Marijuana Business Magazine September 2019

Marijuana Business Magazine | September 2019 120 Looking Back at Washington state Advice for Entrepreneurs in Emerging Markets “I’ve made more money in hemp in six months than I made in the past five years of legalized cannabis,” Fuhr said. Targeting his analytic services to growers at a bargain rate was a mistake, said Jim MacRae, owner of Seattle-based Straight Line Analytics. He recognized cultivators were operating on thin margins and would have difficulty justifying “noncritical” expenses. So, by offering his services at a bargain price, he set unreasonable and unsustainable expectations for what his services should cost. “That taught me to never underprice the value of the services you offer,” MacRae said. To get out of the unfa- vorable situation, MacRae didn’t renew the package in question and decided not to offer such deals going forward. Instead, he reverted to his core business model of charging an hourly rate. “I also started paying more heed to the advice of my spouse and a good friend in the industry who had both advised me against making the ‘socialist’ offer in the first place,” MacRae said. The proportion of revenue coming from farmers has been relatively low throughout his time offering services to the industry, and it declined after he decided not to renew the offer. To adjust, MacRae introduced a pricing option for jobs that he anticipated to be ongoing and fairly demanding of his time. He offered a very small discount from his base hourly rate for clients willing to pay him upfront for a 13-week period based on an agreed-upon number of average weekly hours that were anticipated for the upcoming quarter. As he begins to do more work for non-Washington state companies, he offers fixed-price contracts for well- defined jobs where he can effectively estimate how much of his time and other resources the job will require. “That seems to be a popular option for my out-of-state clients,” MacRae added. Set Clear Goals With Partners The direction and focus of your business can change over time, so having control As more state marijuana programs come online, both in the recreational and medical sectors, it can be tempting for business owners to believe they’re the trailblazers and risk-takers doing this for the first time. There isn’t any universal guidebook to follow, no “Cannabis Business Ownership for Dummies.” And, to be sure, regulators like to reinvent the wheel and create programs with unique rules and business structures each time a new state legalizes. But cannabis executives in emerging markets don’t have to start from scratch. They can learn from the mistakes of the pioneers who came before them in more established markets. Marijuana Business Magazine surveyed cannabis business owners in Washington who have paid their dues since the state legalized rec sales in July 2014. We asked them what advice they would give to entrepreneurs who are just starting out. – Bart Schaneman Jim Makoso, vice president, Lucid Lab Group, Seattle One tip I’d give to any business owner just getting started is to make sure you have at least double the amount of capital you think you’ll need. Steve Fuhr, managing member, Toucan Farms, Shelton, Washington Budget four times more money than you expect to spend, and make sure you invest in both a state and county that favors cannabis. Trying to change peoples’ minds about cannabis is both fruitless and frustrating. Alex Cooley, co-founder, Solstice, Seattle Be unique and novel. Operating a license or being key ancillary will not be enough to be successful. Ryan Abernathy, president, Xtracted Labs, Seattle Our goal has always been to build a real, stable business that can pay fair wages, provide health coverage, be a great partner to retailers and producers in the cannabis industry and replicate what we see with other ethical, non- cannabis businesses we respect. The challenge is the landscape we are trying to do that on is quicksand. Steve Fuhr. Courtesy Photo