Photo Credit: JOHN KARCZMIT
The obstacles to entering and surviving in the cannabis industry – particularly for plant-touching businesses – are myriad.
From banking to insurance and real estate to municipal governments, the key is not just engaging but building partnerships and doing that from the beginning and not waiting until you have to.
That was the overarching message delivered by the panelists on the New Jersey Cannabis Summit’s “Establishing a Legal and Compliant Cannabis Business” panel on Oct. 24.
When it comes to banking, Leise Rosman, chief operating officer of 4Front Ventures, told the more than 300 attendees, “We consider them operating partners with us. If you view them as a place where you’re just making transactions, that’s not an effective relationship. They’re going to want to see things like your seed-to-sale outputs to make sure that what you’re depositing is coming only from your business.”
Rosman was joined on the panel, which was moderated by Brach Eichler’s John Fanburg, by Devra Karlebach, CEO of GTI New Jersey; George Schidlovsky, president of Curaleaf New Jersey; Dianna Houenou, policy counsel, ACLU New Jersey; and Bob Daino, COO, Acreage Holdings.
Schidlovsky said that Curaleaf works with a state-chartered bank in New Jersey. Because the transactions are in cash, he warned potential operators to be wary of alternative solutions. “There are cashless payment systems that are out there that are very dangerous to get enrolled in. Be careful, be very cognizant and let your bank actually do the due diligence on those systems before you start to use them in your dispensaries.
The key when dealing with insurance companies, Daino said, “was explaining that the risks aren’t greater than doing due diligence on a ‘normal’ operating business. We get a lot of no’s before a yes. It’s because of the stigma and people on the other side create their own fear factor that it’s going to affect their own business. It’s not that we’re the risk – it’s their own risk by doing business in this business.”
Schidlovsky added that on the whole the cannabis industry files few insurance claims and is highly protected and low in crime.
“When you talk to insurance companies you can stress that you’re a low-risk industry,” he said. “Yes, we handle a lot of cash, but when you move the cash out every night, there’s not a lot to insure in the safe.”
Speaking of safes, Rosman used her experience with one as a perfect example of why it’s important to bring your insurance company and other service providers in on the process from the beginning.
“Our vaults in some of our facilities have a safe where we keep cash and other things. The floor underneath the safe has to be built to a very special standard for our insurers to feel good about our safes being protected so someone can’t get in from underneath or it’s not going to drop into the basement,” she said. “It sucks to have to reinforce a floor after you didn’t get their advice on a vault that you’ve already had inspected.”
The stigma of cannabis is one of the primary battles the industry has to fight.
Educating local leaders, businesses and the community is essential, said Karlebach. “It’s about dispelling fears of reefer madness. It involved educating on what cannabis is today. You have to have a community benefit plan.”
It also means being a good neighbor. For Karlebach, that meant the workers at a dispensary she managed in Oregon shoveled the driveways of her neighbors and for Rosman that meant letting police use their security camera footage to catch the person stealing birds from the bird store next door.
Houenou stressed that engagement with community members, especially in communities of color, is critical. “Don’t patronize. Don’t just check the box,” she said. “Partner before the regulations come out. Don’t wait to be required to do something.”
She added, most importantly, “we don’t want to be tokenized.”