How to Save you From Yourself Part 1 of 3
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This week we're running a series:
This series is titled “How to Save You from Yourself". This is part one.
A lot of people suffer from overconfidence. Because of this, they try to take shortcuts, which then lead to bad decisions.
Places like the cannabis marketplace are incredibly noisy. Everywhere you turn has someone else giving you different advice. There can be so much misinformation, it is difficult to see what the real facts are.
It’s even harder to try and interpret results when everyone is an “expert”.
Everyone wants an easy button. As a business owner trying to balance the day-to-day responsibilities, it can be tempting to pick the first option that comes along.
Let’s look bad decision example #1.
You finally get your producer license and location in order. Now, you need to find someone who knows how to grow plants.
Pick a guy, any guy, who knew how to grow 15 plants in their basement and all of a sudden, they call themselves a “master” grower and want you to pay them $100,000/year? This guy has never made more than $35,000/year on his own, heck he hasn’t had a job half the time, but now he wants six digits for a salary?
There is a point where you need to decide does growing 15 plants in a basement, somehow qualify them to manage your 1,100 plants with a commercial scale operation and a dozen employees?
I have a really hard time believing those two roles are filled by the same guy successful. It doesn’t usually work that way.
Bad decision example #2.
You desperately want your company to start turning a profit. Even if you can sell $8,000 each month in product, it doesn’t matter if your overhead is $15,000 per month. Eventually, your funds start running really out and you need another way to increase income.
Enter the cannabis consultant.
There are definitely consultants who bring value to your business and know what they are doing.
Then, there are the rest.
The challenge is we have so many guys who just want a piece of the action so they swoop in from some other state and all of a sudden they become “cannabis consultants.”
What did they do before? Nothing that helps you out with this business or the regulations or any compliance or profitability measures for your specific location.
Are they smooth talkers? Yup.
Does it sound like they know more than you? At least in certain areas, they appear knowledgable.
However… are they licensed in any way? Probably not.
Are they even a legitimate registered business in any state, let alone the one they are trying to work in? If you’re lucky.
But, you want the easy button. You hire this consultant and pay their deposit and fees. Then, they end up bringing in a bunch of bugs and destroy your crops.
Now, you’re lost not only the fees that you paid them, but also the potential revenue from that crop, and now have to suffer with the downtime as you figure out how to get rid of the bugs and start over.
Bad decision #3.
You’ve spent the last 6 months negotiating with multiple buyers.
Now that you are worn down and tired from the fight, you give in and agree to terms with this new buyer.
Except, this guy is in a hurry. He wants it done NOW, or else he’s going to walk.
Well, crap, it took your attorney 3 weeks last time to get the first draft of a contract out. This guy doesn’t seem patient enough to wait and you just want it over with.
So, what do you do?
You call your buddy. See, he’s an attorney. He understands contracts and business. Why couldn’t he just draft your purchase agreement real quick?
Your buddy is a nice guy. He wants to help. He thinks he’s doing you a favor.
Except…. He doesn’t know anything about cannabis business and rules.
You think that’s ok, it’s just like a business purchase. We’ll just use his version anyway. I mean, it’s ready to sign now and then you can make the buyer happy and everyone moves on.
Only, the state still needs to approve your deal.
See, there are specific ways that the business, the products, the company transfer and especially the funds need to be handled in order for this entire deal to be successful. And, those aren’t common sense rules.
Unfortunately, we have watched more than one license get pulled from the state because of a lack of understanding for when money can change hands or who is allowed to operate the day-to-day.
What would have been acceptable in any other business environment, is just NOT acceptable to Washington State Cannabis Licensing. Therefore, it is your fault as a license holder and you just lost the license you spent the last few years working on.
There is too much BS in the cannabis marketplace. It is time the true business owners stepped up.
So, how do you save yourself from this confusion? You take a step back. You do your homework. And you make clear and thoughtful decisions.
I know that’s hard when the buyer is threatening you that if you don’t come up with some sort of deal by tonight, otherwise they will back out. You know what you tell him? To suck it up and be patient. If he wants to get into the industry, then he needs to work with you to ensure he CAN get into the industry. And, that my friends, will never happen overnight.
I know it is hard when you thought you had a deal together, but then someone wants the change the terms and payment at the last minute.
I know it is hard when after waiting 3 weeks for your attorney to get you a draft purchase agreement it finally comes through but by then you want to make changes to the deal but are afraid it will take another 3 weeks if you do, so you just sign it anyway.
We get it. We do it every day.
The only way this industry succeeds is if you make the choice to treat this business with the level of professionalism it deserves.
Is there an easy button?
Are there ways that help you through the difficult process? Absolutely.
When you need a reference to a true cannabis professional, or when you need a team who understands how Washington works, we can help with that. Keep yourself moving forward. Give us a call at (206) 466-4020 or email@example.com.