NJ Cannabis Media -
February 4, 2019

Cannabis and stigma: Business implications

Written by Marc Schwarz
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How is a cannabis business different than say a bakery when it comes to building an operation?

Beyond the obvious – cannabis, although legal on the medicinal level in New Jersey and for adult use in other states, is still a Schedule 1 drug federally – it’s also the basic elements of establishing a business. Such as getting a loan or insurance.

“There’s  an assumption that we don’t know what we’re doing and that somehow we’re less capable of running businesses than other entrepreneurs in other industries,” says Leise Rosman, Chief Operating Officer of 4Front and President of Mission, 4Front’s dispensary brand.

Part 1: How stigma affects everything in the cannabis industry

Part 2: Why words matter

Part 3: How N.J. can address the issue

Success in breaking through that stigma comes from being smart, prepared and serious.

“I think not taking anything for granted in this business is important,” she says. “You might be able to walk into a bank meeting in any other business and maybe be able to be less prepared or ask more questions. In our business you have to be smart. You have to be able to be a guide to the people you’re talking to and that is I think different than what some other entrepreneurs have to do in other industries.”

Turning to the issue of dispensary vs. bakery, Rosman explains how meetings are different.

“You don’t normally have to explain how bakeries work to someone. They want to see if you’re going to make money,”  she says. “In our business, they want to see if they’re going to make money and you have to explain how to run the business to them.”

Being smart and well-prepared is just Step 1.

Rosman finds that out-reach and connections are also critical. That means being able to put a person in state new to the industry in touch with someone doing the same function – whether it’s insurance or real estate – in a state with cannabis experience.

“We’re able to say, I get that you don’t have experience with this but let me put you in touch with my guy who does this in a different location or guy I know through a network,” she says. “You ask all of your questions to him because he’s going to know all the details that pertain to you better than I will. It’s important to be that conduit to information so someone doesn’t have to feel like they have to take your word for it. They can actually double check that with somebody else that maybe you’ve worked with or give a reference to. That seems to work fairly well.

“And then just don’t screw up. Don’t make mistakes that are harmful and damaging. Maintain that credibility by just showing up every day and being a really good functional, compliant business.”

Rosman also cautions that cannabis businesses need to be aware of the Butterfly Effect.

“What happens is you might make a decision over here, but not realize that three steps away it has impacted some other part of your business and our vendors get nervous about that,” she says.

There’s not always a complete understanding of how a seemingly safe decision can cause problems later on, including a deal with a landlord that doesn’t have a mortgage on the property and no other tenants in the building. “So they’re good to go,” says Rosman.

Then six months after signing the lease, the landlord’s insurance renewal comes up for their other properties and the issue of the lease to the cannabis firm is raised.

“All of a sudden, the insurance company won’t cover those other properties or they’ve got  investors that aren’t comfortable with the risk involved with this and pull back,” Rosman says.

In that case, Rosman says there were two options:

1. Educate the insurance company that the use was actually going to have our insurance running  underneath it – there wouldn’t be a lot of liability left for him in that place. The insurer was hopefully  okay that the rest of the impact of that use in that strip mall would be minimal.

2. The other element was the insurance company said that cover it, but they were going to raise the premiums for the policy to be able to continue in the space.

“We volunteered to cover that $12,000 increase on behalf of the strip mall and basically said, look because we came in and this happened to you will cover the difference.’ And then what we said was, give them a year or two and I think you’ll see that there is no risk. We haven’t had increased claims and we should be okay.

“But you kind of have to do some of that, let me lead and then you’ll show them that it’s not so bad.”

It’s a cost of doing cannabis business – a green tax if you will.

Rosman has seen improvement in this area.

“I think the stigma is more just a lack of information.”

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