The “green rush” has started to flourish as marijuana becomes more legal with each piece of legislation. A problem still remains however; there is an abundance of rules and fees.
Several studies have projected California will reach $6 billion in marijuana sales by 2025. And though the challenges of starting a business aren’t ideal, there are those looking for other avenues to pursue their greener interests.
Mark Hersman and Nick Portolese are just two of the aspiring entrepreneurs looking to break into the industry. Having met at church 10 years ago, their bond over sports has now led them to attempt to build a successful marijuana business in Alameda, California.
The town has reserved certain parts for potential cannabis businesses. Alameda has also enacted legislation that will permit two medical dispensaries. The two men hope to be one of them, and would plan to open it next summer, with the appropriate name, Portman Enterprises.
Mark and Nick have also expressed an interest in opening a cannabis friendly social club with a country club atmosphere and entertainment, where monthly memberships would allow members to enjoy recreational cannabis.
Their reasoning for pursuing this business lies in both Nick’s remembrance of his parent’s suffering with cancer, and Mark’s deduction that those interested in cannabis don’t have a strong grasp on the business side. He states, “They have tremendous experience and technical skills in growing the plant and proper nutrition, fertilization, hydration techniques and that sort of thing…but they don’t know a lot about running a business — meeting payroll, regulation, audits and taxes, etc.”
The trouble for the duo lies in the expenses. Together, the total investment for both businesses is close to $8-$9 million. They have put $100,000 of their own money into research and development alone, and plan on conducting a capital raise and looking for investors. The problem has been shown to be the actual real estate for the business. Landlords are more restrictive on leasing to marijuana businesses and federal banks can pull loans on the building.
Sharon Golden, a business consultant and founder of the Alameda Island Cannabis Community, warns against the belief of getting rich quick. She explains for places like dispensaries, edibles, farms, and testing sites, that licenses and permits are pricey. Taxes are another issue, with 15% sales tax going toward adult use and adding the local 9.25% sales tax, costing the consumer 25% in sales tax.
Yet there’s room in the business for non-selling purposes, which Nate and Krystle Cameron plan on investing in. After opening Them People Productions, that provides safe social spaces for people of color, they now plan on creating events that allow the use of recreational marijuana. The effort comes from the understanding that people of color are more persecuted for their cannabis use. Their strategy is to find a venue, sometimes as a partner for the event, and pay the artists they hire from ticket sales. Krystle states the most they’ve personally spent is $1500.
Hopefully the stigma of marijuana will change to allow cannabis companies to have an easier foot in the door. Until then, those that are already investing are proving to be valuable allies in the fight for federal legalization.