Sold: Starting a Medical Grow Business

Before starting a medical grow business, you need to do a ton of research.

Federal, state and local laws create a vast web of interconnecting rules that are unique to each medical grow (even if they are in the same city and industry). Navigating this miasma is both arduous and tedious by design but is also vital to remaining in business. The best place to start is with your states official rules.

You can’t simply put some seeds in backyard dirt or throw thousands of dollars around and expect to get anything competitive out of it. And this is a competition. The time, effort and skill needed to get a plant from seed to sale is a skill that can be developed over several years. A skilled hand can take a good strain and make it great while an unskilled grower can kill everything.

But it takes more than growing the dankest buds to survive.

Growing great herb is a prerequisite to a business based around growing weed. But equally important is the ability to manage costs and duplicate results. It doesn’t matter how much you can sell your product for. If it costs more to produce than what you get, it isn’t a viable business.

“Even if you get your costs under control, you still have to worry about duplication. If you can’t produce the same product every time, you have a problem.” Mike Boynton, the master grower for Oregon Imperial farms told me in an interview. “Changing anything in the environment from fan placement to light duration will change how your plants grow and therefore your bottom line.” The more people and the bigger the farm, the harder it is to control costs. If you can’t get it under control with 5 plants, you will never be able to with 5000.

The Marijuana industry is an especially challenging one.

Getting a business off the ground in the weed industry is a lot harder than most other industries. Cannabis is one of the oldest crops known to man and you can bet there are a lot of talented people out there trying to do it better and cheaper than you. Besides having to deal with the standard problems of location and competition, cannabis businesses are heavily regulated and lack traditional support infrastructure like banking services.

Marijuana businesses lack the ability to use banking services because it remains federally illegal. This is not to say that banks refuse drug money. SBC was fined $1.9 billion by the U. S. government for laundering cartel drug money in 2012. Yet the cannabis industry is forced to work on a cash basis regardless of how big the costs.

There are a variety of rules regarding how to grow legally.

With over half of the nation having legal weed in one form or another on a state level, there have been many ideas about what should be allowed. Each state has taken different measures to ensure a safe and effective cannabis industry. Some states require seed to sale tracking and vertical integration while others prohibit delivery or drive-thu services.

In addition to rules and regulations about where and how to provide services, there are also rules around what kind of equipment is needed in order to get a license. This further compounds the complexity with many states have a different set of rules for medical grows and recreational operations. As an example, Washington merged their medical grow and recreational grow rules for a single comprehensive program while Oregon kept them separate.

After all, growing weed isn’t cheap.

Even in places with ideal growing conditions like Northern Cali, Florida or Hawaii, plants still need water, nutrients and protection from pests/diseases. In areas where the weather is too dry or cold, growing indoors becomes a necessity. The cost of equipment pales in comparison to the cost of keeping the growing environment perfect.

In addition to lights; pumps, timers, fans, filters and air conditioners all use electricity. Keeping the juice flowing can be a challenge in itself. Grows with more than one room may even need to have a more powerful line run by the electric company to keep from blowing transformers. All of these little additions add up quickly and can quickly eat up all the potential profit.

A lawyer, an accountant and a lobbyist walk into a grow room.

If you plan to operate a successful company growing a federally illegal substance, you need to have some specific talent on your team. This team needs at least a lawyer, an accountant and a lobbyist to run interference while the head grower does their work. Without someone covering each area, the chance of getting blindsided is astronomical.

Lawyer

Find someone who specializes in canna-based business compliance and criminal cannabis defense. Ask others in your area who they recommend. Don’t forget to check online databases like www.martindale.com, www.avvo.com, www.justice.org to name a few.

Accountant

Look for someone with experience in the industry. Overly “creative” accounting can get you in hot water so make sure you can trust them. In addition to searching online for local tax professionals, ask colleagues for referrals. Asking others in your area who they use and why is also a great way to narrow the search for the right accountant.

Lobbyist

Look for someone with the time and energy to represent your cause. Their job is to keep an eye on local and statewide changes that pertain to your business. They are also there to help prevent others in the community from effectively banning your business or engaging in sneaky tactics to close you down. There are no lists/registries for this, gotta tap into that network to find the right person..

Head Gardener

Look for someone with botany experience. Many master gardeners hang out in local hydro stores or are at least known by them. Don’t be afraid to ask questions and be picky. This is the person who will dictate the initial and final quality of the product and choosing the wrong person can have dire consequences.

Skipping the support staff can have dire consequences.medical grow

Many states ban the operation of any marijuana based business (including a medical grow) within a certain radius of schools. But most states don’t ban schools from opening near a marijuana businesses. There is normally nothing explicitly stopping a preschool from opening next to a dispensary or grow location and putting you out of business.

A good team is the difference between closing up shop or staying open for years. It does you no good to spend millions of dollars on a medical grow business just to have a preschool open next door a week later and shut you down. Better to have the staff on hand to stay open and deal with the issue before it gets finalized than not.

You need to find just the right spot.

Besides schools randomly popping up, there is a lot to consider when starting a grow business. The first thing most growers work out is where they plan to grow. Most medical grows are done on a personal consumption scale. If the plan is to make it profitable, it takes a bit more consideration.

Because cannabis remains federally illegal, landlords are almost as hesitant as banks are to work with weed entrepreneurs. Even in the case of a medical grow, it can be almost impossible to get permission to start. In most cases, growers need to own the land/building they plan to operate in or receive written permission from the land owner before getting licensed.

Security is a major concern as well.

Each state has very specific rules on which types of security are needed for a medical grow to remain in compliance. States may require barriers like walls be erected around grow sites. They also might require closed circuit cameras linked to cloud backups but it depends.

Whole sectors of the economy have been dedicated to the outright eradication of cannabis for decades (I’m looking at you Big Prison, Pharma and Tobacco). As cannabis moves from illicit trade to regulated market, there is bound to be pushback from entrenched interests. Even a medical grow can face opposition from local religious or political groups that don’t like cannabis.

The market is growing.landrace 2

More and more people are getting in on the Green Rush and starting to grow cannabis. Like the Gold Rush that sparked westward expansion, the hype and obvious wealth being generated is causing a migration of talent and willpower. Fortunes are waiting to be made by talented and driven individuals willing to put in the work.

In the end, most of the states where weed has been legalized were ballot measures which means they were supported by voters. With the majority of the population clearly supporting cannabis reform, cannabis is primed to continue growing for years to come. Getting a good team will make every other part of the process easier.

Do you agree?

Or do you think I’m off my rocker? What advice would you give to someone just getting started? What do you wish you knew before starting a medical grow? Let us know in the comments down below. We would love to hear your take. And as always, thanks for reading.

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