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Business-Savvy Stoners: Licensure for the Cannabis Industry

Massachusetts waited decades to legalize the purchase, possession, consumption, and cultivation of cannabis for anyone over the age of 21. But where are all the pot shops?

Business-Savvy Stoners: Licensure for the Cannabis Industry

We don’t have any places other than medical marijuana dispensaries. Who should apply for a license to sell, produce, manufacture, or cultivate cannabis?

A document that’s more than a hundred pages details all the regulations and qualifications for Licensed Marijuana Establishments. First off, one amazing aspect is that the highest fee for a cannabis business is $600. This is a very cheap entry point into the cannabis industry. If you can come up with $600, you can come up with the application fee to get a business going. Then there will be annual fees. Roughly $5,000 each year.

Categories of State Licensure

One of the main permits you could get is for craft cultivator. Massachusetts is really trying to address the issue of big marijuana – huge corporate entities that come in, get all the permits, and produce cannabis with big corporate money. Massachusetts wants to address that and provide opportunities for small businesses and local business owners to participate.

The craft cultivator license basically means you could have multiple locations and work with people who want to cultivate. You can work with people who want to process and produce your cannabis, but you can’t be retail. Tiered guidelines dictate the size of your cooperative and how you can structure your business.

If you have some friends who know how to grow or want to produce edibles, you can be a small craft cooperative. You can’t be a retailer. It’s like being a small farm. You can imagine a small farmer who brings their veggies to market. That’s what a craft cultivator does. Like how a microbrewery might produce beer in a space and then deliver their beer to various bars.

The next category that I think is really interesting for people who want to enter the market but may not have a lot of money or space is the micro business. Essentially, this is a cannabis business that does everything in only one location. You can cultivate, manufacture edibles, and produce concentrates for vape pens and things like that. You can also retail if the space is less than 5,000 square feet. That’s pretty good for a business. You could produce and sell many pounds of cannabis each month with 5,000 square feet. It’s a lucrative possibility for small business owners. The fees are also less.

But there’s a caveat to all of this: Regulations are incredibly strict.

Another fascinating business category is a transporter. Every dispensary that produces and every cultivator that grows must get their cannabis from Point A to Point B in a secure process, from a cultivator to a testing laboratory for example.

The transport license in some ways is the most efficient possibility. You could be an individual with a van and be a transporter in the industry. That’s going to be a huge need. You could have an enormous factory churning out tens of thousands of pounds of cannabis, but if they don’t have a transporter license they’re going to need somebody who can transport.

Another licensing category is manufacturer. This is going to be the category where you don’t necessarily have to grow your own cannabis, but you have a license to manufacturer it, meaning you can buy cannabis from a cultivator, dispensary, or micro business. You can buy it from a craft cooperative and then process it to products you like. It could be edibles, skin patches, balms, or creams. The manufacturer license has a lot of interesting elements. And there’s a lot of potential for creativity within that.

The next category is retail licensed – Licensed Marijuana Establishment. The most obvious scenario is a shop that buys products from manufacturers and craft cultivators then sells in their store front. With a very small investment into a store front, if the regulations are all in place it could be turned into a cannabis retail location.

A lot of people speculate that there will be a lot of growers producing huge amounts of cannabis in the state and there may not be a ton of retailers. So, if there’s a small number of retailers and a huge amount of product, the price of the product goes down for purchasing at wholesale and the retail environment is still high because there’s demand. Retailers may be doing really well. It’s very difficult to predict.

Some states have legalized and had a lack of cannabis. There have been too many retailers and not enough cannabis producers supplying the demand. That’s why I really encourage everyone who has any business sense and wants to get involved to try it, because there will be a wide spectrum of possibilities.

The final category, which is interesting and already in place, is testing labs. If you have the equipment and the knowhow you can actually create a business testing other people’s cannabis products. Whether it’s a pot brownie, vape pen, or flower produced for smoking, it all must be tested by a laboratory before it’s sold. There are regulations in place and you can pay the application fee and create your own testing lab.

Some of the testing equipment does seem complicated, but with basic investments you can put yourself in a situation where you’re just testing people’s cannabis every day. It’s like the transporter, it’s something that must happen for cultivators to sell their product and retailers to sell it to consumers. A testing laboratory is a great business idea with all kinds of possibilities.

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