The public perception is that folks in the marijuana trades have been raking in the dough for decades and these rumors are bolstered now that legal cannabis is creating millions of dollars in tax revenue. This misconception is hurting our newly forming legal industry and is showing up in the form of what I call “green gouging.”
The culture of much of the cannabis cottage community of lore is/was simply one of creating a network of sharing the bounty for reasonable compensation — purchase an amount, split it four ways, sell three parts to friends to cover the costs and basically have a personal stash for the effort. If there were any actual profits made, it was simply extra pocket money for most. Sure, there are some who have created enterprises involving huge quantities for great profits but the lifestyle of dodging border patrols and federal authorities is not one many have chosen; it’s just the one that makes the headlines when busted touting street values in the millions. Personally, since the mid-1970s when I began using cannabis, I have yet to know a marijuana dealer that is dripping in wealth!
The conception that legal cannabis businesses are making millions is also wrong. The news is full of articles about the troubles with the burgeoning marijuana industry in Washington State and those of us experiencing it are troubled for sure. The reality in this highly-regulated industry is that on top of the federal, state, county and city government restrictions, new businesses face inflated prices for services. This green gouging mentality is especially prevalent in the professional services sector where quantifying prices are subjective. It also shows up in the form of agency fees that seem outrageous.
I have been an independent business person utilizing common business services for decades and now that I am shopping for the same type of services for our cannabis business, I am astounded by the exorbitant prices some ancillary business are demanding. Why should I pay more for simple services like web design or packaging than other industries?
Landlords are what started my experience with green gouging. When we began to seek a proper place to establish our business, we were looking at grungy warehouses in South Seattle for 50 cents a square foot. These buildings quickly went to more than a dollar when the use was revealed, and now, three years later, are approaching $2 a square foot plus the triple nets. I understand supply and demand and properly zoned buildings are a premium, but my pencil does not calculate how any business can survive at those lease rates.
Legal consultants are another service that is grossly taking advantage of bright-eyed entrepreneurs. I was quoted a fee of $5,000 from a prominent law firm to just to get me through the Liquor and Cannabis Board’s docusign process! I found the process to be little different than applying for a home mortgage and did it for nothing other than a couple afternoons of my time.
The plethora of “professional consultants” are another group that seems ridiculously overconfident in their services. Think about it. No one has ever been through this process before. What experience could they possibly have? We can apply basic business practices to our industry, but we are also making it up as we go along, due to all the rule changes coming at us weekly. How could an outsider know more about this process than those of us living and breathing the legal, regulated cannabis market?
And then there is the banking — if you can find it. Five hundred dollars a month to just count and bank my money? I thought extortionary practices were unlawful, but apparently not when it comes to our federally insured institutions.
The Puget Sound Clean Air Agency fee is the crème de la crème of government fees run amok. A Tier 3 friend of mine’s PSCAA fee was more than $4,000. When I called to inquire, they explained in detail how the fees stack up, but how little they can actually do to determine excessive odor. They use no devices to detect odor; everyone has different sensitivities to odor. Even if they get a complaint, by the time they investigate the wind will have shifted, thus spreading the odor far and wide. The agency’s advice was to walk the perimeter of our property often to see if we can smell anything. That advice is worth about 10 cents in my opinion.
This green gouging will prevail unless we, as an industry, quit falling for it and work to change it. Personally, I am taking my ancillary business needs to companies that are well-established and have been servicing non-cannabis industries for years. They are not experts in cannabis — that’s my job. They are experts in their own fields and I have found them not only competitive but very excited to help me in my business development. I am also engaging in regulatory government conversations to help soften the fees for all small business. I encourage all in our industry to do the same and let the green gougers fade away.
Shawn DeNae is CEO of Washington Bud Company, an aspiring applicant for a producer/processor license. She is one of the founding members of the Marijuana Business Association Women’s Alliance.