I am privileged to hold three Oregon retail licenses and one producer license. It has been a long time since my last contribution to “Living the Dream,” but time has allowed the dust to settle for me, just enough to pass on the good, the bad and the cannabis industry.
Like most entrepreneurs in cannabis, I had high expectations, filled with prosperity, when I entered the market in 2015. If you’re in it, you know what I’m talking about. But if you’re thinking about jumping into the mix, this industry is not for the faint of heart.
First, the advice you hear in this magazine and those with experience are worth taking to heart. In my quest to grow the company in 2019, I took on a partnership that almost destroyed my dream. My partner was experienced in business development and had funding to grow the business. It was a bad decision at the time and, ultimately, I rushed the deal without creating the fundamental framework to protect my interests: an operating agreement.
The operating agreement is paramount for partners to understand how decisions are made, how to break a deadlock, who is compensated, roles, expectations and, most importantly, how to separate as partners. Business partnerships are like a marriage; once you say “I do” without understanding how you will work as a team, you have forgone the legal opportunity to set the foundation for a productive relationship.
But I did not have an operating agreement and unbeknownst to me I was now in business with a partner who had every intention of flipping the business to the highest bidder. I was left with little option but to sell my shares when that highest bidder came along.
Fair or not, my story is not uncommon and unfortunately the saying goes, “It isn’t the smart guy or the crazy guy who will win a fight. It is the guy with the most money.”
My haste in bringing in a partner without an operating agreement led to selling my company to the highest bidder, Chalice Brands. In the end, I was holding a contract with no down payment and no cannabis retail shops to support my farm. I had to own it. I was left with a cannabis farm and a family to support in a flower market continuing to decline from its record sales during COVID. Those were dark days, but either you stay dark, or you find a solution to your problem. I found a solution, and at the same time, luck found me.
Three months after signing the deal with Chalice Brands, they executed their right to terminate the contract. Call it karma or just great luck, but the stores were back in my hands. My partner and I had concluded our other business dealings during those three months, freeing up my options. So, when the contract was terminated, he proclaimed no desire to own his shares and I purchased them at a fair market value. It was as simple as it was lucky.
The lesson here is don’t count on your luck or good karma; just don’t sign anything without consultation with someone that has your best interests in mind.
Always kushy, never pushy.