Marijuana Business Magazine

Retail A consensus among California industry veterans is that the best places for retail opportunities will be in the population centers. However, many of those are already leaning toward some sort of cap on the number of storefronts they’ll allow, with plenty limiting it to just a few dozen. Many major cities – including Los Angeles – were still hammer- ing out regulatory details as of October, while others have ordinances on the books allowing for a small number of storefronts. For instance, Long Beach, a prime location for retailers just south of L.A. proper, currently allows for just 32 medical marijuana dispensaries. Los Ange- les itself could eventually permit several hundred retailers, but to start it’s going to give licensing priority to 135 dispensaries that have been in operation since at least 2007. For those not already experienced in a specific plant-touching niche of the cannabis trade, “Dispensaries are probably your best bet,” the SCC’s Grant said. “If you’re not an experienced cultivator or manufacturer, and you’re not connected with one, then you’re going to be investing a lot of money into learning the business,” he added. Infused/Concentrates This is perhaps the biggest and best niche for new market entrants, accord- ing to longtime L.A. industry consultant Avis Bulbulyan. “Your only limitation is your imagi- nation,” said Bulbulyan, CEO of SIVA Enterprises, a cannabis-focused busi- nesses services firm. “Anything that can be consumed can be infused, so go figure out what your customers want.The consumer base is already there, so ... it all comes down to branding.” Extraction may be one of the most strictly regulated niches within the can- nabis industry, specifically for operations that use volatile solvents in their manu- facturing process. So location may be key for many such companies. This is another area in which small desert towns like Adelanto and Desert Hot Springs have reached out to MJ businesses. Other municipalities that have already approved ordinances allowing for both medical and recreational extraction meth- ods with volatile and nonvolatile solvents include Arcata, Baldwin Park, Bellflower, Berkeley, Blythe, Brisbane, Cathedral City, Coalinga, Colusa, Davis, Emeryville, Eureka, King City,Maywood, Needles, San Bernardino, San Diego, San Leandro and Woodlake, according to CannaRegs. Even more, however, have already approved both volatile and nonvolatile solvent extraction for medical cannabis production, and may also allow for the same with rec. Oakland and Long Beach are prime examples. Cultivation Those looking to get into cannabis cultivation will have a host of options, with actual locations probably being the least of all possible business worries. Rather, the key in this sector will be either raising the capital to go big – which will cost any operator millions of dollars – or having the busi- ness savvy and connections to develop a craft grow that remains competitive in a market that’s almost certain to be flooded with product. Again, the best opportunities will likely be determined by local ordi- nances and whether a company has a preference for growing indoors, outdoors or in a greenhouse. Some small desert towns like Adelanto and Desert Hot Springs have tried making themselves more attractive to large-scale commercial growers by adopting pro-industry regulations and low tax rates. For example, Adelanto adopted an ordinance specifying that it won’t impose more than a 5% of gross receipts tax on MJ companies. The big caveat here, warned Berkeley Patient Group’s Luse, is that growers should be prepping to compete in volume. If they’re not, they’re probably setting themselves up for failure. “If you’re not looking at cultivation with a very low cost to produce a pound on a very large scale, you probably won’t be able to compete in the California market,”Luse said. 98 • Marijuana Business Magazine • November / December 2017 C alifornia D reamin' Avis Bulbulyan Sean Luse