Hopeful cannabis retailers have a lot of ideas and a lot of questions, but they are short on answers when it comes to the nitty gritty of how things will work day-to-day in the retail cannabis space.
With the industry still evolving and regulations still being written, it’s hard to make a plan. Much of what would-be participants will be able to do and how they’ll be able to do it is unclear – and that’s if they can get their hands on a retail license amid stiff competition.
While hopeful operators can look to other states for an idea on how some things may shake out, New York is writing its rules in a way it hopes will avoid some of the common pitfalls that have happened elsewhere in places that legalized pot first, such as California and Colorado, where high taxes have dampened the legal market.
Here are just some of the issues operators face going foward.
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There’s still a stigma. Will consumers feel just as comfortable entering a recreational pot store as they are a liquor store?
Though society has become much more progressive than it was in years past, there is still a stigma about wanting to get high.
The industry has done a great job erasing the stigma surrounding medical use of CBD. Consumers have widely been able to use CBD products without embarrassment, even talking to their doctors about how much they should take for pain relief or peaceful sleep.
But there’s another bridge to cross when it comes to using cannabis for recreation.
“There’s no shame in being a euphoria user and more people need to talk about that,” said Kristin Jordan, the CEO of Park Jordan, a commercial real estate brokerage that advises the cannabis industry.
Getting past that stigma will be essential if shopkeepers want to fully build a base of customers who feel comfortable going to their shops and buying pot in a public place.
Will the medical and recreational markets collide?
Will medical marijuana patients still need to use a card when they purchase their cannabis? Will retailers be able to sell medical marijuana and recreational cannabis under one roof? Will there be enough supply from growers to keep up with the added demand?
Answers are unclear. What is clear, though, is that the state is trying to learn from the medical marijuana trade as it goes forward with its adult-use licenses.
It is particularly trying to learn how to nurture smaller businesses and keep the bigger operations from steamrolling them with their higher budgets.
“We have multi-million-dollar medical marijuana companies that are publicly traded,” said Chris Alexander, executive director of the New York State office of Cannabis Management.
“What we wanted to do was prioritize finding a way to get our small operators some space first,” he said. “I think that being creative on the front end with the conditional cultivators, processors and retailers, we’ve done some initial work to show the priority we have for small businesses.”
To diversify or specialize? Usually when a retailer enters the market, they have a line on who their competitors are and which niches need filling. Not so here.
Byron Cage, a hopeful retail licensee with the Higher Calling in Syracuse, is concentrating on the retail end. He’s biding his time by focusing on educating others about the industry and fighting for the social justice that is the key component in how the legalized pot laws are written. His store sells branded hats and clothing online for now.
“You have to get involved early, make your stamp and build your niche now,” he said.
Glenna Colaprete, a cannabis grower and spa operator in the Rochester area, is taking a different approach. She is looking to diversify into several aspects of the legal pot market.
Colaprete is a licensed cultivator, processor and distributor.
She also owns two Rochester area spas that use her company’s CBD-based products in massages and facials. She has also expressed interest in contract producing infused beverages for other retailers.
“I would like to do more,” she said.
Operators will have to decide which approach they want to take.
Banking remains a challenge. Without federal rules legalizing cannabis sales, banks are afraid to do business with operators out of fear they will be penalized by financial regulators.
That means operators cannot rely on traditional lending and are often forced give away equity in their companies. They also have trouble doing something as simple as keeping a bank account.
“I tell people to take ‘cannabis’ out of their name, it just adds a level of difficulty,” said Colaprete whose company calls itself Colorado’s Brand Distributing. “We’ve been cancelled by banks so many times.”
Colaprete has also been dropped by website hosts, ecommerce platforms and even Quickbooks, she said.