For many in the area, the prospect of a nearby medical marijuana growing facility and its accompanying storefront retail dispensary are like dirty words printed in a church program.
Shocking and unbelievable.
But for those who look through the clouds of smoke and look without the muddled head of a “stoner,” the medical marijuana industry coming to Massachusetts is a chance to catch on to a very profitable business opportunity – provided they know exactly what they’re doing, experts say.
Adam Bierman, a marijuana industry expert for the MedMen Company, has been consulting with several serious clients in Massachusetts who are vying for one of 35 licenses that will be given out at the end of a state Department of Public Health (DPH) licensing process that begins in earnest this Thursday, Aug. 22nd.
On last November’s ballot, Massachusetts’ voters approved medical marijuana overwhelmingly, and over the last several months the DPH has been coming up with strict regulations and a comprehensive licensing process. Patients with specific conditions documented by a doctor can register to be allowed to buy marijuana from the companies.
Bierman, from Los Angeles, is the founder of MedMen, and has consulted with numerous business people in other states where medical marijuana has been legalized – including California, Colorado – and most recently – Arizona. Now, he has moved on to Massachusetts and he’s warning anyone with a half-baked business plan that the industry is no laughing matter.
In fact, Bierman said those who might be interested in getting a license need to be prepared for a long and expensive journey. His company is estimating that it will take between $2 million and $5 million just to get started here.
“The first dispensary in the state is not going to open up anytime soon,” he said. “In Arizona, which came right before Massachusetts, it took two years and that guy didn’t last long. There were lawsuits there and one suit even came from the government…It’s just not going to happen in six months like some people think.”
While a lot of people to a person have conjectured or discussed the idea of going into the pot business, Bierman said getting it done is going to take a serious person with capital and experience.
One of the biggest stipulations in the state’s regulations is that the industry here will operate in a closed circuit. He said that means no one can outsource his or her product. So, anyone opening up a store has to grow their own marijuana, and they cannot buy it from someone else and sell it. Those who want to sell it will have to grow it, and being able to stay in business and stay financially viable will require a large-scale growing operation. That, he said, is a major hindrance to those who might want to stumble headfirst off the couch and into the pot business.
“Those who succeed in this new industry are going to be the people who seek out and find the very few people like me who are business people – not weed people – business people who have a track record of doing this exact thing elsewhere,” he said. “We can point to 50 dispensaries we’ve successfully opened in other states. You’ll have to go to Colorado or California to find a person to partner up with, but that is what it will take in Massachusetts to be successful…If 10 are open here one year after they give out the licenses, I’ll be blown away. They can’t outsource their product, so that makes it hard to get started.”
Bierman said the costs can be exorbitant and shouldn’t be taken lightly.
“It’s not Mexico or Northern California where you have thousands of acres and it’s summer-like weather all the time,” he said. “This will be someone who has to get a 20,000 or 30,000 sq. ft. facility to grow marijuana indoors in a full agricultural operation. You’re looking at $2 million at least for the set up alone. Then you have to operate your growing facility, meaning you have to pay for electricity, water, employees, health insurance and payroll. It’s going to take $200,000 to run the thing every month. People don’t understand this, but you won’t have your first crop until four to six months later and that first crop is just for seeds. They think they’ll get this license and everything will just fall in place. This is very hard stuff. Again, if more than 10 are up a year after they give out the licenses, I’ll be shocked.”
Another difficult part of the fledgling industry will be getting through the licensing process, he said.
He said he believes Massachusetts has done things the smart way, meaning that Massachusetts has learned from the mistakes of states that have already gone down the medical marijuana path. An example of that, he said, is in the licensing process – which comes in two phases.
He said that during the background check in Phase 1, applicants must show that they have experience in the medical marijuana industry and they must prove that they have at least $500,000 in assets. That, and a $1,500 application fee, will simply get one in the door.
“The big question is if you get one of these licenses, then what?” he said. “One thing Massachusetts does is it requires people to show enough liquid capital so as to prove they can get something done. In Arizona, they gave out licenses to people who didn’t have access to capital to get it done. Here, they looked at the other states and said that an applicant will have to show they have the money to do it and they’ll have to show they have the background to do it.”
Bierman said he realizes that many are shocked by the prospect of growing marijuana in the community for medical purposes, but he said once people see it in action, they will understand it’s much more a business entity and much less a seedy operation.
“As a business, economically, it’s not going anywhere,” he said. “We’re way past the tipping point. Those in the industry are excited in Massachusetts and see this as an opportunity. They are ready to jump in because there is a lot of money to be made…The few business people who get this right and get it done correctly; they’re going to be in an excellent position because they’ll be the only ones around. People will have to come to them.”
Of Street Dealers and Politicians
Bierman said that in his experience as a consultant to the marijuana industry, there are two things that he said always happen – street dealers tend to disappear and politicians will come forward with a ban or a zoning amendment.
Already, in Revere, Chelsea and other areas, such bans or zoning amendments have been proposed. In Chelsea, the City has already zoned dispensaries into a commercial area. In Revere, such an amendment is on the docket for a vote this month.
Bierman said such things are inevitable, but tend not to make any difference in the end.
“The reality is it’s bad politics to be part of a City Council and say that you are pro-weed,” he said. “I haven’t heard of any successful City Councillor who has done that. Even in Los Angeles it was sad because the Los Angeles City Council passed a ban on dispensaries. It was laughable to everybody but the politicians. It lasted two months and was rescinded…The money and momentum in this industry is such that things like that just don’t matter in the end.”
Meanwhile, he said his experience is that the street dealers tend to go away when medical marijuana takes hold.
“You’re not creating any new demand,” he said. “The demand is already out there, but they’re buying from street dealers. This puts street dealers out of business. In LA, we might be the Wild West for marijuana, but we don’t have street dealers. I haven’t heard of a marijuana street dealer in years. Maybe there are a few, but before everyone was dealing with a street dealer. They don’t do that anymore because they can go to a storefront and be legitimate and make an informed, consumer decision.”
Adam Bierman, a medical marijuana consultant from Los Angeles, said those with half-baked business plans need not apply for the new Massachusetts Medical Marijuana growing and dispensary licenses. He indicated that start up costs alone could total as high as $5 million.