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THE FUTURE OF ROLLING
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Contents Table of
An Existential Crisis
The industry’s delinquent accounts receivable balance is expected to balloon to $4.2 billion this year, “creating Swiss cheese in balance sheets” and threatening the health of the entire supply chain. Why aren’t companies paying their bills? And what can be done to stem the rising tide of red ink?
Industry News
Current events, data, trends, forecasts, and other tidbits for the well-informed professional.
Finance
Looking for investment? These five strategies will help your business stand out for the right reasons.
Retailing
Sensitivity and finesse transformed a piece of Berkshires history into Sweetgrass Botanicals.
Executive Insight
Greenbax Marketplace President Carole McCormick was among the first bankers to engage with the industry. Now, she peels back the curtain to reveal how financial institutions really work—and why cannabis is no longer scary.
Marketing
Business-to-business networking requires a different approach. Try these essential strategies.
Design Showcase
Boone Town Provisions blends nostalgia with respect for the Garden State’s natural wonders. See how the project came together.
Buyers Guide
Be ready for the holiday rush with our guide to new top-shelf products.
Human Resources
Employee stock ownership plans are gaining popularity. Is an ESOP structure right for your company?
Legal
Despite hurdles, Native American nations are finding success in cannabis.
High Finance
Investors are eyeing New York, which may reach $1 billion in sales this year.
Contributors
TERRENCE WHITE
A returned citizen, Terrence White works to correct the disproportionate impact of criminalization on marginalized communities. In addition to founding Monko, a luxury cannabis experience in the heart of Washington, D.C., he owns the cultivation brand Pleasant Hill Wellness. Monko.co
STACY LITKE
A community banker, fintech executive, and consultant with decades of experience in financial services, Stacy Litke employs her comprehensive view of the industry as vice president of banking programs at Green Check. Previously, she served as senior vice president of operations for a $900-million institution in Massachusetts. GreenCheckVerified.com
DARREN GLEEMAN
As managing partner at MBO Ventures, serial entrepreneur and prolific angel investor Darren Gleeman assists clients with employee stock ownership plans (ESOPs) and capital management. He holds a patent on ESOP methodology for the cannabis industry and received Green Market Report’s 2024 Top Financial Advisor award. MBOVentures.com
MITCHEL CHARGO, ESQ.
With nearly three decades of lawfirm and in-house general counsel experience, Hinshaw & Culbertson LLP Partner Mitchel Chargo represents Native American-owned manufacturers, cultivators, retailers, and real estate companies in Minnesota. The overarching goal of his practice in emerging markets is to help create a robust and compliant industry. HinshawLaw.com
DAN SERARD
A six-year veteran of the cannabis industry, Dan Serard is vice president of sales and marketing for Cannabis Creative Group, an awardwinning marketing agency. He is a member of professional organizations including the Cannabis Marketing Association, Rolling Stone Culture Council, and the National Association of Cannabis Businesses. CannabisCreative.com
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Editor’s Letter
By the time this issue is published, we will be days away from a federal election that could have far-reaching consequences for our industry.
While both presidential candidates have espoused cannabis-positive policies, only one has endorsed full federal legalization. The other prefers to leave legalization up to the states, although he vowed to vote “yes” on Florida’s adult-use ballot initiative.
As important as the presidential election is to the future of the country, the outcome of congressional races arguably could have more impact on our small but economically significant portion of the whole. Thirty-three Senate seats and all 435 seats in the House of Representatives are on the ballot this year. How those races shake out could determine whether the plant’s legal status, banking reform, and social justice initiatives see action—or any consideration at all—during the next legislative session.
For most Americans, politics is distant and impersonal, imposing on their daily routines only every couple of years. For our industry, politics, politicians, and the regulators they appoint are critical cogs in the wheel, able to determine whether our businesses thrive or collapse under the mountains of debt currently threatening to rip the rug right out from under the entire value chain. Sue Dehnam examines the causes and potential solutions for the industry’s financial crisis in this issue. In addition, bankers Carole McCormick and Stacy Litke provide insider insight, attorney Mitchel Chargo takes a look at Native American operations, and Terrence White offers advice for retailers seeking investment.
Our industry is extraordinarily resilient. No matter the outcome on November 5, we will survive and—if the past is any guide—become even stronger.
Keep the faith.
Kathee Brewer Editorial Director
Editorial Director KATHEE BREWER
editorial@inc-media.com
Creative Director ANGELA DERASMO
Digital Editor Jeff Hale
Contributing Writers Alisha Holloway PhD, Anthony Coniglio, Christopher Jones, Dan Mondello, Danny Reed, Dan Serard, Darren Gleeman, David Kooi, David Sandelman, Gary Allen, Henry Baskerville Esq., Howard Sykes, Jay Virdi, Jess Phillips, Kim Prince, Kris Krane, Kyle Sherman, Lance C. Lambert, Laura Bianchi Esq., Marc Beginin Esq., Michael Mejer, Mitchel Chargo Esq., Rachel Gillette Esq., Rachel Goldman, Randy Reed, Richard Proud, Robert T. Hoban Esq., Ruth Rauls Esq., Ryan Hurley Esq., Scott Johnson Esq., Shane Johnson MD, Stacy Litke, Sue Dehnam, Taylor Engle, Terrence White
Artists/Photographers Christine Bishop, Steve Hedberg, Mike Rosati
Digital Strategist Dexter Nelson
Circulation Manager Faith Roberts
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Senior Account Executive
Brandi@inc-media.com (424) 703-3198
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SAN FRANCISCO — Once known as “the Uber of Weed” and valued at $700 million, delivery-service-cum-multistate-retailer Eaze is winding down operations and will shut down by the end of the year. Nearly 500 workers in California and Michigan will be displaced, according to the United Food and Commercial Workers International Union, which represents employees.
Founded in 2014 by Keith McCarty, Eaze began in a small San Francisco apartment with a team of just four employees and a goal of delivering medical marijuana to patients across California. In 2015, the company secured $10 million in Series A funding from multiple venture capital groups, including Snoop Dogg’s Casa Verde Capital. The following year, Eaze raised an additional $16 million in Series B funding, positioning the company as one of the highestfunded startups in the industry. By 2017, Eaze operated in more than 100 California cities and had raised more than $52 million from a broad range of investors. In its annual report for the year, the company reported more than 300-percent year-over-year growth.
Trouble reared its head 2019 when a competitor sued the company, alleging Eaze used European shell companies and fake websites to misrepresent creditcard transactions and gain an unfair advantage in the marketplace. The case was dismissed, but federal investigators latched onto the allegation and subsequently charged Chief Executive Officer Jim Patterson and consultants Ruben Weigand and Hamid Akhaven with operating a complex scheme that generated more than $150 million by deceiving financial institutions and the card networks. In 2021, Patterson, who had replaced McCarty in 2016, pleaded guilty to one count of conspiracy to commit bank fraud. Weigand and Akhaven received multi-year prison sentences and fines for their roles in the scheme, and Akhaven was ordered to pay $17 million in restitution.
Eaze denied involvement and was never charged, but financial, leadership, and investor issues continued to plague the company, including a series of lawsuits filed by Green Dragon founder Andrew Levine and his family. The Levines—who together held 42.1 percent of Eaze’s stock—alleged, among other things, malfeasance related to Eaze’s acquisition of the then-multistate retailer in August 2021. (Green Dragon currently operates only in Florida.)
That same year, Netscape co-founder James Henry Clark purchased 35.9 percent of the company; in 2022, he loaned Eaze $36.9 million on the condition he would take control if the company failed to meet monthly revenue targets. Clark foreclosed on the loan in May 2024 and purchased Eaze outright at auction in August for $54 million. His holding company, FoundersJT, has not revealed future plans for the acquisition.
The companies building their brands now will be the strongest and best positioned after federal legalization.
— Ricardo Baca, founder and CEO, Grasslands: A JournalismMinded Agency
Law Enforcement Still Targeting Cannabis
WASHINGTON — About 25 percent of all state-level drug-related arrests in 2023 were for cannabis violations, according to data posted in late September on the Federal Bureau of Investigation’s Crime Data Explorer website.
According to the online database, police made at least 217,150 arrests for cannabis violations last year. The total represents a slight decline from 2022, when the agency reported 227,108 cannabis-related arrests. Of those charged with violating marijuana laws in 2023, 84 percent (200,306) were charged with possession only.
The 2024 total undoubtedly is an underestimate, because some law enforcement agencies did not report their data to the FBI. For example, in 2022, 17 percent of agencies, representing 25 percent of the total United States population, failed to report crime data. The FBI stated it received 2023 data from local agencies representing more than 90 percent of the population.
According to NORML Deputy Director Paul Armentano, annual data about federal marijuana arrests and seizures by the U.S. Drug Enforcement Administration and its partners has yet to
be provided for 2023. That data typically is published by the DEA in the spring of the following year.
“It is discouraging that there are significant gaps in the available information,” Armentano said. “At a time when voters and their elected officials nationwide are re-evaluating state and federal marijuana policies, it is inconceivable that government agencies are unable to produce more explicit data on the estimated costs and scope of marijuana prohibition in America.
“Nonetheless, even from this incomplete data set, it remains clear that marijuana-related prosecutions remain a primary driver of drug-war enforcement in the United States,” he added.
“Hundreds of thousands of Americans continue to be arrested annually for lowlevel cannabis-related violations even though a majority of voters no longer believe the responsible use of marijuana by adults should be a crime.”
U.S. cannabis crimes peaked in 2007, when police made more than 870,000 arrests, according to FBI data. At that time, slightly less than half (48 percent) of all drug-related arrests in the U.S. were for marijuana-related violations.
Bud
Why home cultivators grow their own. (Source: Harris Poll / Royal Queen Seeds)
49% sense of confidence
48% sense of joy
46% sense of pride
44% connectedness with the earth
Illicit Products Pose Serious Health Risks
LONDON and BERLIN —Europe’s legal markets may have launched only recently, but already they face a serious threat from the same scourge the United States’ market still hasn’t subdued: unlicensed producers and sellers.
Even worse: New research indicates many of the illicit products easily available in two of Europe’s most promising nascent legal markets are contaminated with dangerous biological and chemical adulterants.
In the United Kingdom, illegal online cannabis sales via the open and dark web have risen by 50 percent in the past two years and increased by 67 percent across e-commerce websites, according to a report from Curaleaf and Manchester Metropolitan University. Researchers stated as much as 73 percent of illicit purchases were made by consumers seeking relief from health conditions that would make them eligible for legally prescribed plant medicine.
Products tested by the research team contained dangerous levels of mold, lead, and synthetic cannabinoids, posing “severe health risks” to the 1.8 million people in the U.K. who self-medicate. Nearly one in five consumers (17 percent) mistakenly believe illicit products are safer than regulated products or don’t know the difference between illegal and legal channels, the researchers noted. As in the U.S., licensed producers in the U.K. adhere to rigorous testing protocols.
So do licensed producers in Germany, where a second study across thirty cities
found 80 percent of “street cannabis” contaminated with human and animal feces, COVID-19, salmonella, influenza, dangerous levels of banned pesticides, or illegal drugs including cocaine, ketamine, crystal meth, and MDMA. That study, conducted by Sanity Group, examined illicit products obtained by consumer volunteers and submitted to a lab under controlled conditions.
“After eight months of rigorous analysis, the results are alarming,” the study’s authors wrote. “Of over 253 samples tested, only seventy-four were deemed safe and clean.”
According to Sanity Group founder Finn A. Hänsel, “The fact that over 50 percent of all samples tested positive for banned pesticides and over 60 percent contained human feces and bacteria is alarming. This clearly indicates most black-market cannabis is packaged under unsanitary conditions, emphasizing the need for quick action to give consumers access to cannabis produced under regulated safety standards.”
In the U.K., Curaleaf is urging the government to adopt a holistic reform strategy that would tighten regulation of illicit sales channels, increase public awareness, improve patient access, and expand research.
According to Juan Martinez, who leads Curaleaf’s European subsidiary, “By curbing the illicit market and expanding access to legal, regulated options, we can better protect vulnerable individuals and dismantle illegal operations.”
Photos: Mike Rosati
Cannect Wellness Secures $7 Million
During its second round of funding, Chicago-based cultivator and manufacturer Cannect Wellness secured $7 million in fresh capital from a diverse group of investors. The company plans to use the funds to increase its production capacity, expand its product portfolio, and double the size of its team.
Dark Horse Buys Greenlight Store
Dark Horse Cannabis acquired the Greenlight Dispensary in West Helena, Arkansas, for an undisclosed sum. The store will be rebranded Speakeasy by Dark Horse and join the company’s expanding network of wholesale and retail operations in Arkansas, Mississippi, and Missouri.
Simply Solventless Acquires ANC Inc.
Canadian licensed producer
Simply Solventless Concentrates Ltd. (SSC) acquired infused preroll manufacturer ANC Solutions for up to $13.5 million (depending on earn out) in cash, promissory notes, and stock. The acquisition will deliver pre-roll manufacturing capability to SSC along with significant intellectual property, some of which is patented.
Green is the New Black
Black Friday is good for retail sales, both in and aside from cannabis.
But the Wednesday before anksgiving, known as “Green Wednesday,” is also a huge, if not bigger, sales day.
Whether it be for stress relief or to bring for Friendsgiving, shoppers stock up for this Autumn holiday.
Recommendations:
Be ready for high-volume sales with enough sta to handle in-store sales and online order ful llment.
POSITION YOUR RETAIL BRAND FOR INVESTMENT
Implement these strategies to build a stronger, more resilient business.
BY TERRENCE WHITE
Attracting investment is crucial for growth and expansion. Whether your company is a startup looking for seed funding or an established brand wanting to scale, positioning your retail business effectively can make all the difference in catching the eye of potential investors. Let’s explore some key strategies to maximize your potential.
Develop a unique value proposition
At the heart of any successful brand is a compelling unique value proposition (UVP). The UVP is what sets the business apart from competitors and communicates the distinct benefits offered. When positioning your brand for investment, developing and articulating a strong UVP that demonstrates both differentiation and innovation is crucial.
Identify your target market’s pain points and how your company addresses them better than competitors. Highlight unique features, technologies, or methodologies that set your offering apart, and emphasize the brand personality and values that resonate with your target audience. A retail brand’s differentiation might lie in sustainable practices, personalized shopping experiences, or innovative product designs.
Investors often are drawn to brands that demonstrate innovation. Highlighting any proprietary technologies or processes you’ve developed, showcasing how you’re disrupting traditional industry practices, and emphasizing your commitment to ongoing research and development will go a long way. For instance, a retail technology company might emphasize its artificialintelligence-driven inventory-management system that reduces waste and improves profit margins.
By clearly communicating the UVP, you demonstrate to investors that your company has a solid foundation for growth and a competitive edge in the market.
Showcase industry expertise
Positioning your brand as a leader and go-to resource in your vertical can boost investor appeal significantly. Demonstrating deep industry knowledge not only builds credibility but also suggests your business is wellequipped to navigate sector-specific challenges and capitalize on opportunities.
Use content as a strategy to establish thought leadership by producing and sharing high-quality, insightful material through blogs, whitepapers, or video series. Contributing guest columns to respected industry publications and participating in or hosting webinars and podcasts that discuss industry trends and challenges can be effective, as well.
Demonstrate a firm grasp on your market by conducting and publishing original research or market analyses, providing commentary on industry news and developments through social media and your website, and developing case studies that showcase how your brand solves real industry or consumer problems.
Form strategic partnerships
Collaborating with known leaders, influencers, and complementary brands can significantly expand your reach and boost your credibility. Strategic partnerships demonstrate your brand is well-connected and respected within your industry, and industry respect commands attention from potential investors.
There are several ways to collaborate with industry leaders, including partnering with established
companies or charities to create co-branded products, events, or services and securing endorsements or testimonials from respected industry figures. Participating in joint research or development projects with academic institutions or industry organizations also will inspire investors.
By developing long-term relationships with influencers who align with your brand values, creating collaborative content that showcases your products or services authentically, and involving influencers in product development or as brand ambassadors, you can leverage influencer partnerships.
Do you want to form complementary brand alliances? First, identify brands that complement your offering and explore co-marketing opportunities. Then, develop bundle deals or cross-promotions that add value for customers. Also consider creating joint loyalty programs to expand your customer base.
By showcasing these partnerships, you demonstrate your brand has the network and collaborative spirit necessary for sustained growth and success.
Leverage data and analytics
In the digital age, data is king. Leveraging data and analytics not only helps business owners make informed decisions but also provides concrete evidence of their company’s performance and market potential. To showcase performance metrics, present clear, easy-to-understand visualizations of key performance indicators. Highlight growth trends in areas such as revenue, customer acquisition, and market share. Use cohort analysis to demonstrate customer retention and lifetime value.
You’ll want to demonstrate market potential. Use market-sizing data to illustrate the total addressable market for your brand. Present data-driven forecasts for future growth and expansion opportunities, and employ predictive analytics to show how your brand is positioned to capitalize on emerging trends.
Focusing on metrics that are most relevant to your sector and business model; ensuring all data is accurate, up-to-date, and verifiable; and being prepared to explain the significance of each metric and how it relates to your overall business strategy will produce viable metrics.
By effectively leveraging data and analytics, you can provide investors with tangible evidence of your brand’s success and future potential.
Participate in industry events
Active participation in industry events can enhance a brand’s visibility and provide valuable networking opportunities. Event involvement signals to investors that your brand is engaged with the wider industry and committed to staying at the forefront of developments.
I can’t emphasize enough how valuable attending trade shows and conferences can be. Secure speaking engagements to share your expertise and showcase your brand. Set up eye-catching booth displays that effectively communicate your UVP. Then, use these events to launch new products or announce significant developments.
Get creative and host your own events, too.
Organize workshops or seminars that provide value to your industry peers and potential customers. Create networking events that bring together various industry stakeholders. Collaborate with colleagues to develop annual conferences or summits that position your brand as a driver of industry evolution.
Get involved with industry associations by taking on volunteer leadership roles, contributing to the development of industry standards or best practices, and participating in association-led initiatives that address industrywide challenges.
Summing up
Positioning your retail business for investment requires a multifaceted approach. By developing a unique value proposition, showcasing industry expertise, engaging in strategic partnerships, leveraging data and analytics, and participating in industry events, you can create a compelling narrative for potential investors.
Remember: Investors are not looking at just your current performance; they also want to see evidence of future potential. They want to be convinced you have:
• A clear understanding of your market and your place within it.
• The ability to innovate and adapt to changing conditions in the market.
• Strong relationships within your industry.
• Data-driven decision-making processes.
• A commitment to growth and industry leadership.
Ultimately, the goal is to tell a cohesive, compelling story about your brand. With these elements in place, you’ll be well positioned to attract the investment needed to scale.
SWEETGRASS Botanicals
Cousins reimagined an iconic lodge and tavern as a comfortable haven for plant-based wellness.
BY TAYLOR ENGLE
Nestled in the heart of the picturesque Berkshires, Sweetgrass Botanicals is a beacon of communitybased connection rooted in holistic health care.
The region, renowned for upscale living, celebrating the arts, and farm-to-table food, is the perfect backdrop for Sweetgrass’s unique blend of cannabis culture and plant-based wellness.
Sweetgrass’s story began with a beloved restaurant to which locals and tourists alike had flocked since 1874. The transformation from cherished eatery to award-winning dispensary is a tale of thoughtful renovation and respect for history, which co-founders and cousins Jason Song and Cassandra Purdy placed at the center of their interior-design plans.
“The interior design was partially dictated by our choice of building,” Purdy said. “We knew we didn’t want an Apple-Store-like, anonymous, boxy look. We wanted something that fit the town, and we were largely directed by the town to see what fit the criteria. They pointed us to this building,
which was an iconic Berkshires restaurant—this beautiful, rambling lodge-tavern that has existed for more than a century.”
What started as a small icehouse expanded over the years, bringing the location to its most modern iteration: a woodsy, homey dispensary that invites people to come in and stay awhile.
“The building has this stunning, thirty-five-footlong view of Laurel Lake, and a sort of patchwork of pieces that have coexisted for years,” Song said. “Creating a harmonious feel was a little challenging, but it was also very on-brand for the Berkshires— which is why we fell in love with the spot.”
The renovation team was careful to preserve many of the restaurant’s defining features, like the original beams, which were crafted by a local’s father years ago.
“We’ve had a few people from the community come in who grew up in the area and remember the history of the building,” Purdy said. “One older gentleman said the beams in one of the rooms had come from his father’s hay barn, and as a teen, he’d helped his father take the barn apart and create these beams. He was tearing up, telling me how nervous he was that I might have painted over them.
“Overall, people have been really grateful that we didn’t really mess with the space,” she continued. “Jason and I grew up in New England, and we’re very sensitive to that aesthetic of the patina of old regional buildings. We didn’t want to disturb that; we just wanted to dive right in and enhance it.”
Indeed, the renovation pays homage to the building’s past while introducing elements that reflect Sweetgrass’s vision. Integrating modern amenities with historical charm, the founders crafted a space that bridges the gap between old and new, celebrating the rich history of the area while embracing the future of retail.
The shop’s interior thoughtfully incorporates elements that reflect the Berkshires’ rustic, high-tolow charm. The main sales floor, which once served as the restaurant’s primary dining room, boasts the long glass wall with stunning lakeside views.
“There’s also an indoor garden in the giant mercantile room, which was another feature I absolutely fell in love with,” Purdy said. “It’s the feature people are most blown away by: this
stunning rock garden with a skylight. That was a lot of fun to pull together, too—digging out dead soil, putting in compost, and creating a French drain with stone so the water runs out of the building and waters the plants outside.”
Said mercantile space, which extends into the sales floor, promotes a holistic, plant-based lifestyle that goes far beyond the typical dispensary inventory. The selection comprises a variety of non-cannabis products, from hemp-based kitchen accessories to wellness items like CBD products and medicinal mushrooms.
“We wanted to create a space that felt less like a typical dispensary and more like a lifestyle store,” Purdy said. “And then we created this screen from the hallway so you can sort of peek through to the THC sales floor in a tantalizing way. You don’t really know what to expect—and then you pop out into this enormous room with a gorgeous lake view.”
The team never gets tired of hearing the audible gasps, which often escape visitors’ mouths when they funnel into the mercantile space.
“I think that’s a real differentiator between us and other dispensaries in the area,” Purdy said. “Most of them don’t have a place for anyone to sit down. In fact, they discourage sitting. But at Sweetgrass, we have couches and stacks of books for people to take, sit down, and peruse. We don’t disturb them; we offer tea and lemonade, and we welcome people to sit and hang out by the fireplace.”
The THC sales floor itself is another nod to classic New England aesthetics. The room features a seventeen-foot-long antique wooden bar and speakeasy-inspired decor with dark wood paneling and woodlands-inspired wallpaper. The design aims to create a space that feels timeless, as if it had been there for decades.
“We didn’t want to make it look brand new and renovated,” Song said. “People come in and say, ‘Oh, how lucky for you to have found a place that already looked like this.’ But actually, we recreated a fantasy of what we would have loved to have found there.”
Sweetgrass Botanicals also serves as a hub for education and community. The dispensary offers a range of classes, from homegrow cultivation workshops to seminars about plant medicine and herbalism.
“We’ve had everything from mushroom festivals to hash-making classes,” Purdy said. “Our goal is to provide valuable learning experiences and create opportunities for people to connect over shared interests.”
Yet another standout feature at Sweetgrass is the in-house hash lab, which is visible to customers through demonstration windows. Such transparency is rare in the region and adds an interactive element to the customer experience.
“We have live demos where people are able to come and sit on stools and watch the process—sort of like they’re at a brewery or a cheese factory,” Purdy said. “I think this is part of why older customers feel particularly drawn to the place. It’s homey and slower-paced. People can come in, have
a lemonade, sit down, and chat with the budtenders. I think that level of attention and care has really resonated with older people in the area.”
The store’s commitment to its locale is further reflected in its partnerships and events.
“Our classes are open to the public and superaffordable,” Purdy said. “We’re also planning to focus more of them on women hash makers and women in the general space, since we’re so few and far between.
“Beyond that, we’re looking to amp up our community events,” she continued. “There’s a restaurant nearby called the Dream Away Lodge where we want to do infused dinners, and we’ll be hosting future events when our specialized hash products drop.”
As Sweetgrass Botanicals approaches its sixmonth anniversary, the team is focused on expanding the dispensary’s interactive offerings.
“We want to do a few classes where you can leave with something,” Purdy said. “For example, we’ll pull out some medicinal plants, and people will be able to leave with a mason jar of herbal tea they created. You’ll have some snacks, meet some people, and learn something new. It’s going to be a lot of fun, especially going into the winter months, when there’s less and less to do.”
Just seven weeks after opening, Sweetgrass beat 400 other dispensaries to capture the NECANN Cup’s “Massachusetts Best Dispensary 2024” award.
“We didn’t think we had a shot to win, so that was an incredible surprise,” Song said. “It was a four-year process to open this store, so that up-front success was incredibly validating. It was more than just an industry thing; [the award represented] the community voting for us and backing us. We’re excited to see how much we can grow from here.”
THE MONEY EQUATION
Evolving economic and regulatory climates are establishing a symbiotic environment for cannabis
and banking.
BY STACY LITKE
When it first hit my desk several years ago, the idea of “cannabis banking” was much different from what the industry knows today. At the time, only a few pioneers banked the industry, doing the hard work of figuring out how to provide services under guidance provided by the United States Treasury’s Financial Crimes Enforcement Network without raising the ire of regulators. Back then, most financial institutions collected enormous monthly fees to cover not only the risk but also the research and development required of early adopters in any new market.
This was “cannabis banking 1.0,” and it was most about taking cash and storing it safely as well as helping operators make tax payments. Over time we’ve seen that environment evolve through version 2.0, which encompassed checking accounts, payroll, and payments. Now, under an emerging version 3.0, full cash-management services and lending are becoming table stakes for establishing new relationships between banks and cannabis-related businesses.
At the same time as services expand and relationships grow between the industry and financial institutions, we’re seeing monthly fees driven down by a combination of competitive pressure and a more relaxed regulatory approach. The Massachusetts
Full cashmanagement and lending are becoming table stakes for banks.
market is a good example: Monthly fees slid to zero at a number of financial institutions as at least fifteen of them vie for the companies that own slightly more than 1,000 licenses.
These “no fee” plays are possible because interest rates have risen significantly over the past few years, impacting the cost financial institutions pay to acquire funds. The cost of funds for cannabis deposits generally falls in the range of 75–100 basis points (or 0.75–1.0
percent). While not particularly interesting when the federal funds rate (the interest rate at which banks lend to each other overnight) was at ten basis points (0.1 percent), now that fed funds cost more than 5 percent (500 basis points), cannabis dollars become increasingly attractive to financial institutions trying to raise deposits while managing their net interest margin.
This is balanced nicely with the decreased risk of banking the industry. Regulators and examiners have gotten more comfortable and familiar with the requirements for banking the industry and the technology available to provide demonstrable evidence the money entering the financial system is the result of state-legal sales, not the illicit market. Good money in, bad money out.
The data available within this technology—in particular, sales data and peer analysis—allows the business-development and lending teams within financial institutions to participate more in the program. They now have more information about the performance of cannabis clients than they do about any other segment. This information supports the growth of traditional lending in the space, as credit analysts and lenders are able to see trends and patterns over time.
to take the initial risk are coming due. Those loans are in need of refinancing in the immediate future. Due to the risk of working with operators early on, the initial loan rates were quite a bit higher than even high-risk commercial financing provided by financial institutions. To the benefit of the operators who have them, the performance on those loans provides an opportunity to show traditional financial institutions they are good credit risks and have the ability to repay.
Traditional lenders should be prepared to take out that higher-rate financing at a rate that is above average for their portfolio but significantly lower for the operators. This means cannabis businesses will save interest expense and raise their profitability, and lenders will be able to impact their revenue and net interest margin in a positive way. It’s a win-win.
It has been interesting to watch financial services in this industry evolve over the years, particularly when so many operators were unbanked just a few years back. Although some people expect banking to be normalized for this space, I don’t see that happening in the near future. Even with shifts in the federal government’s perspectives, as long as there are both illicit and legalized markets, there will be a need to
In fact, they are able to monitor the performance of the businesses in real time as opposed to waiting for annual tax returns or quarterly financial reports.
Combine this data with emerging tools such as cannabis-specific risk reports and the ability to participate in syndication networks, and you’ve got a solid risk-management scheme in place for lending directly to cannabis operators. And the timing couldn’t be better for that opportunity. As the industry matures, a number of loans provided by alternative lenders willing
keep illicit funds out while allowing licensed operators to have banking relationships as robust as those enjoyed by any other business entity.
My expectation is that the best practices that have been forming at hundreds of financial institutions that have been working with regulators in this new market will be the foundation for more consistent and clear guidance from those agencies once the federal government finalizes its thinking around how best to regulate the industry.
CAROLE McCormick
The Greenbax Marketplace president takes us behind the scenes to demystify compliant banking.
BY CHRISTOPHER JONES
Only a few years ago,
financial services
were a rare luxury for cannabis companies in the United States. Few were able to secure even a basic bank account, and those that could find an institution willing to take the risk of working with a business that trafficks in federally illegal goods faced compliance hurdles and exorbitant service fees.
Even when companies secured banking relationships, many experienced sudden account closures for reasons that often weren’t explained well, if at all.
More recently, however, financial institutions— particularly credit unions and regional banks—have been more receptive to cannabis clients. Today, quite a few offer services similar to those traditional businesses enjoy, albeit with a lot more oversight and paperwork.
Carole McCormick was among the pioneers in developing cannabis banking and financial compliance programs during her tenure as chief compliance officer at North Bay Credit Union (NBCU) in Santa Rosa, California. In 2017, the institution became one of the first in the U.S. to openly offer commercial accounts to plant-touching businesses. McCormick subsequently helped many farmers in the Emerald Triangle transition from the illicit market to the legal market with a legitimate bank account and a clear understanding of the new rules of the game. Today, as president of NBCU division Greenbax Marketplace, she and her team help clients across the country with everything from cash pickups and loans to paying and receiving funds via secure electronic platforms.
Much of the paperwork financial institutions must file is dictated by the Bank Secrecy Act (BSA), which is designed primarily to help detect and prevent money laundering. The BSA requires financial institutions and other businesses to “keep records of cash purchases of negotiable instruments, file reports of cash transactions
exceeding $10,000 (daily aggregate amount), and report suspicious activity that might signify money laundering, tax evasion, or other criminal activities.”
If cannabis is rescheduled or descheduled, the expectation is that much of this paperwork no longer will be required. McCormick is not so sure about that, especially if new federal regulations are introduced. Although Congress has considered multiple bankingreform bills since 2017—most notably the Secure and Fair Enforcement (SAFE) Banking Act—significant legislation has yet to emerge as law. Nevertheless, McCormick said, as long as businesses comply with state laws and regulations and maintain transparent financial records, there is little reason to believe the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) will impose fines or other penalties against legal operators or their banking partners.
Seven years into her tenure as an industry banking specialist, McCormick is enjoying her job more than ever and embracing the challenge of expanding Greenbax’s services across the country.
“This will be my last job, and I love it so much,” she said. “When we started, nobody had cannabis banking experience, but we’re finally at a place where we’ve hired a couple people who have experience. For me personally, it’s been so fun to build something from a very small start and to bring on employees and give them the training and expertise for an industry that will just continue to grow.”
What is the most common misconception about cannabis banking?
The biggest thing is always that people are surprised by the compliance oversight that is really required.
I think regulators don’t often understand why operators don’t understand the importance of compliance, but we spend a lot of time educating our accounts about why we do everything we do, and it’s important for them to understand we are in this together. We have a great track record, and that’s why we’ve been able to [provide financial services to the industry] for so long—because we do it right. It’s not a big ask, but we do [look at] things like tax returns and clients’ [profit-and-loss statements] every quarter. If we see something that raises a question, we reach out to them to get responses back. And we tell them up front, “Please understand we’re doing that so we can continue to provide the service to you.”
That’s the biggest thing people don’t understand. They’re used to just a regular Wells Fargo or Bank of America checking account, and nobody ever calls them about anything. Cannabis banking is different, especially for an operator that’s never been in the business before but sees the opportunity in the industry. There is a learning curve; no question about it.
Do the intricacies of compliance ever cause friction between banks and businesses?
Most of the time, if we open an account we’re definitely on the same page with the client. But through the onboarding process, there are some times when it’s clear that an operator really isn’t set up to provide what we need or just doesn’t agree to provide it. From six and a half years ago to today, our onboarding process has become way more streamlined. We were very, very careful starting out, because we didn’t know what we didn’t know. But there are some times when an operator just isn’t a good fit for us, and we would rather find that out up front.
What are some of the most common customer complaints about cannabis banking?
I’m sure it depends on the program. If you look back six years ago, we were focused on only California, and operators were so grateful to have banking from a financial institution that understood the compliance
that would be required. It was all about anti-moneylaundering, to make sure only legal product funds are hitting the financial institution.
From our vantage point, most of the time when a bank or credit union has jumped in and then jumped out it’s been because they thought [providing financial services to the cannabis industry] was going to be a much easier program. So you see them jump out, and it leaves operators all of a sudden without an account. It’s just another disruption to their business, because they then have to go find a replacement.
But we also notice much more pushback from customers not understanding the compliance piece of [banking], and for them it feels like more hoops to jump through. My team has to spend quite a bit of time on the onboarding side making sure our operators understand what’s going to be required of them. There’s an upfront conversation to make sure we’re a good fit, because some would just rather take their chances until they’re scrambling to look for a compliant program.
Do you expect to see the SAFE Banking Act or similar legislation pass over the next few years? It really does depend on this year’s election. I honestly think we are years away from descheduling. There are so many other things that are dependent on that decision, including global drug treaties and a lot of other downstream effects. So I think it’s way more complicated than most operators and other people in the United States are thinking.
The SAFE Banking Act has a good chance of passing, but I do think that depends on the election. And I’m just not really convinced it would make that much difference. Again, if you want a compliant cannabis account, you can get one today. I mean, it’s not impossible to get one if you really want one. If people think SAFE Banking is going to mean all the big banks all of a sudden open their doors and welcome cannabis, I don’t think that’s going to happen.
Will [passage of the act] do anything to reduce the amount of paperwork and fees and all the bureaucracy around cannabis banking? No, because the paperwork and fees are really from FinCEN. There’s been very little guidance for financial institutions getting into this. Since [then-Attorney-General Jeff Sessions rescinded the Cole Memo’s laissez-faire mandate regarding state-
legal cannabis businesses], there has been guidance from groups like the National Credit Union Association saying “if you want to support cannabis, here are some guidelines for what makes a compliant program.” But that’s different from a regulation. It’s more like “here are some things to consider.”
As a banker, do you expect rescheduling to have an effect on banking?
I see people on LinkedIn saying rescheduling is going to help companies that are in search of banking relationships, but operators who want a compliant bank account can secure one right now. We have lots of credit unions and regional banks in the space. I think rescheduling will definitely help the operators on the [Internal Revenue Code Section] 280E tax side, which feels like the biggest thing. [IRC Section 280E prohibits businesses that deal in federally illegal substances from deducting most normal business expenses from their federal taxes. —Ed.]
I do think we, as banking providers, are always looking for ways to drive down the cost of offering our services, because we understand this is an industry that pays higher taxes just to be in a legal industry. So for rescheduling, I don’t see it having a big impact on banking, but I do think over time when [the plant becomes] federally legal, that will be a game changer.
Will rescheduling encourage larger banks and national institutions to take on cannabis accounts, or will they stay on the sidelines until full legalization?
Larger banks are already in cannabis whether they know it or not. I’ll give you one example. We have a product on our platform called GBXPay, which is a product for retailers to pay vendors. When we look at where those payments are going, they’re going to Chase and Wells Fargo and other banks, but the accounts are not named cannabis accounts. Companies establish holding-company accounts, or they come up with a name that is not obvious. I mean, I’m not inside one of those banks to know what’s really going on, but we’ve seen it enough to know there’s plenty of cannabis funds sitting in banks that don’t support the industry. But all banks have software running in the background to ensure compliance with the BSA,
and that’s how those accounts get closed down. They’ll receive a payment from an obvious cannabis operator, and all of a sudden they’ll get shut down. But sometimes, the bank just looks the other way. It’s really hard to figure out where they turn a blind eye and where they just kind of go all in and completely obliterate an account. I’ve seen both sides of it.
Where large banks saw oversight risks and compliance headaches due to the plant’s federal status, NBCU and other regional institutions saw an opportunity to develop lasting client relationships in a brand-new sector. Do you ever worry clients may migrate to the big banks when they finally enter the space?
That’s something I think about all the time. One of the reasons NBCU spun off Greenbax was so we could offer multistate operators one solution across state lines, so they didn’t have to have a bank in each state where they operate. That’s a benefit of working with a national, versus a local or regional, bank.
I believe we’ve built loyalty with our customers. I know my team gives all kinds of service a big bank would never provide, and I believe that will count for something. As long as our customer service is matched with reasonable rates, I really think we’ll be fine.
On top of that, remember that even when cannabis becomes legal it will potentially remain a pretty cashintensive business. It’s no different from gambling, which is legal in lots of places, but heavy compliance oversight is still required for that vertical. I expect cannabis to be the same. At Greenbax, we’ve got the expertise for this industry, and I think we’re going to be needed regardless of descheduling or rescheduling.
Do you worry about federal crackdowns?
No, I don’t. Early on, nobody knew whether the feds were going to come after employees of credit unions or financial institutions for taking the chance to offer banking to the industry, but we all made those personal choices. For me, it was definitely worth supporting the industry. I’ve never lived in fear, because we’ve always been in lockstep with our [banking] regulators and had really good relationships with them during our exam process. Anytime we need some kind of clarification on anything, we’ve got those relationships.
When the plant’s federal status changes, I do think it will be a challenge if we have to overlay a new set of federal regulations on top of state-specific regulations. Just think about how that would look and how long it would take to get through it. I think federal regulations will be a big burden for financial institutions and operators on top of state-specific rules. To me, it feels like it’s going to be even more of a regulatory … I don’t want to say mess, but you get my point. Just a lot of details for all of us to work through and understand. Compliance issues will be greater in that scenario, not less.
Where is your focus in the short term?
As a team, we’ve been in development mode and just launched our merchant-pay products. We’re just trying to put the right products and services out there. So we’re pretty focused on that, because we’ve been doing it for so long. We’ve got our processes down around cash pickup and that kind of thing, but we often are looking for referral partners. We can’t be everything to everybody, but we do have some really great referral
partners. For instance, when you get a new operator, especially a startup in some of the new states, they often need help with getting payroll set up. We’ve got some good partners we can refer them to.
If we want to be that resource to our customers, we’re constantly looking for what else our customers need. If we can’t give it to them and it doesn’t fit within our expertise, we partner with someone, because our clients trust us as their bankers.
I don’t know if that keeps me up at night, but I’m really focused on trying to find the best in class for our referral relationships.
What are the most satisfying parts of your job?
To have people on our team that were hired five or six years ago who are still here and helped build this, that gives me a real sense of satisfaction. There’s also a sense of satisfaction in supporting an industry that hasn’t been widely supported. I think we all feel like we’re part of the cause. We’re really proud of what we’ve done, and we’re really excited about what the future holds and grateful to be part of this.
PLAYING THE LONG GAME
Networking can help your brand build trust, but don’t expect to see overnight success.
BY DAN SERARD
The cannabis industry may be growing rapidly, but it remains a close-knit professional community where who you know matters. Ancillary businesses—also known as non-plant-touching businesses—and those engaged in strictly business-tobusiness (B2B) relationships, in particular, face unique challenges when trying to build credibility and lasting business bonds in a competitive, highly regulated market.
Although these types of firms can be seen as less exciting in comparison to consumer packaged goods brands, at least in the rarefied atmosphere of social networking, properly leveraged networking still can lead to tremendous growth. That’s why leaning into the longterm game is essential to create sustainable growth and stand out.
In this industry, trust is essential. In a market where compliance must be airtight and success comes only to
those who are in it for the long haul, a reputation for reliability is key. Therefore, no one can expect to grow a professional network overnight. By focusing on building real connections (rather than short-term gains) and centering clients, B2B businesses can foster deeper, more profitable collaborations.
Building relationships is all about alignment. Find individuals or businesses that share your values and goals and back their words with action. Whether you’re co-hosting an industry event or launching a co-branded product, success depends on shared goals and a long-term vision for growth.
For this reason, you must have a clear set of goals and values anytime you speak with an industry professional. Whether you’re networking for personal or business reasons, having guidelines for compatibility will help determine your investment in that relationship.
Moreover, you can more clearly assess red flags. For instance, partners focused solely on financial gain or with conflicting goals can derail even the most promising collaborations. Before attending a networking event or meeting up with a fellow professional, be sure to jot down your priorities and values to keep you focused. Industry-specific events are goldmines for professionals looking to form meaningful connections. Major trade shows like MJBizCon, MJ Unpacked, and NECANN offer unparalleled opportunities to meet industry leaders and potential partners in person. Local events, such as New England’s TeeHC Open golf tournament, provide a more intimate setting for building hyper-local relationships.
To make the most of events, plan ahead. Schedule meetings before you arrive, attend after-parties for chances to network in a more relaxed environment, and seek out opportunities to participate in panel discussions or breakout sessions. Such touchpoints help establish your presence and build connections.
In addition to in-person events, digital networking tools like LinkedIn are essential for nurturing relationships post-event. By sharing valuable content, engaging with industry professionals in the comments, and sending thoughtful direct messages, you can keep the conversation going long after the trade show ends. Networking requires a focus on providing value without expecting immediate returns. Offering helpful insights, sharing resources, and being a reliable sounding board can foster genuine connections.
It goes without saying this should be a consistent effort made over time. Stay engaged without overwhelming contacts by periodically sharing industry updates, relevant articles, or upcoming events others may find useful. This not only keeps you on your contacts’ radar but also demonstrates your commitment to supporting their success.
For example, after meeting someone at a trade show or networking event, follow up with a thoughtful email that recaps your conversation and expresses interest in continuing the relationship. Then, focus on keeping the conversation going in the months to come. Lastly, show up for your contacts when it matters, whether that means attending their events, sharing their content on social media, or offering insights when asked. These small but meaningful actions build trust, setting the foundation for stronger, more profitable partnerships in the future.
Long-term networking opens the door to powerful opportunities like joint ventures and co-branded campaigns that foster mutual growth. Once trust is established, businesses can collaborate on joint product launches, educational webinars, or cross-promotional campaigns that showcase their products and expertise to a wider audience.
Beyond the direct benefits, the ripple effect of good connections is significant. In a tight-knit industry like cannabis, word-of-mouth recommendations often lead to new opportunities without aggressive marketing tactics. When businesses focus on building trust and providing consistent value rather than chasing immediate sales, they create a foundation for sustained growth, innovation, and stronger partnerships. Whether your business is B2C or B2B, consider rethinking your strategy for networking and forming strategic partnerships. By aiming for genuine connections, trust, and consistent value exchange, you’ll be better positioned for long-term success.
Networking requires a focus on providing value without expecting immediate returns.
RUSTIC RETREAT
AN INVITING BLEND OF NATURAL BEAUTY AND NOSTALGIC CHARM CREATES A TRULY UNIQUE RETAIL EXPERIENCE.
Bringing the outdoors inside is a hot trend in interior design, both residential and commercial.
Boone Town Provisions, tucked into a pastoral hamlet of about 9,000 people surrounded by hiking trails, parks, and the Boonton Falls on the Rockaway River, interpreted the trend in a fresh way that overflows with character—quite literally: The store’s mascot is an eightfoot-tall, custom-designed bear statue named Tokey.
Boone Town’s story began in a raw, industrial shell—a commercial space marked by cinder block walls, towering steel-framed windows, and exposed beams and ductwork. A blank canvas, the space awaited bold vision and creative ingenuity to bring it to life.
Owners Sarah Stretchberry and Justin B. Singer were determined to ensure the dispensary embraced the rich history and culture of Boonton, New Jersey. Settled in 1761, the town once supplied iron to the Continental Army and served as a stop on the Underground Railroad. Today, Boonton’s charm remains intact, drawing visitors not only to its museums
and antique shops but also to enjoy its picturesque scenery, camping, and hiking opportunities.
The dispensary’s name is a nod to the original settlement’s name, BooneTowne. To minimize the industrial ceiling and windows, the walls were transformed by a wraparound mural abstractly depicting blue skies and forested hills. Rugs covering wood floors evoke a carpet of woodland moss. Wood is repeated in the ceiling beams and design elements at the checkout stand, as well as in the mascot’s domain: a flower bar called Tokey’s Canteen. Flanked by faux pines and Tokey the Bear (holding a sign proclaiming the sly double entendre “Where there’s smoke, there’s fire!”), the structure calls to mind a forest ranger’s stand. Artifacts from the area’s history dot the shelves, interspersed with cannabis products.
To create fixtures that complement the forestry-inspired, history-seasoned theme, the owners turned to New York-based Display Dispensary.
“Our clients have great ideas, and we always want to make them come to
ABOVE: An island in the Rockaway River near Boonton, New Jersey. Visitors flock to the town to enjoy its historic charm and picturesque scenery.
OPPOSITE: The checkout counter’s color palette and wooden stanchions echo other elements in the dispensary’s design.
life,” said Georgia Peterman who, along with Jeff Sunga, managed the project. “Fixtures were the initial talking point, but after Sarah and Justin visited our showroom and saw the depth of the product range, the project bloomed pretty quickly from there.”
Because the shop’s opening date was a mere ninety days away, the dispensary and design-and-engineering teams chose a combination of in-stock fixtures and custom pieces. In the same way the mural blends the building’s industrial elements with decor evoking the natural world, the fixtures blend in while making distinct design statements. Particularly notable is
TOP: Tokey the Bear greets visitors at the flower bar known as Tokey’s Canteen. The custom-crafted bear is one of the dispensary’s signature features.
BOTTOM: The entry hallway sets the tone for the customer’s journey with framed images of canoes, backpacks, and other outdoors accoutrements.
“THE BEST RESULT IS ALWAYS ONE THAT TELLS THE STORE’S STORY BUT ALSO ENHANCES THE EXPERIENCE OF THE PEOPLE BUYING THE PRODUCTS.”
one of Boone Town’s signature features: a circular glass product showcase surrounding a pine tree towering over the sales floor.
“The shop has a very circular flow,” Peterman said. “Linear showcases would not have worked.”
Nick Homan, the lead engineer on the project, added, “We’d never done round showcases before. The dispensary business is a relatively new frontier for us, but our parent company has a century of experience designing and manufacturing custom store fixtures for some huge companies.”
Display Dispensary’s parent company, Econoco Corp., has been engineering custom fixtures since 1925.
Crafting gigantic animal mascots is a fairly new skill, but Tokey the Bear is a vital part of Boone Town’s brand story. Reminiscent of an iconic Forestry Service spokesanimal, the mammoth statue evolved from a tiny sticker Boone Town created as a marketing tool.
“The bear is a mannequin, and we designed and built him from scratch,” Sunga said.
Tokey also establishes emotional resonance with consumers, according
to Homan. “The best result is always one that not only tells the store’s story but also enhances the experience of the people buying the products,” he said. “What is the story? What is the vibe? What is the essence? We help customers figure all that out in a meaningful way that creates an emotional connection with the customer.”
As the first dispensary in Boonton, Boone Town occupies a unique spot in local history. The shop’s clever design pays homage to a storied past while opening a new chapter about the future.
Ledger The Scarlet
Delinquent accounts receivable have reached crisis levels. How did we get in this mess and, more importantly, how do we get out?
BY SUE DEHNAM
The legal cannabis industry in the United States is expected to generate between $31 billion and $34 billion in revenue during 2024 and $87 billion by 2035. Yet, a Whitney Economics study to be released later this year discovered only 27.3 percent of licensed businesses nationwide are profitable. That’s an improvement over the 24.7 percent that reported profitability in 2023, but both figures represent a remarkable decline from 2022, when operator profitability stood at 42 percent.
Compared to the 65 percent of traditional small businesses that are profitable in an average year according to U.S. Chamber of Commerce data, the cannabis industry looks downright anemic. What’s more, 30 percent of cannabis businesses that responded to Whitney’s 2024 survey reported they’re losing money. Surprisingly, the biggest drain on their finances isn’t federal taxes.
Instead, companies reported delinquent accounts receivable are responsible for putting their operations in jeopardy.
At the end of 2023, delinquent receivables in the industry totaled $3.8 billion. Whitney Economics Chief Executive Officer Beau Whitney expects that figure to balloon to about $4.2 billion this year—or more than one and one-half months of the market’s total revenue. Some survey respondents indicated their delinquent receivables balances exceeded two months’ revenue and totaled millions of dollars.
“People are trying to run twelve months of business off ten months of cash flow,” Whitney said. As part of each year’s survey, his team speaks directly with operators. “Some are like, ‘I don’t know how I’m going to make payroll,’” he revealed. “Others don’t know how they’ll pay their taxes.”
“Accounts receivable is creating Swiss cheese in balance sheets.” — Adam Stettner, CEO, FundCanna
Whitney calls the level of delinquent receivables an “existential threat” to the industry, rippling through every sector from large multistate operators to ancillary businesses like attorneys and accountants. Cultivators, who are owed about 27 percent of the total delinquent balance, struggle to plant, raise, and harvest crops, threatening the entire supply chain. About 65 percent of them told Whitney Economics their past-due receivables—most of which are forty-five days or more late—exceed their monthly revenue. Processors and manufacturers, whose goods compose about 45–50 percent of retail revenue, own about 7 percent of the industry’s delinquent receivables. Distributors claim less than 1 percent of the unpaid balance, but because of their pivotal role in the market, those receivables play an outsize part in the industry’s health. Counterintuitively, vertically integrated operators—those whose stores sell products produced by other divisions of the parent company—hold the lion’s share of unpaid receivables: 66 percent. Primarily, according to Whitney, that’s because successful vertical integration requires massive scale. In markets where retail is hyper-competitive, vertically integrated operators “don’t have enough capacity to move all their goods [on their own], so they depend on other retailers to sell much of their product,” he said. “Because retailers are notoriously slow to pay, they’ve ended up with mountains of receivables.”
For small operators, past-due receivables represent an especially dire threat—for their businesses and the market as a whole. “Some of these guys put up their house as collateral on a loan to start a business, and then if they get behind because their customers aren’t paying them, they can’t catch up,” Whitney said. “Economic desperation is pushing people into the illicit market. They do a hybrid model where they get most of their revenue through the front door but another part through the back door. It’s the only way they can survive.”
FundCanna founder and CEO Adam Stettner is similarly concerned. With more than twenty years of experience in onbalance-sheet lending and billions in loans underwritten, he believes the whole industry’s health is at risk.
“Accounts receivable is creating Swiss cheese in balance sheets,” he said. “Companies are laying out money to make product, pay for labor, or purchase raw goods, and then they’re not getting paid.
“Ten to 15 percent of total legal sales are either delinquent or unpaid, and we’re watching [accounts receivable] continue to grow in people’s financials,” he added. “That goes way beyond being untenable or frustrating. It’s simply not sustainable.”
Examining the problem
It’s tempting to blame retailers for the cascading effect of delinquent receivables. After all, retail is where the majority of the industry’s revenue enters the system, and that revenue is all cash. Some of the blame may be justified, according to Whitney Economics’ March 2024 report Cannabis Delinquencies: an Existential Threat to the U.S. Cannabis Industry. “Retail carries the lowest amount of [accounts receivable] delinquencies while carrying the highest amount of delinquent accounts payable,” the report states.
Due to their role as revenue gatekeepers, retailers control the market, according to Beau Whitney. Manufacturers and cultivators depend on retail exposure for their very existence, and retail operators will “just take providers off the shelves if they complain about not being paid,” he said. “They have that level of power, and they use it.”
But if retailers are allowing accounts payable to linger, where does all the money they take in go?
According to NewLake Capital Partners co-founder and CEO Anthony Coniglio, the funds don’t stay in retailers’ pockets. “There’s tension between cultivators and retailers, but retailers are not taking advantage of cultivators or other wholesalers,” he said. “Two years ago, wholesale prices
decreased but retail prices didn’t, so some retailers were slowpaying even though they had the cash. Now, retail prices are falling faster than wholesale prices. The cash that was there two years ago has gone to consumers through price decreases.
“Everybody is struggling,” he added.
Undeniably, retail is an expensive business, especially in cannabis. Not only do stores operate on slim margins and face the highest licensing fees and labor costs, but they also bear the majority of the industry’s tax burden. Of the $2.1 billion in excess federal taxes (that is, taxes beyond what traditional retailers would pay) assessed against the industry as a whole in 2022, retailers shouldered $1.8 billion. Thanks to Internal Revenue Code Section 280E, which prohibits businesses that traffic in federally illegal substances from deducting most standard expenses, retail operations in some states are taxed at an effective combined federal and state rate of 70 percent. More commonly, the rate is closer to 40 percent—still nearly double the 21 percent most traditional businesses pay.
Consequently, Whitney Economics suggested the threshold of viability for retailers is $2–$2.5 million in revenue per store per year. The firm’s survey found the average reported annual revenue per store to be $2.4 million. If that’s the case, the average store is breaking even, which means accounts payable are at risk of nonpayment when the economy dips or unexpected events disrupt normal operations.
During his seventeen years in the industry, Jason Vedadi has witnessed retail operations up close at companies including Harvest Health & Recreation, Oasis Cannabis and, most recently, Story Cannabis, which he co-founded in 2022. He
“It’s not a new problem and not specific to this industry.”
admits retailers sometimes “stretch out payments to 90 or 120 days, and that causes stress on balance sheets.”
But, he continued, “they’re not making enough money to cover their bills. A lot of them have debts, taxes, or they might be in growth mode. So, they use [money that otherwise would go to] payables to fund operations for as long as they can.”
Harvest, which Vedadi co-founded and served as executive chairman, found itself in that predicament, he said. “We were growing too fast,” he revealed. The company operated profitably in the Arizona and Maryland medical markets, “but we went through a turbulent time in 2019 and had to recapitalize and stabilize.”
As part of stabilizing, the company made some tough decisions about products and personnel, where it operated, organizational structure, and overall strategy. Two years later, Trulieve acquired Harvest for $2.1 billion in stock. “Ours turned out looking like the greatest story on Earth, but we had some massive turbulence and made some mistakes,” Vedadi said.
According to Coniglio, extending accounts payable in order to conserve working capital is not uncommon. “It’s not a new problem and not specific to this industry,” he said. “It just may be exacerbated in this industry.”
Stettner believes the industry’s prevailing financial dynamics encourage the behavior.
“One of the things that’s unique about this industry is that it started as [cash on delivery],” he said. “Nobody would ship goods until they were paid. But then you had all these states that did a less-than-stellar job at licensing. States will license as many or more cultivators as retailers. First, that leads to price compression. Then, once price compression runs its course and normalizes, you’ve got an abundance of choice—and that means buyers dictate the price.”
— Anthony Coniglio, CEO, NewLake Capital Partners
It also means buyers can demand payment terms. Extending credit represented a monumental shift in the way the industry operates, allowing both suppliers and retailers to grow. The problem, Stettner said, is the payment term that best meets suppliers’ needs, net thirty days, doesn’t match the retail revenue cycle. In cannabis, that cycle “is closer to four or four and a half months,” he said.
Retailers are wary of tying up their ready cash in inventory for that long, especially with equity capital on hiatus and traditional funding like bridge loans and lines of credit either nonexistent or exorbitantly expensive. So they slow-walk payments to suppliers for as long as they can, often ordering new stock before they’ve paid off their previous balance.
“What this industry really needs is lines of credit.” — Stacy Litke, vice president, Green Check
“Suppliers allow their accounts receivable to grow because they believe it’s better to keep selling products to slow payers than to stop future sales entirely,” Coniglio explained. “By and large, suppliers have been exceedingly patient versus other industries where they would have been quicker to cut off customers for nonpayment. Suppliers tend to be patient because the loss of sales causes a bigger gap on their [profitand-loss statements].
“What benefits retailers in this industry is that a lot of other retailers are in the same boat,” he added. “Suppliers can’t cut off huge chunks of their customer base.”
Political and regulatory uncertainty also encourage suppliers to be patient, Coniglio said … to a point.
“How long their patience will last is a function of potential catalysts ahead,” he said, mentioning rescheduling and the subsequent withdrawal of 280E business-deduction restrictions, both of which could inject significant capital into the industry. “The people who are owed money are thinking there are opportunities for the world to get better, and the financial picture could turn around.”
Implicit in that worldview is an unpleasant uncertainty, he added: “If those catalysts don’t materialize, do people lose hope for the future and cut off terms?”
Financial and regulatory solutions
Fixing the industry’s cascading delinquency issues won’t be quick or easy. In part, that’s because two of the largest stressors are outside the industry’s control: taxes and regulations.
“This industry is overtaxed to the level of egregiousness, which leads to inefficiency,” Stettner said. In addition, “if you’re going to expand, you have to run each state as a completely new and autonomous entity. Those are two huge pain points.”
Whitney believes legislators and regulators must become more attuned to the industry that exists today, not the industry as it was in the early days post-legalization. Allowing interstate commerce, limiting licenses, and reforming tax structures would be good places to start if the goal is to improve cash flow. Licensing is particularly crucial, he said, because his research indicates that by 2035 the U.S. industry could add 25,000 to 30,000 new licensees to the roughly 40,000 that exist now.
“There needs to be a new vision for how to regulate cannabis,” he said. “The same old ways just simply are not working. Because regulators are not addressing commercial viability [when they issue licenses], they’re failing in their other public policy objectives such as public safety, public health, and beating back the illicit market. By right-sizing licensing, they’d facilitate growth and consumer transition into the legal market.”
In addition, “Instead of limiting the distribution of marijuana through dispensaries—which is a failed model, because it puts a cap on demand—adopt the hemp distribution model,” he said. “Put products in gas stations, grocery stores, and convenience stores and regulate cannabis like alcohol.”
In fact, “regulators could mandate vendor payments like they do in alcohol,” Whitney added. “If alcohol sellers get behind on payments to vendors, they’re prohibited from getting more product until they pay their bills.
“You really need to push the reset button on all these processes, and then you can have a more functional market,” he said.
Taxation is a more complex issue. In states like Oregon, operators can’t renew their licenses if state taxes are unpaid. At the federal level, though, some companies delay tax payments to free up working capital. According to Stacy Litke, vice president for banking and financial services at Green Check, the Internal Revenue Service charges 18-percent interest on tax debt, which is lower than the rate at which many businesses can borrow on the commercial market.
“Be stubborn about who your partners are at retail.” — Jason Vedadi, CEO, Story Cannabis
Using the IRS as a de-facto lender may not be as attractive if a proposal to move cannabis from Schedule I to Schedule III under the Controlled Substances Act, currently under consideration by the Drug Enforcement Administration, goes through. Although reclassification wouldn’t make the plant federally legal, it would dispose of 280E’s restrictions on federal tax deductions, thus freeing up operating funds. Litke said 40 percent of industry businesses have indicated they would use an infusion of cash from 280E revocation to clear debt, including past-due accounts payable.
Even so, according to Whitney, zeroing out the industry’s delinquencies “probably will take two to three years.”
Another critical piece of the puzzle, in Litke’s estimation, is encouraging banks to engage with the industry in the same ways they engage with other sectors. “Most lending going on now typically involves real estate,” she said. “That’s a ‘hard asset’ financial institutions know how to handle. But what this industry really needs is lines of credit so businesses can draw on those to pay their providers. Line-of-credit financing is not prevalent yet, because it’s more nerve-wracking for financial institutions. They can’t take product for collateral.”
Some ancillary companies are stepping in to fill the financing gap. Wholesale platform LeafLink launched a “man-in-themiddle” program in September. Called Payment on Sell Through (PoST), the software tracks invoiced products and automates weekly bank-to-bank transfers from retailers to product brands based on seed-to-sale compliance data. “This
new model will help alleviate delinquent payments to brands, free up needed capital for retailers, and provide data insights to help both make better business decisions,” said Chief Product Officer Matt Hutchinson. Within a month of launch, 140 businesses in Colorado, Michigan, and Mississippi were using the system, he said: 100 retailers and forty brands. LeafLink plans to expand the program to California, Missouri, and Oregon during 2025’s first quarter, with nationwide coverage expected by the end of the year.
PoST is essentially a consignment program with a middleman, but there is a time limit on transactions: After sixty days, whatever products have not been sold will be debited from the retailer’s account to clear the invoice. Alternatively, with agreement from the supplier, retailers may return unsold goods. LeafLink encourages buyers and sellers to work together to resolve unsold inventory issues, because “if a product sits on the shelf for sixty days, nobody wins,” Hutchinson said.
PoST assesses suppliers a fee of 2.25–3.5 percent of each transaction, which Hutchinson called “very reasonable” compared to the cost of delinquent receivables and stockouts during busy seasons. Plus, “We see a lot of benefit in furnishing the data to brands’ sales teams,” he said. “Now sales representatives have quantifiable information. Leveraging those insights can accelerate sales growth.
“The detailed visibility also helps brands in upstream product development based on real consumer data,” he continued. “The result is a more collaborative partnership between brands and retailers to optimize product sell-through and meet consumer demand.”
FundCanna’s ReadyPaid, which also launched in September, functions like a buy-now-pay-later service for business-tobusiness transactions. FundCanna underwrites the buyer and pays the seller. Thirty days later, the buyer can either pay the balance on the interest-free short-term loan or opt to extend payments, including interest, over as long as seven months. “Add a small cost of capital, and they can make twenty-four weekly installments or choose to pay back the entire balance at any time,” Stettner said. “They only pay interest for the time the money is used.
“Our goal is to mitigate ballooning receivables and payables by sitting in the middle of transactions,” he added.
Litke, whose firm facilitates solutions for clients through partners like FundCanna, said man-in-the-middle programs
have much to offer an industry where finances are tight, outside funding is scarce, and trust has been compromised. She mentioned 240 Logistics and GrowFlow Live are considering adding buy-now-pay-later options to their offerings.
“The more folks who get involved in the middle of the process and are willing to lend, that’ll certainly help,” she said. “I think we’re going to see a variety of different ideas and solutions, maybe as soon as the middle of next year.
“It takes time to put these things together,” she added.
What businesses can do
In the meantime, businesses are not without coping strategies. Some are old-school simple.
“As a supplier, you can insist on cash terms,” Whitney suggested. “Some buyers will go for it; some won’t—and [cash-up-front terms are] only possible in some states.”
Coniglio proposed “binary outcomes—pay or don’t pay—are not the only solution. Chief financial officers are now asking, ‘What’s the minimum I can pay to keep the supplier happy?’— usually coupled with an explanation about why the supplier should continue to sell to them.”
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And, he reminded product brands, “the best defense is a good offense. If you have a good product that’s in demand, you’ll be in a better position to get your customer to pay.”
Story Cannabis’s Vedadi agreed but warned even the most popular brands can become mired in accounts-receivable nightmares. His advice? “Be stubborn about who your partners are at retail. If you ultimately don’t feel your customer is going to survive… I know it’s hard to give up those sales, but you need to pull back. If I had to shrink a little bit but I knew that meant I would be around in six months, I’d shrink.
“Take a hard look at everything deal by deal, person by person, and make a solid business decision,” he continued. “Tighten up timelines the best you can. Work with partners the best way you can so everybody gets a win.”
Above all, he said, “focus on your balance sheet and know you’re going to survive in the end. In cannabis, the balance sheet is more important than anything else.
“It took my team a decade to get good at this, but it’s second nature for us now,” Vedadi said. “With rescheduling coming and both presidential candidates indicating a pro-cannabis stance, there are better days ahead.”
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TOP Shelf
The holiday rush is just around the corner. Are you stocking the products consumers will be looking for this year?
BY SUE DEHNAM
Botani Rolling Papers and Wraps
Nationwide
Botani offers innovative solutions rooted in 400 years of papermaking tradition. Using natural, plant-based ingredients like hemp, bamboo, and wood pulp, the company delivers eco-conscious, chlorine-free papers and wraps that meet brand partners’ unique needs. From gummed hemp wraps to custom watermarks and anticounterfeiting features, Botani’s premium, customizable rolling papers and wraps help brands stand out with sustainable, tailored products.
Pro tip: Now’s the time to order housebranded merchandise for holiday displays and giveaways. botani.com info@botani.com
CaliLily Fruit Chews
California
Guided by the belief cannabis can add enjoyment to one’s daily routine for any reason or no reason at all, womanowned CaliLily’s luxurious line of infused fruit chews is crafted with premium ingredients, awardwinning solventless live rosin, and minor cannabinoids to elevate any vibe. Launching this fall with globally inspired flavors and thoughtfully elegant packaging, CaliLily is focused on helping modern women incorporate cannabis into their daily lives.
Pro tip: CaliLily’s spectrum of effects and sophisticated packaging will appeal to the luxury market. calililycanna.com info@calililycanna.com
Muha Meds Mates Pre-Rolls California, Michigan
Each Muha Meds Mate is crafted with proprietary Muha Sauce Diamonds, delivering an impressive THC potency of more than 40 percent and intriguing flavor profiles. Packed with premium indoorgrown flower and evenly coated with kief, the pre-rolls have developed a reputation for producing a smooth inhale, a flavorful exhale, and a potent and long-lasting high. In hybrid, indica, and sativa strains, the uncommon flavors include Apple Tart, Orange Cake, Pina Colada, Thin Mints, and Watermelon.
Pro tip: Target experienced tokers with a yen for fire weed. muhameds.com chelsea@muhameds.com
Dialed Out Gummies
Colorado
Say goodbye to restless nights with Dialed Out from Dialed In Gummies. Packed with 5mg each of THC, CBN, and CBD, the fast-acting açaiberry-flavored treats deliver full-spectrum sleep support in just five to fifteen minutes. Carefully crafted with award-winning solventless rosin and cooked sous vide in small batches to preserve terpenes, the proprietary blend produces consistent, rapid-onset effects. Twenty tencalorie gummies per recyclable package.
Pro tip: Market as a discrete and delicious alternative to traditional sleep aids. dialedingummies.com contact@dialedingummies.com
Juāna Vapes California
Juāna is a wellness-first atelier combining the art and science of neuroscents, botanicals, and craftsmanship to create premium cannabis and lifestyle products. Everything is organized by desired effect: arouse, uplift, focus, rest, calm, and recover. The company’s signature all-in-one botanical vapes incorporate a blend of single-strain cannabis oil and natural terpenes to elevate both taste profiles and effect. Juāna’s live-resin vapes, which present a deliciously herbal aroma, are formulated using single-strain whole flower to preserve the full cannabinoid spectrum.
Pro tip: Female wellness consumers will appreciate Juāna’s holistic approach. juana.org hi@juana.com
Bonanza Maui Wowie Cartridges
Arizona, Colorado, Nevada, New Mexico
Awaken the senses with the earthy, distinctive flavors of Bonanza Cannabis Company’s Maui Wowie carts. Handcrafted with a proprietary terpene blend and an abiding reverence for quality and consistency, Maui Wowie 1000mg cartridges provide a full-frequency, energetic experience. Bonanza also crafts 500mg and 900mg cartridges, allin-one vapes up to 4000mg, and a selection of gummies; offerings vary by state.
Pro tip: Watch for the company’s vape concentrates and gummies to enter more states in 2025. bonanzacannabis.com contact@bonanzacannabis.com
Swifts Peanut Butter Cups
California, Washington
A leader in the Washington edibles market, Swifts places a strong emphasis on authentic confectionery craftsmanship. Made with premium ingredients and infused with just the right amount of cannabis, Swifts’ Peanut Butter Cups are offered in three flavor profiles: white chocolate, dark chocolate, and milk chocolate. With 10mg THC per cup, the delicate treats are vegetarian, gluten-free, and handcrafted with local ingredients.
Pro tip: Market as a decadent twist on a perennial candy favorite. swiftsedibles.com oliver@greenlabsllc.com (Washington), sarah@swiftskushcups.com (California)
EMBRACING EMPLOYEE OWNERSHIP
Employee stock ownership plans can have a positive effect on cash flow and employee morale.
BY DARREN GLEEMAN
Successful cannabis businesses are strategic, savvy, and clever. They have to be, don’t they? With harsh regulations like Internal Revenue Code (IRC) Section 280E, banking restrictions, and the unfortunate fact the plant remains federally illegal, the industry is not for the faint of heart.
Business leaders in the space typically accept these struggles as “part of the job.” But recent advancements, such as the adoption of employee stock ownership plans (ESOPs), have enabled businesses to reap tax benefits and operate with higher margins.
What is an ESOP? To put it simply, ESOPs are another way for a company to sell itself. Sure, you can sell your company to a private-equity investor or a strategic buyer who will help the business grow. But you also can sell your company to your employees, creating an ESOP structure.
You might be wondering, “Why would I sell my company to my employees rather than securing a juicy offer from a high-profile investor?”
Consider what happens when you sell to a private-equity firm. Capital gains taxes alone can siphon off hundreds of thousands, if not millions, of dollars. But, when you sell your firm to your employees via an ESOP, you can defer those capital gains indefinitely.
Why would the government allow something like that? The truth is, the government wants employees to become owners. In the 1950s, the government wanted to find a way for capitalism to work for everyone. But capitalism only works for everyone if everyone has equity. So, the government began incentivizing companies to sell to employees by offering tax benefits. For instance, if you establish your company as an S corporation and then sell 100 percent of the company to employees by way of an ESOP, the company itself pays no federal income tax. In most states, it doesn’t pay state income tax either.
So, what’s in it for the business owner? Selling the company to the employees provides the business’s former owner with a substantial payout and a way to diversify their equity.
Publix is an ESOP. Inside a Publix store, the level of service is remarkable and distinctly different from other stores. Everyone is kind and helpful. Is it possible to have the same experience at Walmart? Sure. Is it common? Not really. Publix’s exceptional service is partly because the employees understand how their roles directly impact the company’s success. And the success of the company directly affects their personal profits. A Publix cashier potentially could become a millionaire due to the ESOP structure.
Which is why it should come as no surprise that cannabis businesses are adopting ESOPs. Earlier this year, Theory Wellness became the first employeeowned cannabis company in the country. Since then, more businesses have moved or are moving toward creating an ESOP structure. Some of these companies have doubled or tripled their cash flow, which is crucial in this industry. Additionally, employees now have substantial equity, making them a key aspect of the company’s success.
Employee ownership impacts company culture, employee motivation and job satisfaction, and overall business performance. Think about it: Once an employee understands they’re an owner, their mindset shifts. They’ll work harder, care more about the work they’re putting in, be more productive, and be less likely to quit. According to a Rutgers University Study, productivity increases by approximately 4–5 percent per year in an ESOP-structured company. In addition, employee retention increases by as much as 300 percent. According to the National Center for Employee Ownership, turnover at ESOPs is around 10.8 percent, whereas the turnover rate at more traditionally structured companies is about 27.1 percent.
But the cannabis industry has another benefit to gain from ESOPs. IRC Section 280E ensures this industry is taxed differently from any other industry in the United States. The tax code prohibits cannabis businesses from offsetting against income anything except cost of goods sold. Industry businesses can’t deduct salaries, rent, marketing, or anything else businesses in traditional sectors routinely deduct. An ESOP makes 280E irrelevant, because ESOPs don’t pay income taxes.
With the tax benefits, boosted productivity, and increased cash flow ESOPs provide, I believe the cannabis industry will embrace the structure.
INDIGENOUS OPPORTUNITIES
A bright future for tribal cannabis is possible in America.
BY MITCHEL CHARGO, ESQ.
The Eastern Band of Cherokee in the territorial boundaries of North Carolina recently opened a dispensary, despite marijuana being illegal in the state. Likewise, the White Earth Band of Ojibwe opened a cultivation facility and dispensary on its tribal lands as the State of Minnesota legalized marijuana possession. The White Earth Nation, along with the other ten federally recognized tribes within the territorial boundaries of Minnesota, are in the process of compacting with the state for cannabis activity outside the exterior boundaries of their tribal lands.
These tribes exemplify a growing number of Native American communities across America that are exercising tribal sovereignty to enter the cannabis market. Initially, obstacles and challenges seemed to create insurmountable barriers to Native American participation in the industry. Challenges included friction with state laws and state governments, gray areas in
federal enforcement of the Controlled Substances Act, and lack of financing. Make no mistake—these obstacles can still obstruct a tribe’s path to participation in green markets. However, now more than ever, there seems to be a brighter future for Native American cannabis operations, and there are many reasons why tribes may want to consider stepping off the sidelines and onto the playing field.
Federally recognized tribes are situated in a unique space within the American legal system. They have inherent sovereignty as established by the United States Constitution, and this sovereignty has been confirmed by U.S. Supreme Court rulings and treaties with the federal government. Tribes are deemed to be domesticdependent nations with rights to self-governance, management of tribal lands, and operation of tribal business entities. Because the Constitution granted power over Indian affairs to the U.S. Congress, states
have no authority over tribal governments or affairs on tribal lands unless expressly authorized by Congress. Since tribes and states are both sovereign, neither is subordinate to the other.
So, taking tribal sovereignty into account, why should a tribe explore entering the industry?
Within the legal framework of tribal sovereignty, marijuana has emerged as a viable economic commodity, presenting significant economic development opportunities for Native American tribes. As many tribes face persistent economic challenges, participating in the cannabis market can lead to the enhancement of potential revenue streams, job creation, investment in infrastructure, promotion of entrepreneurial initiatives, and improvement of health and wellness programs.
One of the most compelling benefits of cannabis for Native American tribes is the potential for substantial revenue generation. Many tribes operate in areas with limited economic resources, often relying heavily on federal funding and grants. By entering the cannabis market, tribes can create new revenue streams that can significantly bolster their economies. In turn, revenue derived from operations can be redirected toward essential community services such as education, healthcare, and infrastructure development. The economic impact of the industry thus can extend beyond immediate financial gains, allowing tribes to invest in long-term community welfare.
The industry can create jobs for tribal members. Growing, manufacturing, and selling products is labor-intensive, requiring a diverse range of skills from cultivation and harvesting to distribution and retail management. As tribes establish operations, they can create numerous job opportunities for tribal members. Job creation is particularly vital in communities where unemployment rates can be disproportionately high. Employment in the cannabis sector also can lead to skill development and training for tribal members. By offering vocational training and education in agriculture, business management, and compliance with regulatory requirements, tribes can empower their communities with new skills that can be applied in other industries.
The cannabis industry also opens doors for entrepreneurial initiatives among tribal members. Beyond large-scale cultivation, various ancillary businesses can flourish in the ecosystem. These include processing, distribution, retail, and marketing services.
By supporting local entrepreneurs, tribes can cultivate a robust local economy.
With the influx of revenue from sales, tribes can invest in critical infrastructure projects. Improved infrastructure can include roads, housing, and community facilities, all of which contribute to a higher quality of life for tribal members. Additionally, enhanced infrastructure can attract further business opportunities and investments from outside entities.
Investment in technology and modern agricultural practices is another critical aspect of infrastructure development. By adopting innovative farming techniques and equipment, tribes can increase productivity and ensure sustainability in their operations. This modernization can serve as a model for other agricultural ventures within the community.
Economic development through cannabis can lead to greater investment in community health and wellness programs. Many tribal members desire access to the plant as an alternative to pharmaceuticals (many of which come with inherently severe side effects).
Revenue from cannabis can be allocated to health initiatives that directly address disparities in healthcare and health issues that arise in tribal communities, fostering a healthier, more resilient community.
Make no mistake: Despite the rosy future and the potential benefits for economic development, challenges remain. Stigma can lead to resistance within tribal communities. As a result, education and outreach programs are needed to dispel myths and promote accurate information about cannabis and its benefits.
Tribes must navigate the legal and regulatory landscape as each state has its own laws, and tribal sovereignty adds another layer of complexity. In states where cannabis is legal, tribes must work to establish their own regulations that align with state laws while asserting their rights to govern cultivation and sales.
Collaboration with state governments, whether through negotiating compacts or mutual understandings, can help facilitate a smoother integration of cannabis into tribal economies. Additionally, proactive engagement with local law enforcement can foster a cooperative environment, ensuring compliance and community safety.
Andrea Kingbird, general counsel for the White Earth Band of Ojibwe, contributed to this column
NEW YORK FINALLY LIVING UP TO POTENTIAL
The state may join the $1-billion-in-sales club this year.
BY CHRISTOPHER JONES
New York took longer than expected to give a thumbs up to legalized adult use, but when the state finally got its program off the ground in 2022, operators on the East coast were optimistic legalization in the Empire State would be a catalyst for dramatic growth in the region. It didn’t quite work out that way, partly due to licensing delays but mostly because a thriving illicit market put legal operators at a disadvantage from the start.
In 2024, New York is starting to fulfill its potential as one of the largest cannabis markets in the world. From January through August, the state’s licensed dispensaries reported $368.4 million in sales, according to the Office of Cannabis Management (OCM). That’s a dramatic jump from the $160 million reported for the whole of 2023. State agencies and independent analysts estimate this year’s sales will total between $700 million and $1 billion. Grand View Research projects
the state will reach $3.22 billion in sales by 2030.
A dedicated crackdown on unlicensed operators helped New York rebound from its sluggish start. Since May 21, the statewide Cannabis Enforcement Task Force, in cooperation with other state and local agencies, has padlocked 345 unlicensed retailers and seized more than seven and one-half tons of illicit products with an estimated value of $28.9 million.
As a result, licensed retailers reported an average increase in sales of 50 percent across the state and a 97-percent increase in New York City.
Patrick Rae is a veteran investor and a managing director at Poseidon Garden Ventures, which Rea estimates has invested in 200 different cannabis companies. Retail opportunities are of particular interest to the firm.
“New York is an exciting market, and the industry continues to grow,” he said. “I think there was a fair bit of
worry and concern that New York City was going to become the new version of the Los Angeles market with a lot of illicit activity, and that would really have depressed the legal shops’ performance. But there has been an organized effort to crack down on the illicit market [in New York], and it seems like they’re getting it under control, which is great.”
Eleven states, excluding New York, are projected to top $1 billion in licensed sales this year; New York is expected to join them in 2024 or 2025. Based on average monthly sales of $149.7 million, neighboring Massachusetts, which launched an adult-use market in 2018, will rake in just shy of $1.8 billion in 2024. Rea said similarities between the two markets are part of the reason investors are watching New York.
“The two states seem to be the same, and there are patterns you expect consistently,” he said. “There are states that don’t make it easy to meet all their regulatory and compliance requirements.” In states like that, “You need experienced investors and key team members. This is a startup industry and there are a lot of entrepreneurs, and we know what’s important for them to focus on. We make sure they do [focus on what’s important] and bake that into our investments.
“What are our expectations for success with cannabis startups? Should they be different from startups in general?” Rea continued. “Let’s be intellectually honest about our expectations related to the success of these businesses and look high-level at a state like New York. People should be pleased with what appears to be a turnaround in the New York market, at least from the outside looking in. We think now is the time to hit the gas and find more stores and more businesses to support and invest in while everyone else is taking a pause. If you believe in the opportunity, you need to press forward.”
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