance and consulting firms.
We spent some time with the Firm’s Managing Partner, Sean Maddocks, whose legal background and strategic business experience have enabled him to assist a wide range of cannabis businesses with their licensing needs. His clients have been some of the first to win licenses throughout California’s emerging cities, positioning them at the forefront of the country’s largest commercial cannabis market.
From licensing insights in California and beyond, to the truth about CBD legalization, keep reading to discover why every business in the cannabis industry needs to work closely with a compliance expert.
Why did you start Green Consulting Partners? What drove you to want to work specifically with cannabis entrepreneurs?
I was working at a law firm doing cannabis licensing work and realized that I wanted more freedom in terms of assisting clients. Bigger firms tend to prioritize billable hours at the expense of building meaningful client relationships.
And, as soon as I began working in the industry, I saw the value of having a compliance team assist with the licensing process. So many applications are denied simply because business owners haven’t been through this process before and don’t know what exactly local and state regulatory bodies need.
I now have the luxury of working closely with a select roster of clients who are like-minded and get along great with our team. We work with cannabis entrepreneurs because they, just like us, believe in the industry’s potential to help people and ultimately, we get to see more approvals come through for quality companies.
Are there “easier” or “more difficult” cities to receive a license in California? If so, which cities are easier and why? What can make the licensing process more difficult?
The short answer is yes. But you typically don’t know until you’ve gone through the process in a given jurisdiction. For example, there are cities that have simple applications upfront, but then offer limited guidance and/or assistance from the city while getting the necessary entitlements and building permits, etc. So, even if you have been granted local approval, that approval doesn’t mean much if you’re ultimately prevented from opening your business.
Licensing jurisdictions with Conditional Use Permits (CUPs) and Development Agreement requirements can result in delayed approval processes. Licensing may not be more difficult in these jurisdictions, but these additional requirements can prolong the start-up process.
The most difficult licenses are the heavily impacted jurisdictions with high competition. In these jurisdictions you have to submit a stellar application. It can be discouraging because there are no guarantees and the odds are not ideal, but if you do win the license then there is inherent exclusivity that comes with it. Retail licenses won under these circumstances are particularly lucrative.
Do you specialize in licensing for a specific use or type of business (i.e. Cultivation, manufacturing, distribution, lab testing, or retail)?
Not really. We work on all license types but the most complex tends to be the laboratory testing business license because of the complicated technical aspects of equipment used and standards for testing methods and validation.
At Green Consulting Partners, we’ve realized that we each have a knack for standardized aspects of the industry, and that our best work requires input from team members with varying perspectives. So while every member of our firm knows more than the basics for each form of cannabis business, our collective expertise allows us to adapt to the varying demands of all license types.
What sets Green Consulting Partners apart from other firms that assist cannabis businesses with licensing? What services do you offer aside from licensing preparation?
A few things.
First, we don’t carry any dead-weight and are always there when our clients need us. Each person on our team has a dynamic skillset, and, since there is limited bureaucracy internally at our office, we have a higher level of agility than most firms. For a client, this means that instead of calling and leaving a voicemail with an assistant and waiting around hoping to get an answer, our clients typically can get ahold of one of our associates or partners who can then immediately jump on a task.
Second, our credentials. We have obtained over 80 cannabis business licenses in California alone. For being a relatively modest consulting firm, we are probably as competitive as anyone in the space. Our team members have degrees from upper echelon universities across the board. Not only do we know the cannabis industry well, but we have learned how to adapt quickly with changing regulations and even anticipate new developments.
Outside of licensing, we offer ongoing compliance guidance, facilitate investments, advise on business development, consult on equipment and procedures, and support our clients with a handful of other ancillary services.
How has your business changed since California opened its doors to adult-use cannabis businesses?
There was a ton of confusion leading up to the recreational market and some individuals are still feeling that frustration.
It began as early as the separate programs (the MCRSA and AUMA) were created. Once they were merged (the MAUCRSA) there was some clarity, but it was still frustrating because “M” and “A” designations were applied throughout the entire chain of custody. The emergency regulations simplified the program, allowing “M” licensees to transact with “A” licensees and vice versa, but clients are (arguably justifiably) still worried about “M” and “A” designations attached to their business license(s).
As of now, the biggest distinction is at the retail level. Recreational shops may sell to anyone 21 or over and medical shops may sell to anyone 18 or over with a medical recommendation. For our firm, the implementation of the recreational market greatly increased investment and entrepreneurial interest; put bluntly, most people who come to us seeking to start a cannabis business want to have an “A” designation.
Have you seen an influx of businesses pursuing licenses since the Federal Government announced the rescheduling of CBD products?
More than anything, we’ve seen more confused clients seeking clarity about what they can legally produce, market, distribute and sell.
As a whole, CBD is not legal and has not been rescheduled.
A patented medication “Epidiolex” is the cause of most of the confusion. The FDA approved Epidiolex, in which CBD is the active ingredient, as a medication. In turn the DEA scheduled FDA-approved CBD medications as Schedule 5 drugs.
Any small developments toward legalization create a buzz in the business community – people on the fence are starting to jump over to the pro hemp and/or cannabis side. And CBD, because of its anticipated range of medicinal benefits, is sort of the foot in the federal door for cannabis but there’s still more that needs to happen before it can legally land on shelves across the country.
Do you offer licensing services outside of California? If so, where? And why expand to other states?
California hosts the largest cannabis market in the world – California’s population is actually larger than Canada’s. We have worked up and down the state and have basically learned every single aspect of California’s regulatory program. Needless to say, California will always be a primary focus of our firm as long as our doors are open.
However, we’re always interested in learning new programs and working in other states. The more people we can help operate in compliance throughout the country, the better for the industry. We ultimately want to see federal legalization not only so people across the country can have safe access to cannabis, but so law-abiding operators are protected.
The more informed and experienced groups there are acting in cannabis operators’ best interests, the better. Because of the scattered legalization, we’ve seen state and local politicians take advantage of operators through exorbitant taxes or fees and questionable practices.
What resources do you recommend new businesses use to research the licensing process? What’s the value in using a company like Green Consulting Partners to prepare licensing applications?
Sometimes a city or county will have a web page devoted to cannabis – you can typically find basic application requirements there. Most application processes require the submission of several comprehensive operating and business plans. And, even if you know the basics of, say, cultivation, it doesn’t mean that your knowledge will translate to a successful application.
The industry is highly regulated and there are a ton of laws and compliance considerations. So, most people realize that hiring us is cheaper than taking the time to learn everything on their own or having to learn through trial and error.
When a client hires us for a licensing project they typically work with us to create the vision of the business. By the time our client is licensed, they typically want to continue working with us to assist with the subsequent phases – all the way up to being operational and needing compliance audits or assistance with purchase agreements and so on.
We have put a lot of time and energy into becoming experts in the cannabis compliance space and our clients know that we want them to succeed. It’s best for everyone that they do.
What’s the best way for people to get in touch with Green Consulting Partners?
Call and leave a message with my assistant and hope I get back to you. Not really, you can call or email anytime, and typically there is at least one of us at the office on weekends – we do actually work pretty hard.
We also have a contact form here. Whether you are an industry veteran or are just starting to think about building a cannabis business, feel free to send us your questions. We’ll look forward to hearing from you.
(949) 291-0587 | contact@greencp.com
Reference
Image 1: "Compliance" by Nick Youngson CC BY-SA 3.0, Alpha Stock Images
Image 2: "Compliance" by Nick Youngson CC BY-SA 3.0, Alpha Stock Images