Marijuana Business Magazine

Geographic Considerations One of the biggest questions for plant-touching business opportunities is geography. “When you look at the landscape of California, there are so many jurisdictions that don’t currently license or permit marijuana business activity. So many counties and cities have a complete ban,” said Sean Luse, chief operating officer of Berkeley Patients Group, one of the oldest dispensaries in the state. As of late September, only 19 of California’s 58 counties and 112 of the state’s 482 municipalities had adopted or were in the process of enact- ing some sort of ordinance to allow for legal cannabis companies, according to Jacqueline McGowan, the CEO of Canaccelerate, a Sacramento marijuana con- sultancy that also provides business incubator services to entrepreneurs, startups and investors. McGowan tracks California’s cannabis-related laws at the local level, and she noted that even of those 19 counties and 112 towns, many are not wide open for new entrants and have already issued all the business licenses they intend to or struck one-off deals with a single company. “Investors beware. It’s extremely important to know this does not mean each of these jurisdictions are open for business,”McGowan said. In addition to McGowan, another resource for companies looking into local ordinances is CannaRegs, a website that provides an online database of county and municipal governments’ MJ business regulations. Looking ahead, industry insiders expect more towns and counties to embrace the MJ industry as local officials realize how much tax revenue is at stake. Local regulations will also play a big part in determining which sectors will provide the most opportunity. For example, most municipalities will have some sort of cap on how many retail permits they’ll issue, while indoor growers may be limited to where they can find appropriately zoned warehouses. Extraction companies may have to set up shop in municipalities that allow for volatile solvent use, because most do not. niches for new entrants run the entire spectrum: retail, manufacturing, infused products and concentrates, testing labs and ancillary companies. Each sector has its pros and pitfalls. Retail may present the biggest profit margins for those who can obtain licenses to run storefronts. But the ques- tion is whether a given business will be able to win those permits, as many cities are limiting the number they hand out and the process is highly competitive. When it comes to infused products, there are already dozens of recogniz- able brands in the California market, so it could be tougher to break into that niche. But many state industry experts say it can be done with the right prod- uct and branding. For testing labs, one of the biggest hurdles is startup capital for expen- sive equipment and high-level salaries for experts that will be able to give the company scientific and industry credibility. When it comes to ancillary business options, however, the sky may be the limit. “The economic opportunity in California is so significant that the businesses that are going to be required, not only in cannabis but to support cannabis, is unmeasurable,” said Greta Carter, the president of G.Car Com- panies, which has California business interests in cultivation, retail, extraction and more. Carter said such ancillary opportuni- ties could extend to alternative energy, water and environmental conservation, or more traditional MJ business models such as packaging and labeling. But those ancillary options will extend into almost every niche that other industries also need: accounting, legal services, insurance, security, real estate, etc. November / December 2017 • Marijuana Business Magazine • 97 Jacqueline McGowan