Marijuana Business Magazine

110 • Marijuana Business Magazine • November / December 2017 a resident or being a local,” she said. “No two are the same.” For example, some towns may ban non-California residents from holding a license altogether, while others may allow out-of-staters to hold only a minority stake of a license, attorneys said. Take Los Angeles. Its draft industry regulations – which were still being finalized as of press time – say no out- of-state companies can come in and set up a business, according to Bricken. Businesses must have some California ownership. In Hollister, southeast of San Jose, a local resident must have at least a 50% stake in any MMJ or rec business located in the city. Other municipalities may not have residency requirements but will put up other “protectionist” measures that give existing operators an inside track. For example, two of the three counties in the Emerald Triangle – Humboldt and Mendocino – will require medical and recreational business owners to prove their company has been operating since before Jan. 1, 2016, Bricken noted. “While not a residency requirement, it’s definitely a protectionist measure to toss a bone to existing operators,” she added. Some towns and counties, mean- while, have no barriers to outside businesses. The best way to know for sure if the locale in which you want to start a marijuana business accepts out-of-state applicants is to check its MJ-related ordinances, which are often online. If not online, a phone call to the local govern- ment offices should get you an answer. “There are pockets that want the (economic benefits) and don’t care where the operators come from. But in more metropolitan areas you’re seeing cities and counties say, ‘Look, we trust the people who have been doing it. We want to make sure that they get in,’” Bricken said. Of the communities that allow marijuana businesses, which ones are most likely to allow out-of-state license holders? Economically slow communities – especially in Southern California and the state’s desert cities – “really want the economic boost so they’re not putting up these barriers to entry that other towns are,” Bricken said. “These smaller rural, desert communities are wooing anyone.” Think Desert Hot Springs, Adelanto and San Bernardino, for example. Another consideration is how far along a municipality is in its decision- making process. If a city has already decided to allow marijuana businesses, it’s likely that many applicants have already lobbied local officials and have their ears, putting them at an advantage over other applicants, Bulbulyan said. They may want to shut the door to out-of-state entities, for example. So it’s better to look at cities that are consid- ering accepting businesses but haven’t finalized their regulatory plans. Sectors and Real Estate It’s also important to identify the sector you want to enter. In making that decision, out-of-state entrepreneurs will need to weigh some factors, including available real estate and its cost, other expenses such as local taxes, and the number of potential competitors. For example, a cultivator could find it much more expensive than a rosin manufacturer to start from the ground up, since growers may have to construct a large building complete with heating, ventilation and air conditioning, among other costs. A rosin manufacturer, by comparison, can operate a press out of a relatively small room, Rogoway noted. “Right there you have a much lower barrier to entry,” he added. Under California’s new MMJ and rec regulations, however, growers may have the option to distribute their own prod- ucts, and vertical integration is allowed, making growing more attractive under the new regime than what it’s been up to now, Bulbulyan said. Another important consideration, especially if you’re in cultivation and/or C alifornia D reamin' Communities with sluggish economies want the economic boost, so they’re not putting up these barriers to entry that other towns are. Hilary Bricken