By Colette Thomas
After winning the retail lottery, you’ve now moved forward in the process of creating a business plan in an industry that doesn’t have a blueprint for success.
You’re also faced with an overwhelming amount of variables to ensure both compliance and profitability. Whether you have an endless budget, or not, here are some ideas on where to skimp and where to splurge.
If you think your family friend who has been doing the books for your current company can manage the tax obligations for your marijuana business … you should respectfully reconsider. It is crucial to the success of your business to maintain sufficient books from the beginning. Entertaining the thought of hiring someone who is not familiar with IRC Section 280E and the other various tax issues pertaining to this industry could be the death of your dream.
In Washington, several I-502 licensees have already had random visits from the Unemployment Security Department and Labor & Industries. You are running a legitimate business and you must hire individuals who are legally employable in the state of Washington. Many think they can have friends and family volunteer until they begin to make a profit, but this is not acceptable. Do yourself an enormous favor and hire an experienced tax preparer who understands the complexities of a marijuana business.
We have assisted three I-502 retail stores pass their final inspection with the Washington State Liquor Control Board and the key focus is on the surveillance system. Be sure to purchase a system with a minimum of 640×470 megapixels that is Internet protocol (IP) compatible, with clear and certain identification of any individual on the licensed premises. You can never have too many cameras to ward off the enemy. If someone cases your store in an attempt to rob or burglarize it, make it very evident that they will not succeed.
Make certain your alarm system is equipped with motion detectors, glass breakage and panic buttons to give your employees an extra sense of comfort. We also recommend panic buttons for key employees to wear around their necks while accepting product deliveries. Try to hire a company that can link your footage to an account that allows the ability to arm/disarm from any device.
The two key components to success are managing your inventory and your money. We have encountered businesses using paper and pencil, others using standard retail software, but the majority are using programs specific to cannabis. The cannabis-based traceability programs that offer a barcoding system that accurately manages your inventory have proven to be nearly bulletproof.
The hardware that syncs with the cannabis software of your choice does not have to be the cream of the crop. You can purchase computers separately and save a bundle. Some traceability companies will encourage you to purchase their suggested products and I respectfully disagree. We suggest buying the software, cash drawers, receipt printers, bar code scanners and label printer they recommend, to ensure obtaining their much needed support.
As the acquisition prices are much higher than anyone originally planned, imagine a licensed store with empty shelves. Without product, your doors are closed and you are not generating revenue. A major chunk of your capital should be designated to your initial inventory.
Consider opening your store with very basic paraphernalia. Provide a variety of glass pipes, bongs, rolling papers, grinders, screens and lighters. A good portion of your customers have not consumed cannabis in many years. They really need some simple tools to enjoy their purchase. You will be able to expand your inventory with unique pieces from our extremely talented local artists sooner than you think.
Exhaust as many free social media sites as possible. This will never fail you. I have witnessed several retailers spending a fortune creating fabulous websites, only to screenshot their daily menu or paste a link on their Facebook page.
As you know, it is virtually impossible to change your floor plan anytime soon. Try to open with very simple décor. You can always have the custom display cases made and unique cosmetic touches integrated at any time. Let’s face it, your customers are at your store to legally purchase marijuana.
Colette Thomas is a partner of Recreational Marijuana Management, which provides consulting services for I-502 retailers on licensing and compliance. RMM has assisted multiple retailers pass final inspection and open for business.