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New Jersey natives Gary and Marie George had no intention of entering the cannabis business until their son approached them asking for help applying for a dispensary license.
Realizing the valuable knowledge they gained during the application process, they started a consulting firm called The Real Canna Advisor to give other social equity entrepreneurs a fighting chance since they felt NJ wasn’t doing enough.
In addition, they launched The Real Cannabis Entrepreneur Conference as a business boot camp and networking event to support their clients and business growth in the industry.
Gary has worked with many new entrepreneurs coming into the space and witnessed the mistakes they make. I interviewed Gary and asked him his top tips for winning a New Jersey cannabis license:
Can you give us a status report on the New Jersey cannabis industry?
New Jersey legalized adult-use cannabis two years ago, and so far, we have 47 medical and adult-use dispensaries open. Thirteen of the medical stores flipped to recreational. There are 400 towns, 200 opted-in, and 700 conditional license applications in review.
The municipalities only have a select number of slots available, and they determine if it’s two retail, two cultivation, or two of whatever. We’re at the point where the opportunity to open a plant-touching business in NJ is dwindling until the other towns opt-in. So that’s where we are in New Jersey.
What type of social equity program does New Jersey have?
New Jersey should give those negatively impacted by the war on drugs a leg up in the game, but they’ve only offered to review the social equity applications first. And out of the 47 open dispensaries, only one is a social equity entrepreneur.
The New Jersey application fees are not social equity friendly either. The application fee started at $1,000 and kept increasing until it reached its latest fee of $27,000 plus a $5,000 escrow. No exceptions.
You mentioned many are underestimating startup costs.
You have to overestimate, especially in cannabis, because there are too many unknowns, and we’re seeing it happening in real-time in New York, where legal battles have stopped the industry in its tracks. You could be sitting in limbo for X number of months in litigation like they are.
Also, many are making the mistake of waiting to hire professional service people and trying to stitch the business together in the beginning when you need experts to get things up and running, especially in a heavily regulated and compliant industry like this one. Maybe they are trying to keep startup costs lean, but you wind up costing yourself more money to unravel what you did.
What advice do you have on managing the timeline of an application process?
It’s a complicated business, and while you wait for multiple approvals, you should use the time to get a head start on operational planning because once you start operating, it’s too late.
When dealing with cannabis, you’re waiting for the cities and municipalities who move like snails, and there isn’t much you can do about it. Meanwhile, you’re paying rent every single month while the council’s members are on vacation. There goes another $8,000 – $10,000 out the door because they couldn’t decide.
You would be surprised how many people do not use the waiting time constructively.
You believe entrepreneurs should create more partnership deals, spread the wealth, and not hoard all the marbles.
Many inexperienced entrepreneurs entering this industry are trying to do it on their own and then realize they’ve bit off too much. They should have partnered with someone, not just from a work perspective but also for financial connections. There is a better chance of success in a high-risk industry if they share equity to build a dedicated team with a personal stake in the business.
It’s not the time to be greedy. If you don’t give up some of the equity, you better have all the money in your bank account, and if you don’t have all the money in your bank account, you better be prepared to give up some of that equity.
What are the tips and tricks for maneuvering a municipality selection?
Getting this right is important because if you don’t, it will end your application.
It helps if you have a connection or something that gives you an edge over other applicants in that same municipality. You don’t know who you’re competing against. Maybe it’s the guy down the street who has had a family-owned business in that same town for 60 years and flips for a cannabis license. You come in brand new, you’re not even from that town, who do you think they’re picking?
It’s necessary to think about all these different scenarios and strategize. Do you have a strong enough case or influence to win it in this town? The MSOs play the local game by enlisting “local partners.” That’s a keyword in cannabis, “local partners.” All the MSOs have local partners, some individual who lives there, who’s a Joe Schmo, who’s getting 5% just for being a Joe Schmo.
What is your advice on negotiating real estate?
The number one way to get business done, all business, is to make friends with the landlord. If people like you, they do things for you. They have to like you because they pick who they want. And finding real estate for cannabis is not easy. You can bet 20, 40, or 50 people are calling this one guy for this building. Who’s he going to pick? The guy that he thinks has the highest probability of winning the license.
How about tech stack research and preparedness?
The first two dispensaries in New York opened without their POS systems up and running and had their menu on paper. This unpreparedness can cause a ripple effect of costly mistakes throughout your operations, causing the accountant to go back and reconcile the transactions for accounting and compliance records.
A POS system is the most essential component of a tech stack for a retail store. It’s a command center and should be one of the first things you research and implement. Anyone out there playing games with the tech stack is playing with fire.
New Jersey requires a dispensary to have cameras in every inch of every facility and operate 24/7. The state also demands you use HD quality footage and keep it for 60 days. You can create a BIG file by running 32 HD cameras 24 hours a day.
If your cameras go down and the cannabis commission inspects your property and asks you for your fail log, you should be able to tell them why your camera went down, how long it was down, why, what happened when it was down, and how quickly it got back up. You may cause suspicion without a log, and the authorities may wonder what you’re hiding or what you took out the back door. You will get a fine without camera footage or a log.
It is not a game, ladies and gentlemen. You must have your tech stack in order.
You and your wife Marie founded The Real Cannabis Entrepreneur Conference. Can you tell us about it?
The conference is in its fifth year and teaches the basic skills of opening a cannabis business, similar to a college crash course or a Ted Talk-style event, not professor talk, not people teaching out of a book, but people who do it every single day.
Most everyone with a New Jersey license has been to our conference and trained by us. It’s not a corporate event, but it’s a family affair. We’ve got the culture. We’re real people born and raised in New Jersey trying to make a difference in our community.
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