Three marijuana licensing strategy tips from a seasoned cannabis entrepreneur

License Procurement is a Speciality of Next Big Crop, With Dozens of Cannabis Business Applications Successfully Secured Across the U.S.

Navigating the complex and ultra-competitive world of cannabis license applications—whether for a cultivation facility, processing operation or dispensary—can be confusing, frustrating and stressful.

It doesn’t have to be, though.

Success stories abound; for every disorganized or incomplete business plan that fails to adequately address the regulations and requirements for this fast-changing industry, there is a well-constructed and thoughtfully presented marijuana license application that hits the bullseye.

Rich Cardinal knows well what a successful cannabis business application looks like—and what can be fatal flaws. As the founder and managing director of Next Big Crop, a professional cannabis consulting platform that offers top-level services with proven strategies for every aspect of the application and implementation process, Cardinal has a proven track record in spearheading dozens of license applications for clients and following through on the design, construction and management operations for many of them.

Here are Cardinal’s three experience-based tips for nailing your city or state cannabis business application:

1) PINPOINT AND ACCURATELY ESTIMATE THE DEMAND FOR CANNABIS IN THE AREA YOU’RE TARGETING.

“We base everything off the population number,” Cardinal says. “Does what you’re doing makes sense for the demand numbers you’re seeing? Once you determine this, that then drives how much money you need and how big the facility should be. Everything should then be tied to that number.”

For example, Cardinal points out that if you estimate that 1 percent of the population in your facility’s area is going to be using medical marijuana by the end of the first 24 months, then you should use that as a hard-and-fast guideline. This number will inform important business-plan aspects including the facility design and its size; how much product will be needed in total and for the average monthly supply; and even whether the licensee can expect to meet that demand in the first place.

“If you’re a producer and you’re projecting a facility that’s 10 times the size it needs to be, or only one-tenth the size it needs to be, then either way, the people reviewing the application are going to know that’s the case, and it’s going to negatively impact your chances,” Cardinal explains.

2) BE AS INVOLVED IN THE CANNABIS COMMUNITY AS POSSIBLE.

Be proactive, Cardinal recommends. Attend legislative sessions and community meetings so that you can get as closely aligned to the missions of those granting or affecting the licenses as possible, while still maintaining the integrity of your goals.

“Listen to the people in the industry, but also the people opposed and the people who stand to benefit,” Cardinal says. “Pay attention to what they’re saying, and be sure you’re addressing those needs, concerns, questions and comments. Even if something isn’t blatantly written in the regulations or the FAQs, making sure that you consider it will go a long way in the application process.”

3) DON’T UNDERSTATE THE POSITIVE EFFECTS YOUR BUSINESS WILL HAVE ON THE LOCAL COMMUNITY.

What most communities desire—and this includes the officials making the all-important yes-or-no decisions on cannabis license applications—is the creation of more jobs.

“Yes, you want to appear to be profitable and solvent, but you also want to give good information on how your facility will benefit the community through employment,” Cardinal says. “We learned this recently during an application process on the East Coast, where our initial application didn’t make it, but we were given the chance to reapply. The bottom line: Once we became more realistic about and also better at projecting an accurate number of jobs that would be created in the long run, we found that they were very willing to approve the app.”

For example, a lot of applicants focus on the number of jobs that will be created in the first year, but they fail to adequately estimate future opportunities for subsequent years.

“In this instance, we had initially estimated that we would need 30 to 50 employees to get things up and running,” Cardinal says. “We wanted to be conservative, but that turned out to be the wrong approach. We went back and looked at it five and 10 years down the line, and we realized that, yes, that would be the number in the first year, but there would be a need for another 50 to 75 people the second year, and over 10 years, we would be looking at somewhere around 200 to 300 people. So that’s the number we used.”

Cardinal adds that, particularly in a smaller town, numbers like that can represent a significant percentage of the population. “Places like that are eager to hear the long-term possibilities,” he says.

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