While negotiations are a fundamental aspect of business, it can be easy to underestimate the skill involved in reaching an agreement. Even seasoned leaders may overlook the nuances of negotiation skills, not least the crucial ability to discern when to seek professional help. But the ability to negotiate effectively is especially important in a highly regulated industry like cannabis, which comes with its own unique set of challenges.
As important as it is to have a deep technical knowledge of the industry and compliance requirements, it’s often the soft skills, not hard ones, that matter most. Do you know how to shine and engage the audience when you speak in a meeting? Or how to set the tone when you anticipate it will take a few “no’s” before you can score a single “yes?”
Leaders in the cannabis industry can gain a competitive edge by mastering these three essential soft skills for effective negotiations:
1. Identify what you want, and ask for what you need. There’s typically a good deal of skepticism and tempered expectations within the cannabis industry. This context can provide you with great leverage. The power of entering a negotiation with a well-defined understanding of your objectives and boundaries can’t be overstated. Such clarity is valuable in itself, and it becomes even more potent in an industry where this level of preparation is frequently underestimated.
Coming to a negotiation prepared is one of the best ways to make incremental progress.
Remember, success doesn’t always mean achieving everything at once. Every step you make toward your goals is positive. And even if you hire outside counsel or other support, your careful preparations will only enhance your attorney’s ability to represent you and deliver favorable outcomes.
This skill is especially important for requests for proposal (RFP), joint ventures, partnership agreements, contracts and amendments.
2. Practice active listening to ask strategic questions. Imposter syndrome can strike anyone, no matter how outwardly confident or experienced you might be. That can be particularly true in highly regulated, stigmatized industries like cannabis. The solution is always the same, however: preparation. Adequately preparing yourself is one of the surest ways to beat a case of nerves and enhance your negotiating position in the process.
Before any negotiation, arm yourself with strategic questions and a plan for how to clearly communicate those inquiries. Once the conversation is underway, use the headspace freed up by memorizing your questions in advance to actively listen to the other party. Make note of each opportunity to advance your position, even if the moment isn’t right just yet. Active listening is a great way to plan the foundation and questions for your next meeting.
This skill is especially important for capital raises and investment forms, letter of intent (LOI), intellectual property, enterprise service and franchise agreements.
3. Be persistent and proactive. Persistence and proactivity are important skills for entrepreneurs and leaders in any field — particularly if you’re negotiating with a third party that underestimates you or assumes they have an inherent advantage.
Social equity applicants, for example, already grapple with added paperwork on their path to business success. Unfortunately, there can also be underlying biases that question their competence compared to peers from more traditional business backgrounds. In states where licenses are scarce, there are always competitors waiting for these applicants to falter, hoping to seize their valuable licenses. This is precisely the moment when a robust and assertive stance in negotiations and business dealings can make a profound impact.
Being proactive in every interaction — from emails to mediation — by over-communicating, arriving early and being exceptionally prepared helps to boost your confidence and also conveys to the other side that you are not just competent, but formidable.
This skill is especially important for regulatory matters, securing financing, leases, operating agreements, non-disclosures and non-competes, disclosure and ownership requirements.
Cannabis leaders can deploy these skills through every step of building a business. From 280E and tax issues to banking access and financing, there’s no shortage of opportunity for founders to hone their negotiation chops. Whether you’re going up against a tough opponent or simply want to communicate more clearly and effectively with your legal team, these negotiation skills always come in handy.