This article is the second in a series called, “So you want to start a canna biz?” created in partnership with Good Tree Capital.Today, we’ll focus on picking the right place for your weed business.
How to choose a place for your cannabis business in 3 steps:
- Determine where you’re allowed to go
- Learn about the fabric of the community
- Make a plan that’s sustainable in the location
The first step to determining where you go is to know where you’re allowed to go.
While a growing number of states are legalizing medical and adult-use cannabis, it is ultimately the municipality that determines whether cannabis operators can set up shop in their county, city, town, or village.
municipality:
a political unit with corporate status and powers of self-government
There’s also variance among municipalities that opt-in to legal cannabis sales. Some permit all types of cannabis operations, while others are more restrictive – only allowing business-to-business (B2B) operators such as cultivators or distributors to do business.
Local government will play a role in determining if and how your business operates, so get to know your city managers, town council members and the zoning authority. Ultimately, they must feel confident that your business will be an asset to the community.
Government leaders will have practical considerations, such as:
- Does your location meet all local zoning ordinances?
- Does your security plan protect against thieves and violent criminals?
- Will your proposed location create traffic congestion?
- How will you protect against illegal (underaged) access to your product?
And they also have principled considerations that become considerations for you as a cannabis entrepreneur:
- Are you a member of the community vs. an out-of-state company seeking expansion?
- Will you invest in programs that benefit the community vs. taking your profits elsewhere?
- Will you promote responsible cannabis consumption vs. seeking only to maximize your profits?
- Will you employ local residents vs. hiring externally?
Secondly, remember: the people, businesses, and trends that make up the fabric of your community will be intertwined into how you build and operate your business.
This underscores one of the most important factors you must consider when selecting your community—the people who make up its population. At the most basic level, this means you must investigate general demographic statistics about the population, including information about gender, racial, and generational make-up.
The community’s economic profile is also vital. It is important to understand the statistics on employment, education, income and other relevant socioeconomic factors. It may be an area with a thriving economy and flourishing resources or one of the many disproportionately impacted areas (DIA) blighted by the war on drugs.
Years of harsh criminalization of cannabis have caused astronomical rates of imprisonment, economic disinvestment, and decades of generational trauma.
This explains why the principles of social equity are increasingly ingrained in the emergence of the cannabis industry. And this reality represents the opportunity, challenge, and responsibility for your business to create economic value for all stakeholders—including owners, customers, employees, and suppliers. Indeed, the entire community.
By thinking critically about operating your business in a way that creates value for the entire community, you can create a virtuous cycle. Once you select an area to set up shop, you’ll be there for the long run.
So as your local economy thrives, your profits thrive. As your neighborhood grows, your company grows. Investing in the community, whether through supporting community-based organizations, creating social engagement programs, or making regular charitable contributions, is intrinsically investing in your business.
And finally, beware: the cost and the ability to sustain the cost of a location until the business is licensed and operating is often a very limiting factor for an aspiring cannabis business owner.
Cultivators may want to look for property in low-cost, low-population density areas. This goes for manufacturers and distributors and any other B2B cannabis businesses.
Dispensaries need to be where their customers are, and perhaps face the toughest challenge finding a compliant location. Strict regulatory limitations on where dispensaries can locate increase costs and decrease qualified locations.
However, the cost of real estate is just one part of the equation. Many states require that a cannabis business must secure real estate before obtaining their state license or permit to operate.
For example, in the Commonwealth of Massachusetts, an applicant must be able to prove to the government that they have premises (real property) that satisfy all legal requirements for their specific type of license.
This creates an obvious risk because many cannabis tenants may never be granted a license. States like Illinois are starting to move away from these practices. Either way, you should do whatever you can to both lower the cost of your real estate and delay payments until your business is generating revenue.
The process of opening a cannabis business definitely isn’t easy. Finding the right community for your canna-biz will require your patience and hard work. However, your determination will result in the success of your business and your community.
