By Garrett Rudolph
I know there are probably thousands of Marijuana Venture readers that will disagree with me on this, but I actually don’t think it’s a bad thing that the Washington State Liquor Control Board is licensing marijuana businesses at a snail’s pace.
Wait! Before you grab the pitchforks and plan to storm our offices … hear me out.
Everybody wants to get their licenses as fast as possible, and that’s completely understandable, but it’s also a classic case of “be careful what you wish for.”
What would Washington’s legal cannabis industry look like if the Liquor Control Board magically granted every pending application at once? I can only imagine the chaos, the cries of price gouging and the frustration that would be caused by 4,000 new businesses flooding the market all at once.
The already-present gold rush mentality would be compounded exponentially.
Many of the ancillary businesses that service the cannabis industry wouldn’t be able to handle the instant spike of clients. They would be so overloaded, there would likely be mile-long waiting lists, and the basic economic principle of supply and demand would drive the price of ancillary supplies through the roof.
Other companies would likely step in to fill the need, attracted by the smell of money, but do they have the expertise in this space that you would want?
If I were hiring a lawyer, I would want somebody with the background, the training and the hands-on experience of representing clients in the cannabis industry. I wouldn’t feel comfortable bringing in a business attorney whose previous clients are clothing retailers and gas station owners. Marijuana businesses simply face a mountain of complications that “regular” businesses don’t have to address.
The same goes for hiring accountants, insurance agents, architects and real estate brokers. The tax issues of a canna-business are significantly different than those of a bakery, for instance. I think specialization is going to be absolutely critical in this industry. It’s one of the reasons I think Marijuana Venture has been able to grow the way it has. Anybody can thumb through the phone book (or throw darts at a board) to pick their team of professionals, but many companies still consider this industry taboo. It’s safe to say that all the companies in Marijuana Venture are friendly to the cannabis industry.
From a construction angle, I could see contractors being booked full months down the road if all the licenses were to be approved at the same time. Imagine the hassle and mess of coordinating plumbers, electricians, carpenters and HVAC technicians if everybody in the industry were frantically hunting for experts.
Many contractors would maintain their high level of professional services and fair rates. But not all.
Some would take advantage by charging exorbitant rates.
Others would cut corners to get jobs done faster and move on to the next project.
And of course, the problems wouldn’t end there.
Imagine dealing with building permits and licenses if all the city and county departments were backlogged. Thousands of business owners can already attest to the wait times of government agencies, even with the regular flow of business.
Imagine doing your research on the various extraction machines, painstakingly selecting the one that fit your needs and budget the best, only to discover a year-long waiting list. Do you proceed with an alternate company or wait it out?
Imagine suppliers running out of the nutrients you prefer, or the light bulbs you’ve been using, or the paraphernalia that’s being sold in retail shops.
Imagine testing labs with one-month turnarounds.
Imagine the cost of the final product if every step along the way cost 10 percent more due to the shift in supply and demand? Many consumers already complain about prices in the $20-$30 per gram range. How would the market change if those starting prices were bumped another $10 a gram just for businesses to keep their doors open?
Imagine if the Liquor Control Board rushed the process and opened Washington State business owners to scrutiny by the federal government if parts of the system went haywire.
In all honesty, the Liquor Control Board’s pace is definitely too slow. There has to be a happy medium between the current pace and completely overloading the market.
But you can’t always get what you want. Business owners have little choice but to deal with a licensing process that could extend well into 2015, if not longer. It’s certainly prohibitive of get-rich-quick schemes.
Personally, I have a feeling the businesses that come out on top will be the ones that best utilize the empty space between preparing for their license and waiting on the Liquor Control Board.
If you’re applying for a producer/processor license, take this time to make connections with as many retailers as possible, and vice versa for the retailers. Take time to visit the testing labs you’re considering. Research the products you’re going to use. If you’re a grower, that might mean your lights, your soil, your HVAC setup.
For processors, there are a wide range of packaging companies and methods out there. For retailers, what type of point-of-sale equipment are you going to use? Are you going to have an ATM in your store? Will you sell locally made, hand-blown glass pipes, or will you go with cheap, factory-stamped pieces? The questions are almost never-ending. Don’t wait until you’ve got product in your store before you buy your first display case.
Shop around for consultants you can trust, employees you can rely on and vendors that best fit your needs and philosophies. In a world of email, social media and digital interaction, it’s easy to forget the importance of meeting people face to face. It’s easy to overlook the value of a first impression.
It’s not easy to be patient, but your time is going to come.