The Greenrush Bonanza: Part 5

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A virtual parade of Porsches and Ferraris rained down upon Sunset Boulevard as I walked to my favorite coffee shop in West Hollywood for a meeting with an aspiring cannabis business. At times past in my career (such as during the dot com in the 1990s), I had to knock on plenty of doors to monetize my skills and experience.

Things are different now.

The greenrush, combined with a relatively small number of people who do what I do for a living, has resulted in plenty of knocks at my door. Each of these parties is interested in one thing: Launching a cannabis business in what promises to be a very rewarding industry segment. Especially for the organizations and cannapreneurs that have what it takes to survive in such a volatile—yet promising—market.

The label “greenrush” aptly applies to the current nascent cannabis industry, centered mostly on the West Coast and in Denver (but let’s not discount East Coast newcomers Maine and Massachusetts). One of the most consistent themes I hear echoed by colleagues here in Los Angeles is that, while more cannabis businesses will fail during the next decade of legalization than will make it, those that forge sustainable, realistic business plans—and that have the human and financial resources necessary to consistently execute on them—stand to make a great deal of money.

We’re not in Kansas anymore, Toto. There is zero hyperbole in the perception that America currently resides on the precipice of what will relatively soon be a trillion dollar industry. Now that California and its 40 million inhabitants (who form the sixth largest economic GDP in the world) are down with legal adult use herb, the dominoes are truly beginning to fall.

This perfect storm has resulted in a logical feeling of panic among prospective investors who fear they will be left behind if they don’t soon become established in the industry.

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One of the most pressing issues for a new cannabis business—be it a small-budget solopreneur project or a multi-million dollar corporate effort—is the deadlines set by jurisdictions for submission of permit and license applications. It is these deadlines that are putting prospective cannabis businesses in a panic.

As they should. The clock is ticking.

My clients often solicit my opinion of the emerging cannabis industry. While simple terms simply don’t suffice in describing what is a very fractioned, disruptive, and even frenetic emerging industry, I often throw out the term “confusing.”

Cannabis Business 101

Let’s take Los Angeles, for example. From the perspective of jurisdictional oversight, it’s both a city and a county (the only such occurrence in the United States, tell me the locals). This means two different jurisdictional bodies with which a cannabis business must contend.

There’s also the need to comply with regulations set forth by the State of California. Currently, however, regulations for adult use cannabis businesses in the Golden State are in only draft stage. And the guidance given by the state? Get permitted at the local and county levels to even think about obtaining a license at the State level later this year. However, merely meeting municipal or county regulatory requirements is no guarantee that the State will, in accordance, also grant a cannabis business permit.

With some jurisdictions in Southern California, such as Costa Mesa, charging about $50,000 to simply submit an application, the idea of investing a couple hundred thousand dollars to then be told by the State that one had to shut down their business understandably hampers the enthusiasm of many small businesses and solopreneurs.

Should your cannabis business invest hundreds of thousands of dollars into a venture that could, technically, be denied at the State level? This scenario would obviously crush the dreams of the creative humans behind such projects—and is more proof of the high-risk environment that is the emerging cannabis industry.

The rapidly emerging cannabis industry is not, quite honestly, for the faint of heart or risk averse. Only those who very carefully and strategically develop compelling business plans will survive.

This creates a stressful environment for entrepreneurs and the professional ancillary services upon which they depend, including attorneys, consultants, and compliance documentation professionals like me.

For those interested in navigating these shark-infested waters—rife with shady investors and fast-talking wannabes with little real experience—there’s a few basic considerations to be tackled prior to involving someone like myself.

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First, a cannabis business must have an address (as does any registered business; these aren’t new rules). Like other industry segments, the address must be in the right place. Many jurisdictions that allow cannabis businesses do so in a very restrictive manner. For example, if pot businesses are allowed only in Zone X, and Zone X is three percent of the land in a jurisdiction, options are obviously limited for entrepreneurs (although tapped-in real estate agents and investors sometimes make a mint).

Second, there’s the consideration of setbacks. Setbacks are minimum distances allowed between a cannabis business and places like schools, official school bus stops, churches, and even retirement homes. While there is often commonality among jurisdictions in their regulatory codes and guidance for cannabis businesses, in the end, each jurisdiction sets its own rules.

In Northern California’s Humboldt County, where I developed more than 100 permit applications for cannabis farmers last year, setbacks were typically 600 feet. Jurisdictions in Southern California, however, most commonly require 1000 or more feet between a cannabis business and something like a school.

Thus, the first consideration before engaging with professionals like me is knowing the exact location of the proposed businesses and learning the zoning and setbacks. For the most part, only if these requirements have been met can a business move forward with seeking a permit or license to legally operate in that particular jurisdiction.

However, it gets more confusing than this (one of the reasons I work with seasoned attorneys who help my clients navigate these regulatory challenges). Some jurisdictions allow exceptions or make available waivers for these requirements. Under the correct circumstances, some cannabis businesses that, on the surface, do not comply with jurisdictional oversight are afforded a hall pass, so to speak.

A Few Hints

My Greenrush Bonanza series will continue to evaluate and analyze the emerging cannabis industry and the topic of compliance documentation, with an obvious focus on legal states like California, Oregon, Washington, and Colorado. Let’s also not forget the new adult use states that came online last November: Nevada, Maine, and Massachusetts. Yes, now the East Coast is also getting in on the adult use cannabis economy.

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Many are unaware of California’s big business moratorium that is part of the Adult Use of Marijuana Act (AUMA; also known as Proposition 64, the official name of the ballot initiative) passed in the state last November. It prevents big corporations from entering the market for adult use cannabis for five years (until January 1, 2023). The idea is to give small and midsize businesses that wish to leave the black market and join the ranks of legal businesses a fair chance, before the behemoth companies step in.

The combination of pending deadlines for permit applications and only five years until there’s an open door for large corporate players (like big tobacco, pharmaceuticals, and petrochemical companies) has created an environment in which entrepreneurs and investment groups are in a literal rush to get established. They are, intelligently, feeling the pressure to become fully legal (at least at the local and state levels) and carve out a slice of the emerging market before it’s too late.

A Friendly Warning

I recently moved to Los Angeles to focus on helping prospective cannabis businesses become established in this exciting emerging industry. This is a time when it’s critical to get into the game to get a good seat.

Experienced industry professionals and consultants have an opportunity to help Southern California form what is virtually guaranteed to be the most promising industry segment to emerge in the U.S. economy since Microsoft, IBM, and Apple duked it out in the dot com wars of the ’90s.

I respect the cannabis plant. It has blessed me and many of my friends and colleagues in countless ways. When used with good intent and in moderation, cannabis is virtually magical.

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However, a mere intense adoration for cannabis sativa in no way guarantees survival in this emerging industry. And, unfortunately, being “nice” simply does not always lead to success (as is seemingly the perception of many beautiful hippie souls in this industry who believe that good karma alone will carry them through).

Those who appreciate this magic herb and its medicinal molecules enough to dedicate their careers to it must also bring to the party a slew of business skills and critical thinking ability (or work with business partners/employees with possess these skills).

Do You Smell the Money?

People are currently smelling the money. In a tired economy that has been battered by the antiquated and bombastic boom and bust approach of Wall St., the United States (and, arguably, the world) needs legal cannabis and hemp to put hard working people back to work. The cannabis industry is an incredible opportunity to improve tax revenues in municipalities and counties throughout the nation, many of which are on the verge of bankruptcy or financially ill suited to best serve their residents (California City, a couple of hours east of Los Angeles, is one such example).

Sheer profit lust also won’t help a business succeed during this genesis of the legal adult use cannabis industry. It is a delicate and well balanced mix of business prowess, reverence for and understanding of the plant (learn the chemistry of cannabis here and all about terpenes here), and involvement of the right business partners and professional services that will separate successful from mediocre cannabis businesses.

Those who aren’t vigilant and don’t keep their eyes on the ball are, sadly, destined to fail.

Stay tuned for more observations on the exciting journey of entrepreneurs and small to mid-sized businesses that are entering the emerging legal adult use cannabis market.

— Gooey Rabinski


All text and photos, unless otherwise noted, Copyright © 2003-2017 Gooey Rabinski. All Rights Reserved.

Gooey Rabinski is a technical writer, photographer, and compliance documentation specialist for cannabis businesses who has contributed feature articles to magazines and media outlets such as High Times, CannaBiz Journal, MERRY JANEEmerald Magazine, Grow Magazine, Herb.coThe KindSkunk, Cannabis Culture, WhaxyHeads, Weed World, Green Flower MediaCannabis HBK11RenderHealth Journal, Green Thumb, and Treating Yourself.

He is the author of Understanding Medical Marijuana, available on Amazon Kindle.

His cannabis-related freelance photos, spanning back more than a decade, are available on Instagram and Flickr. He tweets from @GooeyRabinski.

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The Greenrush Bonanza: Part 4

Verklempt has never been my strong suit. But as I peered down on the Northwestern Pacific Coast shoreline of Humboldt County from the window seat of my departing United Airlines flight, I had to think once again about the immense market opportunities inherent in the emerging cannabis industry (aka the “greenrush”).

The insight I’ve gained during my 10 months in Humboldt County extends beyond mere statistics or photo shoots of cultivation facilities. In most of the United States, where pot prohibition is the norm, the black market obviously rules the day. But in states that have legalized adult use cannabis, like California and Colorado, things are different.

Most Americans, when they learned that the United States had doubled the number of adult use legal pot states last November, were too distracted by the results of the presidential election to truly take notice and weigh the probable economic and cultural impacts of this dramatic shift in public policy.

In a single day, the United States went from four to eight states that allow adult use (“recreational”) cannabis possession and consumption. Joining Colorado, Oregon, Washington, and Alaska are California, Nevada, Maine, and Massachusetts. Sixteen percent of U.S. states now officially condone sparking a joint or hitting a dab rig (but typically limit such activities to one’s home).

At 40 million residents, California is the most populous state in the nation (followed by Texas at 25 million and New York and Florida at 20 million each). As such, its emergence as a legal marketplace for cannabis products is especially noteworthy. According to Wikipedia, California is the sixth largest GDP economy in the world.

As such, the Golden State will hold considerable sway over the emerging trillion-dollar national consumer market for cannabis products and services. In my opinion, this will be due to three things:

  • California’s decades-long and relatively permissive pot culture.
  • The state’s first player advantage (it was the genesis of “medical marijuana” 20 years ago in 1996 with Proposition 215).
  • The sheer girth of the Golden State’s economy.

Rough Regulatory Ride

Many laypeople, upon learning that a state has legalized adult use cannabis, believe the heavy lifting to be over. It’s a common perception to anticipate that dispensaries and cultivation facilities will begin popping up on every corner following the successful passage of a cannabis-friendly ballot initiative.

In reality, though, this is rarely the case. After a pot law is passed, then comes the arduous task of wrapping regulatory oversight around the legislation. This involves defining specific elements of the law and how they will be implemented, enforced, and potentially altered in the future.

This is the messy job of public policy in which all stakeholders have a vested interest. Unfortunately, many simply don’t know it.

Let’s dig a little deeper: Many state laws don’t prohibit individual jurisdictions within the state (such as counties and municipalities) from banning cannabis businesses. And this is no trivial issue.

Dozens of jurisdictions in Washington, Oregon, and California have banned—to one extent or another—cannabis businesses within their borders. Fortunately, personal possession and consumption can’t be banned due to the fact that it would go counter to state law (a higher legal authority).

This patchwork of counties and cities banning cannabis businesses is bad for several objective reasons. First, it’s about the economy, stupid.

Second, it’s a tad ironic when a town or county often featuring dozens of liquor stores and bars says no to cannabis and allowing safe access for patients and recreational consumers alike. I believe in giving consumers options. This is only ethical and good karma, because presupposing the preferences of consumers or tax paying citizens is not only rude, but it is batshit crazy.

Let me explain. Any community that embraces the legal and regulated sale of alcohol that simultaneously prohibits cannabis businesses is depriving itself of tax revenue while preventing its citizens from accessing fair and ethical medical and social options.

The emergence of legal markets for cannabis products touches many layers of society. Yes, there are literally trillions of annual dollars at stake in this game.

There’s a trend in the United States. After cannabis becomes legal, many people—especially more conservative citizens who would never dip into the black market and have been unwilling to break the law—develop a quiet interest in cannabis.

This trend is rife in legal states, especially among senior citizens seeking healthy alternatives to opioids and other expensive pharmaceutical treatments that carry addiction and a slew of negative side effects. How will this mechanism affect the cannabis industry? Will it be different on the East Coast than the West Coast? Hmmm….

What does the future hold for the cannabis industry? Nobody knows. That’s what makes it so exciting. Stay tuned….

— Gooey Rabinski


All text and photos, unless otherwise noted, Copyright © 2003-2017 Gooey Rabinski. All Rights Reserved.

Gooey Rabinski is a technical writer, photographer, and compliance documentation specialist for cannabis businesses who has contributed feature articles to magazines and media outlets such as High Times, CannaBiz Journal, MERRY JANEEmerald Magazine, Grow Magazine, Herb.coThe KindSkunk, Cannabis Culture, WhaxyHeads, Weed World, Green Flower MediaCannabis HBK11RenderHealth Journal, Green Thumb, and Treating Yourself.

He is the author of Understanding Medical Marijuana, available on Amazon Kindle.

His cannabis-related freelance photos, spanning back more than a decade, are available on Instagram and Flickr. He tweets from @GooeyRabinski.