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LESSONS LEARNED BY WASHINGTON STATE CANNABIS FIRMS AFTER FIVE YEARS OF RECREATIONAL SALES By Bart Schaneman

since 2014. Here is what they had to say:

Washington State rolled out the world’s second adult-use marijuana market on July 8, 2014, following closely behind Colorado, which began recreational sales at the start of that year. Over the past five years, Washington state cannabis business owners have persevered through stiff competition, a shifting regulatory landscape and sliding market prices. A study released by the Washington State Liquor and Cannabis Board (WSLCB) in March 2019 found that recreational cannabis cultivators are using less than half their allotted licensed canopy (https://lcb. wa.gov/sites/default/files/publications/Marijuana/ YearOneCanopy.pdf ). That could open the door for regulators to reduce some licenses to a lower tier, which would shrink the maximum amount of cannabis a cultivator could grow. While Washington state’s cultivators suffer from depressed wholesale flower prices, overall cannabis sales continue to increase – although at a slower pace, according to the 2019 Marijuana Business Factbook. By the end of 2019, Washington state – along with Colorado and Oregon – could post year-over-year retail sales increases of single digits. It would be the first time a recreational marijuana market has not posted double-digit increases in adultuse sales. Creative thinkers in Washington state’s industry have suggested possible solutions to the wholesale cannabis price declines, including allowing growers to sell directly to consumers. And lack of mandatory pesticide testing in the market has spurred retailers to develop their own programs to test products, which has been a disruption for the market, particularly for processors. Marijuana Business Daily surveyed several owners of both plant-touching and ancillary businesses in Washington state to hear what lessons they’ve learned

The selected answers focus on: Regulations Falling prices Diversification Political engagement Jeremy Moberg, founder and CEO, CannaSol Farms, Riverside “Don’t depend on a few sources of revenue but, instead, diversify your relationships and your products. The Washington market is extremely competitive, and prices are low due to oversupply. “We have had to do more with less to stay afloat in this market, where prices sometimes do not cover the costs of production. By diversifying all aspects of your business, you are better positioned if something goes wrong. “Businesses built on single relationships or single product lines are at much greater risk of failure.” Jim MacRae, owner, Straight Line Analytics, Seattle “It is unwise to get on the bad side of those that regulate the industry. The gross variability of enforcement against licensees (many have not even received an LCB visit after being licensed, whereas some have been visited over 100 times) appears to, occasionally, show differential focus on outspoken members of the industry. “Many licensees voice concerns in private that they refuse to state publicly (if at all) to the LCB. When questioned, fear of reprisal is a common theme.” Steve Fuhr, managing member, Toucan Farms, Shelton “The WSLCB has absolutely no interest in the cannabis legalization succeeding, which is evident in their han-

dling of the initial rollout, the Leaf software transition, their irrational and frequently irregular enforcement actions, their confusing, conflicting and often illegal rule changes, and the highest taxes per gram in the country.” Ryan Abernathy, president, Xtracted labs, Seattle “This is the most competitive industry in the world. Being successful requires embracing and being passionate about all aspects – from the quality of the products to the level of customer service, all the way through to simple things like your relationship with the bank or following regulations. “To be successful in legal cannabis you need to be passionate about the entire process.” Shawn DeNae, CEO, Washington Bud Company, Arlington “We learned how vital it is to engage early in the political process as laws and rules are being discussed on the state, regional and local levels to push for a small-business-friendly atmosphere. “If given a mulligan, I would engage much earlier in the political process. I would also advise myself to not overextend – focus on building one strong business. “We are still in the infancy of the industry. The current is ever shifting, and it will continue to shift and refine over many more decades. The tortoise can win this race.” Jim Makoso, vice president, Lucid Lab Group, Seattle “The No. 1 lesson I learned about running a cannabis business in Washington over the past five years is to stay nimble and operate at the highest efficiency to stay competitive.” u See LESSONS / page 6

Fore-Twenty: Freedom Leaf Cup to be Awarded at Cannabis Golf Championship By Steve Bloome Golfers will be teeing up and smoking out at the Suncadia Resort in Roslyn, Wash. from Aug. 23-25 where the winner will take home the inaugural Freedom Leaf Cup. The Cannabis Golf Championship, produced by 420 Presents, will take place at The Retreat located within the resort’s private Tumble Creek community that borders the Mount Baker-Snoqualmie National Forest. The idea of the tournament dates back to the early 2000s when construction of Suncadia began. Billed as a lifestyle experience, the “Fore-Twenty Cup” will feature camping, live music, guided horseback rides and relaxing river floats. The site is a natural amphitheater with small solar-powered cab-

ins, virgin well water, a private creek and a secluded beach on Cle Elum Lake. Just north of Interstate 90, Roslyn is 80 miles east of Seattle and 125 miles northwest of majestic Mt. Rainier. In 2006, when the resort opened with a course designed by golf legend Arnold Palmer, 420 Presents CEO Shane Lemco signed a 60-year golf contract with Suncadia. “With full recreational legalization in 11 states, we’re witnessing and are a part of this new and growing industry,” he says. “Trade shows and themed events have become common. Teeing it up at other cannabis-related tournaments around the country revealed a love for the game and a lot of really good players among the community. “Hence, we’re launching an event featuring cannabis brands from all

around the country – including Eden Labs LLC, Marijuana Venture, MainStem and Cannabis Superstore – to compete for the individual and team national championship.” 420 Presents is seeking addition-

al cannabis companies and entrepreneurs to sign up for the toking tourney. Registration fees are $150 per individual and $495 per team. Register today at https://420presents.com/cannabis-golf-cup.


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