Tag Archives: business

Going Beyond POS: Innovations in Dispensary Software

By Aaron G. Biros
No Comments

In a highly competitive market, dispensaries use wide product selections, competitive prices, rewards and loyalty programs to stay relevant and attract new customers. Many of those tools used to make the retail space more efficient require analytics to stay on top of their performance metrics.

At their SE 7th Ave location in Portland, Oregon, Cannabliss & Co. uses Baker software to better connect with their customers and track sales. According to Kevin Mahoney, manager of that dispensary, they use Baker’s software for things like their online menu, online ordering, text alerts and a rewards program.

Cannabliss & Co. SE 7th Ave location
Cannabliss & Co. SE 7th Ave location

Located in an historic firehouse built in 1913, Cannabliss & Co. was Oregon’s very first medical cannabis dispensary. Now that they offer both recreational and medical cannabis, their product inventory has expanded, their sales have grown and they have a wider customer base.

IMG_7545After using Baker’s software platform for almost a year now, Mahoney says he has seen great ROI on text alerts and the analytics. The online ordering and menu features have not only highlighted sales trends, but have made budtender-customer interactions easier. “We don’t want our budtender using the menu as a focal point of the conversation, but this allows for us to highlight particular specials or strains on our menu that gets eye attention right when the customer gets in,” says Mahoney. “Moving past the point of sale, it allows another conversation to happen organically, which keeps the customer engaged.”

On average, Baker sees conversion rates close to a 5% range per campaign. “That check in option is phenomenal; we get to see how many people actually came into the store from any given text alert,” says Mahoney. “In my mind, text alerts are preferable to email alerts; they can’t be marked as spam, it is easy to delete or opt out and takes much less time.”

Kevin Mahoney at his SE 7th Ave location
Kevin Mahoney at his SE 7th Ave location

Mahoney says the online ordering feature that Baker offers is a big selling point too. “Having an ordering service is absolutely terrific,” says Mahoney. “They can come in and out in less than five minutes with their full order by using the online ordering portal.” Mahoney says they see a real draw in this feature because it lets customers treat their dispensary like a takeout window at a restaurant.

Baker just launched a software platform designed for delivery service that a dispensary in Bend, Oregon has been using for two months now. With Portland legalizing cannabis delivery services recently, Mahoney is eyeing Baker’s software for his online ordering and delivery. “When the time comes, that is something we are very interested in pursuing.”

rsz_baker_kitchen_photo_1_of_1
Analytics allow users to track the success of campaigns

In August of 2016, Baker secured $1.6 million in seed funding, led by Former Salesforce Executive Michael Lazerow, according to a press release. “Baker has created a solution that is clean and easy to use and can help dispensary owners engage their shoppers like never before – online, mobile, social and in-store,” says Lazerow. “I witnessed first-hand how Salesforce supercharges its customers’ businesses and I’m inspired to see Baker driving the entire cannabis industry forward with this same intelligent approach.” In 18 months of business, Baker has worked with hundreds of dispensaries, helping them build better connections with over 100,000 customers. At Baker, we believe the cannabis shopping experience should be as comfortable and personalized as it has become in every other retail environment,” says Joel Milton, chief executive officer at Baker. “With expertise in cannabis, data and technology we have created an industry-specific tool that allows dispensaries and brands engage with customers and build brand loyalty through a personalized shopping experience.”

rsz_connect_sms_1
Text alerts are customizable and easy to send out

According to Eli Sklarin, director of marketing at Baker, the number one reason why patients and customers choose a dispensary is because of products on the shelf. “We originally started the platform in 2014 so people could order ahead and wouldn’t have to wait in lines at the dispensary,” says Sklarin. “In 2015, we saw more dispensaries than fast food establishments in many cities. Once inventory started to settle down, we saw a need for the dispensary to better connect with their customers.” The three core products that Baker offers are online ordering, connect SMS & email and the check in & loyalty program.

Their entire suite of software options is specific to the cannabis retail space. “Our customizable program is designed to help dispensaries catch customers and keep them coming back,” says Sklarin. “The software can give a snapshot of who their customers are, insights into the overall health of their dispensary, sales per day of the week, monthly promotions and other basic analytics that help them understand their customers.” Things like strain alerts can help retain customers, allowing dispensaries to notify certain groups of customers when products are back in stock. Whether it’s a customer who prefers a particular brand of edibles or concentrates, these software tools can help dispensaries get the right message to the right customer.

U.S. Senators to Treasury: Protect Banking for Cannabis

By Aaron G. Biros
No Comments

On Wednesday, ten U.S. Senators from both sides of the aisle signed a letter pleading with the U.S. Treasury Department to help with banking for cannabis businesses, according to Lisa Lambert of Reuters. The letter seeks some form of protection for cannabis-friendly banks and credit unions, even those doing business with ancillary companies.

Notable signatories include Senators Elizabeth Warren (D-Massachusetts), Bernie Sanders (D-Vermont) and Jeff Merkley (D-Oregon). “Most banks and credit unions have either closed accounts or simply refused to offer services to indirect and ancillary businesses that service the marijuana industry,” states the letter. “A large number of professionals have been unable to access the financial system because they are doing business with marijuana [sic] growers and dispensaries.”

U.S. Capitol in early December Photo: US Capitol, Flickr
U.S. Capitol in early December
Photo: US Capitol, Flickr

According to a spokesman, the Treasury Department’s Financial Crimes Enforcement Network will be addressing it. It is unclear exactly how Sen. Jeff Sessions, Trump’s attorney general nomination, would deal with cannabis-friendly states, let alone banking for them.

Many think Sessions would restrict access, ramp up federal crackdowns and make it difficult for cannabis businesses to grow. Once again however Jeff Sessions has not shared any plans on enforcing the Controlled Substances Act or cracking down on legal cannabis.

Cannabusiness Sustainability

Dear Cannabusiness Community

By Olivia L. Dubreuil, Esq., Brett Giddings
2 Comments

Dear Cannabusiness Community,

You may have read our two recent articles. We received so much positive feedback that Aaron Biros (editor-in-chief of Cannabis Industry Journal) has invited us to continue with our own column at CannabisIndustryJournal.com. We are very happy to launch this column, and we thought we would take this opportunity to introduce our project, our vision and ourselves so you can understand where we are coming from when you read this series of articles.

Brett and I both have a background in business sustainability and corporate responsibility. We both have backgrounds in management consulting, with a specific expertise in sustainability issues along the supply chain. We have been working together for almost nine months now on sustainability issues in the Bay Area. In May, we started to get interested in sustainability in the cannabis industry and before we knew it we were diving deep into research relating to the environmental, social and ethical impacts of the legal cannabis industry. It was actually difficult to find a lot of information, as the reign of prohibition still very much influences what is available.cannabusiness

In June, we attended the National Cannabis Industry Association’s conference in Oakland to open up the conversation with cannabis industry players and to find out about people’s attitudes and approach to sustainability. The results were overwhelmingly positive. Not only were we encouraged to launch a project, but also excited to discover that many of the speakers presenting at the conference referenced sustainability in one way or another when they talked about environmental impact awareness, social justice, ethics or about staying competitive when “big business” enters the market.

What started out as a side project quickly became the center of focus this summer when we decided to incorporate Project Polaris, a California non-profit, to deliver sustainability knowledge and expertise to the cannabis industry.

Our thinking is as follows:

Thinking about sustainability, means thinking strategically about business. As we forge a new and upcoming industry, let’s seize the opportunity to make it a sustainability-focused one! Let’s create generally accepted industry principles that fosters a positive image of the industry and teaches newcomers about best environmental and social practices. Let’s create a voluntary and industry-led socially responsible code of conduct for cannabis business owners and suppliers, helping the regulators, as they will be drafting all of the future regulations of the legalized cannabis market. Let’s do more research on the market and the consumer. Let’s develop clean and green alternatives to dirty processes or practices. Let’s elevate the discussion and create a model industry, one where short-term, large-scale, quality-lowering corporate interests are kept at bay.

With this vision in mind, we created Project Polaris because we believe that this is a real opportunity for the industry to be a role model for other industries (and educate legislators as well as drive public opinion in those states that are still under prohibition laws). We believe there is a real economic opportunity for those businesses that understand how to embed sustainability properly within their business model. Because we know that sustainability influences legislators in a positive way because it sheds a positive light on businesses.

In the upcoming months, we will continue to research and report on sustainability-related issues facing the cannabis industry, such as packaging, edibles, “organic” in cannabis, butane extraction versus CO2 extraction and so on. We also welcome questions from our readers. If you have a question, please post it in the comments section below.

We will also take this opportunity to call out to cannabis industry organizations, cannabis businesses, or cannabis related services and product suppliers to get in touch with us if they wish to find out how to integrate sustainability more concretely into their action plan. We are not planning on doing this alone, we are seeking partners to join us on this journey, and we want to partner with you on your journey to Cannabusiness Sustainability.

PS: We still have one seat open for the board of directors and would love to hear from you if you are interested!

Greenhouse Ventures Names Lindy Snider Lead Advisor

By Aaron G. Biros
No Comments

Greenhouse Ventures (GHV), a cannabis business accelerator based in Philadelphia, PA, announced they are bringing on Lindy Snider as the lead advisor to the organization. GHV helps seed-stage startups through a ten-week, 90-hour curriculum-based program. Using industry mentors and staff, the accelerator trains founders on emerging best practices of building sustainable cannabis businesses and helping them to raise up to $5 million in seed or growth capital, according to a press release.

Lindy Snider, lead advisor at Greenhouse Ventures
Lindy Snider, lead advisor at Greenhouse Ventures

Snider is the founder and chief executive officer of a Philadelphia-based skin therapy company, LindiSkin, as well as an investor in KIND Financial and Poseidon Asset Management. According to Snider, she is involved in a number of cannabis related ventures at the moment. “In a nascent industry like cannabis, early stage companies require hands-on training reinforced with constant mentorship and continuing education,” says Snider. “Greenhouse Ventures is taking a unique education-technology approach towards early- stage venture development, which stands to benefit entrepreneurs who get accepted into their accelerator, as well as investors who are evaluating accelerator graduates for a potential investment.” Snider’s late father, Ed Snider, was the chairman of Comcast Spectacor, a Philadelphia-based sports and entertainment company that owns the Philadelphia Flyers.

GHVtallAccording to Tyler Dautrich, co-founder of Greenhouse Ventures, Lindy Snider is an extraordinarily valuable asset. “Lindy has been essential in the early success that Greenhouse Ventures has experienced to date and we are fortunate to name such an active and respected member of the investment community as our lead advisor,” says Dautrich. The company will be hosting two ten-week semesters in February and September every year. Applicants that are accepted into the program typically receive an average of $60,000 in professional services in exchange for a minor equity stake in their venture. Those accepted applicants are not required to relocate, as virtual participation is available.

Kevin Provost, Greenhouse Ventures co-founder and chief operating officer, believes Snider has played an instrumental role in the company’s growth. “From day one, Lindy has supported Greenhouse Ventures’ goal of positioning Pennsylvania as the east-coast cannabis and industrial hemp capital of the country, and with the recent passing of SB3, Greenhouse Ventures is in a unique position to make Philadelphia the epicenter of medical research and ancillary technology innovation,” says Provost. The organization is currently accepting applications for its Fall 2016 semester in Philadelphia beginning October 3rd and culminating with Demo Day on December 8th.

Soapbox

Sustainability for the Cannabis Industry: Part I

By Olivia L. Dubreuil, Esq., Brett Giddings
No Comments

The cannabis industry is an unusual creature. It is so new and fluid that nothing in its space is yet crystallized. Product types, brand names, generally accepted processes and procedures are all still being invented and tested. Consumer market segments are defining themselves as the progression of legalization advances through the states. Seniors, children, veterans, women, and professionals of all backgrounds are feeling the health and wellness benefits of the flower that is slowly losing the negative stigma inherited from the so-called war on drugs. The potential is enormous. Money is already flooding to the lucky entrepreneurs with enough foresight to work in the space, and corporate business leaders from many other traditional sectors are slowly, but steadily flocking to the market.

This is economically encouraging. A whole new industry that creates new jobs, generates tax revenue and creates wealth. But there is a worrying scenario. In that scenario, traditional cannabis business owners and entrepreneurs are pushed out of the market as corporate competitors enter the game. In that scenario the industry grows faster than its regulatory framework, with little to no voluntary regulations, no sustainability leadership, and the industry’s practices and reputation finish in the gutter. In that scenario, federal and state regulators ramp up indiscriminate bans and phony prohibitions. In that scenario the new cannabis industry exacerbates the world’s social and environmental problems by being non-inclusive, by creating a divide within communities, by adding its own share of pollution, by pushing unhealthy and unsafe products – all for the sake of an easy buck.

That scenario is not a certainty – it does not have to see the light of day. This industry has the potential to be different. It has the unique opportunity to integrate sustainability practices from the start, to create a space where business meets mindfulness, and where corporate profits do not trump consumer health, worker welfare, community engagement or environmental preservation.

Sustainability strategy is the best risk management tool available to the cannabis businesses emerging today that hope to stay relevant in the future. A sustainable cannabis industry is one where women and minorities feel included, where the consumer recognizes and is loyal to brands and labels, where businesses are thriving while having a positive influence on their peers, a positive impact on their community and on the environment, where the race to the top breeds best practices and innovation.

Three levers can push sustainability: the consumer, the industry (and the businesses that comprise it) and the government (local, regional, national and international). Surprisingly, businesses can have a significant influence on all three. Consumers make and shape a market. What will happen when the consumer becomes aware of fossil-fuel (benzene) extraction in the age of climate change, when they request organic flowers that fits their ‘Wholefoods lifestyle’, or when they boycott non-biodegradable packaging? What will happen when a scandal breaks, linked to an avoidable health and safety accident, or when they realize people of color do not have equal opportunity in a cannabis business?

It is preposterous to think, that in this day and age – where information travels at the speed of light, some type of potentially damaging information about a product manufacturing process will not get out at some point or another (in some cases they have). There is absolutely no need to gamble with that. The solution is simple: adopt sustainable practices from the start.

The third lever is the government – we will come back to the second lever later. The cannabis industry, better than any other industry, knows how the government can make or break a business. If the government decides, like they did in Colorado, that in nine months cannabis packaging needs to be resealable and childproof, businesses will have to sit on several weeks worth of sales until they can find new suppliers, they will probably have to rethink their processes, while absorbing the costs of the packaging they had bought in advance. Worse case, they also have marketing and merchandising to rethink. All of that is costly.

However there is good news; government can be channeled, generally speaking, by doing the right thing. If an industry actively demonstrates a desire to do the right thing, and there is not an exaggerated amount of complaints (or accidents), then regulators will leave it alone. Businesses can and should invest as a group into drafting and endorsing generally accepted industry practices and organizing industry self-regulations. Those will guide governments when they draft regulations, but they could also preempt a lot of nonsensical top down rules

The second lever is the most important, and that is the business lever. Cannabis businesses can make or break this industry. Those who believe that the unsustainable practices that worked in the context of an illegal/black/grey market will work in the context of a 21st century legal industry may need a reality check. Those who continue to promote and endorse them are dangerous for the industry because they breed a climate of distrust, and they bring the industry under closer scrutiny. The cannabis industry needs businesses that display exemplary behaviors, think about their impact, and elevate the discussion as well as their peers.

Whether a business is small, large, mature or emerging, developing a strategic response to these challenges can and will create a sustainable business model. Businesses can gain robust competitive advantages over their peers, reap the rewards of having loyal customers, create thriving communities, and foster healthy natural environments by doing the right thing and embedding sustainability within their business decisions.

Tomorrow’s cannabis industry business leaders will be those that chose to be part of the solution, those that understood that sustainability was vital to their business model and took action early on.logo name1


Editor’s Note: Project Polaris is a California non-profit corporation, offering sustainability coaching and guidance to cannabis industry businesses. By becoming a member of Project Polaris, businesses have access to sustainability experts throughout the year, to set, support and carry out cost-effective, meaningful and impactful sustainability solutions.

Marijuana Matters

Patent Options Available for Breeding Cannabis

By David C. Kotler, Esq.
No Comments

Patent No.: 909554. Date of patent: August 4, 2015. Years from now, historians and academics may look back on this patent number and date as a watershed mark in the evolution of legal cannabis. Feel free to read the 147 pages of the patent documents but, in short, it “leads to many innovations, provides compositions and methods for breeding, production, processing and use of specialty cannabis.” It was the first time that the U.S. Patent Office (USPTO) had issued a patent for a plant containing significant amounts of THC. One USPTO spokesman recently discussed with a journalist that “there are no special statutory requirements or restrictions applied to marijuana plants.” The following is a broad, and I mean really broad, overview of the options available to protect intellectual property within the cannabis species and strain realm.

Generally speaking, to be patent eligible, an invention must be useful, it must be new, it cannot be obvious and it must be described in a manner so that people of skill in the relevant specialty can understand what the invention is, make it and use it without engaging in undue experimentation. In terms of cannabis, essentially the breeder must have created a new and non-obvious strain over what already exists that is useful such as being highly resistant to molds or having a specific concentration of CBD.

Breeders potentially have a number of options available to them, despite the common belief otherwise. In the U.S. there are five types of intellectual property protection that breeders can obtain for new plant varieties or their use of clones:

One may seek protection for seeds and tubers, known as Plant Variety Protection. A tuber is essentially a swelled root that forms a storage organ. The Plant Variety Protection Office provides this protection. To apply for Plant Variety Protection, the applicant submits information to show that the variety is new, distinct, uniform and stable.

For asexually propagated plants except for tubers, a Plant Patent may be sought. These are sought through the USPTO. This is relatively inexpensive compared with a Utility Patent covering the genetics.

Trade secrets are often used to protect inventions that will not be commercially available or cannot be reverse engineered. For example, if a new strain is invented but is only commercially available in its final form, trade secret protection may be the best form. The most important thing to remember is that a company must follow a strict set of requirements to keep the trade secret confidential.

The last patent type protection could be through a Utility Patent. A Utility Patent can be issued for any type of plant showing its utility. These are issued by the USPTO. Seeking and obtaining a Utility Patent is expensive and complex.

In addition to Patent Protection, breeders may seek Contractual Agreements restricting the use of the clones (i.e. a material use agreement). The parameters that a breeder wishes to craft can essentially be crafted into the language of any type of agreement that is drafted to memorialize the relationship and terms between the parties.

A few broad-stroke items to keep in mind with regard to patents particularly relative to the patenting of cannabis strains and the like: First, is the passage of the America Invents Act which among other changes allowed for the U.S. to transition from a First-to-Invent patent system to a system where priority is given to the first inventor to file a patent application. Second, there are the potential bars based on different types of prior use.

Any discussion about the foregoing topic should necessarily include the question: Is it really good for the cannabis industry and its evolution? The dialogue moves out of one steeped in tradition, lure of trips through mountain passages, and potentially patient benefit or in search of higher quality and into connotations of business law and big businesses sweeping in to take over. It is an expensive process. It may be inevitable. In the meantime, protect yourself as best you can and as you see fit.

Soapbox

Why are Business Professionals Hesitant to Enter the Cannabis Industry?

By Tyler Dautrich
2 Comments

I recently had a discussion with a colleague of mine on how the cannabis industry lacks business sophistication. There are not many MBA level, or proven business professionals, that have made a living and name for themselves in another industry, entering the cannabis space. At first glance, you would think there should be, primarily because they can leverage their previous expertise and success into a new, multi-billion dollar space. Instead, those professionals are watching from afar and eying a move to enter the industry five to ten years down the line.

It just so happens that the individual I was speaking to is in the situation described above, so I asked why? Why not leverage your success and make a name for yourself in this industry where there is clearly an opportunity? This individual is coming from a legal background so this piece will focus on that area primarily. However, the story is the same for many others that come from different professional backgrounds.

They informed me that entering the cannabis industry could risk them potentially losing their license to practice law. They practice law in a state that does not have any form of cannabis legalization. So even if this person wanted to actively pursue working in the cannabis industry (where legal), they run the risk of potentially losing their license and not being able to practice law again. This creates a difficult decision for someone considering an emerging industry that still has an uncertain future.

Beyond putting professional careers and relationships in jeopardy, the cannabis stigma affects personal lives. It amazes me that there is still an extremely negative stigma that surrounds this industry. No matter the level of professionalism the industry demonstrates, many still think working with cannabis could be considered unprofessional.

I know from first hand experience in talking with a handful of professionals that are working in the industry, they do not tell everyone what their job is. Or they use their job title from their other current, or previous, job outside of the industry. They do not want certain individuals to know they are in the industry because they know it will damage their current reputation in certain groups.

This is one of the recurring issues with startups not only going through Greenhouse Ventures accelerator program, but throughout the industry. Many lack that level of business sophistication to have the know-how and ability to scale and grow their startup. Yes, they are the founding team and they have the idea and the vision, but they are not the team that investors put their faith and capital in.

My question is, what needs to happen to start attracting these business professionals into the cannabis space? We have already seen a few of the more risk averse professionals jump ship, but a majority are still hiding in the shadows or watching from the sidelines.

New Business Accelerator Program, Greenhouse Ventures, Completes Pilot Semester

By Aaron G. Biros
No Comments

There are a few business accelerator programs that currently exist in the cannabis space, but Greenhouse Ventures (GHV), based in downtown Philadelphia, seeks to fill a gap in helping ancillary businesses get off the ground. Through a ten-week, 90-hour curriculum, program, Greenhouse Ventures assists startups by increasing their business model sophistication.

Bart Mowrey, founder & CEO of TokerWare in December on the 'Demo Day' in Center City Philadelphia
Bart Mowrey, founder & CEO of TokerWare in December on the ‘Demo Day’ in Center City Philadelphia

“The program consists of three hour sessions, three nights a week, for ten weeks, covering topics such as general business development, go-to-market strategy, growth strategy, capital formation, legal & financial due diligence, fundraising, valuation, and exit opportunities,” says Tyler Dautrich, founder of Greenhouse Ventures. Business startups in the program are paired with industry experts who serve as mentors providing advice, guidance and strategic introductions.

The program culminates in a pitch event where the startups are given the opportunity to pitch potential investors and advisors in an effort to strategically advance their business model. According to Dautrich, Greenhouse Ventures’ overall mission is to increase the level of business sophistication of ancillary startups.

Courtney Rudolph, founder & CEO of Green Seven, in December during the program in Center City Philadelphia
Courtney Rudolph, founder & CEO of Green Seven, in December during the program in Center City Philadelphia

They differentiate themselves from other startup accelerators like Canopy Boulder and MJIC’s Gateway by using a curriculum-driven program. Participants in the accelerator work closely with GHV staff, industry services providers and industry experts to learn exactly what they need to secure capital and get their business to the next stage.

Tyler Dautrich, founder of Greenhouse Ventures
Tyler Dautrich, founder of Greenhouse Ventures

According to Dautrich, Greenhouse Ventures also differs from other accelerators because they are not an investment fund. “We do not invest any capital into any portfolio companies at this time,” says Dautrich. GHV does however invest $60,000 worth of services into each portfolio company and only takes an average of 5% common, non-voting rights, stock. “The goal is for the companies in the accelerator to validate some, if not all, their initial assumptions and prove that the company can progress without that capital infusion” adds Dautrich. “This serves as a great due diligence process for potential investors.”

Graduates of GHV and CoPhilly Fall 2015 semester
Graduates of GHV and CoPhilly Fall 2015 semester

The program successfully completed its pilot semester in December of 2015 with three ancillary businesses in the cannabis industry. The second semester will launch this Spring in the end of April and Greenhouse Ventures will be accepting up to 10 ancillary companies for its second semester. The application window is currently open for the spring semester.

Marijuana Matters

What Happens When the Attorney-Client Relationship Goes South

By David C. Kotler, Esq.
No Comments

Today I get to take a break from talking about what some lawyers, where ethically permissible, generally deal with in the cannabis space in terms of drafting leases, distribution agreements, licensing agreements, and/or application assistance. Within the cannabis industry, I personally serve as outside general counsel to entities to which I provide legal guidance and advice under retainer agreements, which comply, with my ethical obligations as a member of the Florida Bar. Over the last two years, I have spoken with individuals in other states and lawyers who practice in other states. As the cannabis industry has evolved, we continue to witness start-ups that need legal help and often take the most cost-effective route. In certain jurisdictions, I have heard of attorneys, particularly attorneys in Colorado, who have expanded into those jurisdictions and taken an equity stake of the start-up for their legal services. Whether or not this is true, and furthermore permissible, remains to be determined or even addressed by me, as this is a topic for another day.

But what happens when the lawyer-client relationship goes south?

It just so happens that in Florida a lawsuit is taking place between a well-known industry participant and its former lawyer. The names of the parties are omitted to protect them; however, perhaps more importantly, not to put myself in anyone’s cross hairs. This dispute was first reported in a reputable industry publication. Having had experience in media-worthy cases in the past, I am assuming that one party or the other reached out to self report the lawsuit for whatever advantage they thought they would garner. Upon review of the docket in preparation for writing this piece, I noted the docket’s length. For those who are unaware, a docket is essentially a listing of the dates and matters that have been filed during the pendency of a lawsuit.

The docket for the case begins between our anonymous parties, on October 26, 2015 with the filing of a complaint. Since October 26, 2015, there have been approximately 59 docket entries. In some cases, that number could encompass all of the docket entries over the life of a full litigation, short of trying a case, and probably gives the reader some idea as to the litigiousness between the parties. In part, this could be due to the personalities of both former counsel and new counsel representing the company in defense, but probably is not indicative of what would happen in every dispute between former counsel and a company. It is certainly a scary proposition considering the fees that may be incurred in defense of the action, aside from the sum that is allegedly owed to the plaintiff. Without getting into the minutia of the complaint, of note was a portion of the retainer agreement that served as the basis of the breach of contract claim, which granted the law firm incentive stock options pursuant to the company’s incentive stock program. It is imaginable that at the time of signing the retainer agreement, the company probably did not think too much about signing such an agreement; however, as time went on, this may have become problematic on a number of levels. Further review shows the parties airing out their dirty laundry in a public forum.

What example has this lawsuit shown us, and what can one take from it?

Well, this lawsuit is illustrative of what can go wrong for start-ups and newer companies in hiring counsel, either on a one-time basis or as outside general counsel. Giving stock options may not always be advisable as a means of deferring payment on the front end. Also realize that counsel who you hire will be privy to some very important and intimate details of how your company operates. In the cannabis industry, one might wish to be especially guarded, as the industry still has considerable exposure federally. The attorney-client privilege, which some readers may have heard about, can cover communications and work done on behalf of the company during the relationship and survive termination; however, that privilege may very well be waived if the services/fees of the attorney are being attacked or defended. Overall, like anything else, it is important to understand who you may be working with on the front end and memorialize any relationship properly and clearly in writing. Go into the professional lawyer-client relationship with reasonable expectations, reasonable demands, and pay reasonable compensation for the work being performed. As a business, don’t try to get something for nothing. And as an attorney, don’t expect the company to be your golden ticket.

masterplans logo

Marijuana Business Planning: A Q&A with Mike McCulley

By Aaron G. Biros
No Comments
masterplans logo

MasterPlans, a business planning firm based in Portland, Oregon, has more than 13 years of experience in the emerging cannabis industry. The firm has worked to develop financial models and business plans for new and existing companies that are looking to secure funding, grow partnerships, and manage their long-term strategies for success. They have created business plans for more than 100 companies at every level of the market, from cultivators to dispensaries, to businesses in packaging, security and tourism. They work with nonprofit ventures, investor propositions, commercial lending and self-funded companies.

“We know how difficult it is to launch a business in the cannabis industry, because we work with businesses in this field every day,” says Mike McCulley, VP of Sales at MasterPlans. Cannabis Industry Journal spoke with McCulley to learn more about some of the challenges that marijuana businesses face.

masterplans logo
MasterPlans Cannabis Business Plans

Cannabis Industry Journal: What are some of the biggest hurdles in launching a new grow operation?

Mike McCulley: Many of our cultivation clients say that the largest hurdle they face is in identifying the ideal location for their business. Grow operations need to factor in a wide range of concerns including cost, zoning, security, soil viability (for outdoor operations), energy costs (especially for indoor operations), and proximity to schools and similar buildings. Location can really make or break the success of any grow operation, and this is often the single largest cost incurred when launching this kind of business.

CIJ: What are some key ingredients in a successful marijuana business plan?

McCulley: It probably goes without saying that a successful business plan for a company in the marijuana field first has to execute all of the elements that every business plan needs to include: Detailed financial projections, accurate market analysis, [and] a comprehensive overview of strategies and goals. Marijuana business plans in particular need to also address the key issues and challenges that are unique to operators in this industry. How will your company be impacted by state-level regulations, and how will your operational model address those? What steps will you take to ensure the security of your product? How will you accommodate the complicated issue of accounting while federal regulations are still impacting the way marijuana companies manage their banking? These issues should be acknowledged and addressed if you hope for your plan to be compelling.

CIJ: With the growing schism between recreational and medical markets, how do you determine your target market and meet those customers’ needs?

McCulley: Determining a target market can be difficult before launching operations, but it’s not impossible. A key tool to help work through this question is up-to-date census information or demographics for the area in which your company is serving. Recreational markets provide a much broader audience to become potential clients, but medical markets can also offer lucrative opportunities if an operator can launch in an area with a high concentration of eligible patients. Accurate market data plays a key role in this process, and close analysis of that data can help operators determine their best course of action.