This post was originally published on this site.
Join NY Cannabis Insider for our next full-day conference on Sept. 21 at the Pearl Street Grill & Brewery in Buffalo. Tickets will sell out.
This guest column is from Andrew DeAngelo, the founder and CEO of Andrew DeAngelo Consulting, which serves dispensaries, cultivators, processors and distribution companies. DeAngelo also co-founded Harborside and the nonprofit Last Prisoner Project (LPP), and is a founding Board of Directors member of the California Cannabis Industry Association. The views and opinions expressed in this article are those of the author, and do not necessarily reflect the views or positions of NY Cannabis Insider.
As additional CAURD licenses drop in New York (pending lawsuits) and new licensing windows open, more and more entrepreneurs are looking for good cannabis consultants to help them build their businesses and open their doors. Like all things in cannabis, thereâs a lot of choice regarding consultants. Here are five critical questions for business owners to ask so they can find the right fit.
What do you need from a consultant?
Getting into the legal cannabis industry can be a daunting opportunity to consider; itâs a complicated and difficult thing to do. Iâve seen people with Ivy League educations and millions of dollars fail in this industry. Many have incorrectly assumed that what made them successful in one sector will transfer to cannabis.
The same holds for legacy-to-legal owners. The tendency is to assume one already knows the game, so no help is needed. We all need support to succeed in any industry, particularly in cannabis. Figuring out the help you need comes down to evaluating your skill set and asking for assistance in areas of weakness.
Most Ivy League grads couldnât smoke or deal weed in school, so they need help understanding the heavy consumer and stoner culture. Education is needed regarding the history of the drug war, the impacts it had on communities of color, and the need for social equity. Many legacy-to-legal operators didnât attend prestigious schools and may need help with compliance, contracts, employee handbooks, SOPs, branding/marketing, and design. Both groups have important knowledge but not all the knowledge they need to win.
Successful entrepreneurs in cannabis know what they donât know and find the knowledge they need to build a profitable company.
Does the consultant have the knowledge you need?
There are loads of cannabis consultants available. Only a few are a good fit for any entrepreneur. It all comes down to the knowledge you need on your team and the specific expertise of the consultant. Due diligence is key here. Consultants sell themselves just as anyone does. It can be hard to cut through the marketing noise and figure out exactly what theyâre good at.
Insist on a free consultation with the consultant and ask questions. Follow up by interviewing past clients and references provided. Make sure you do some internet and ChatGPT or other AI research on the consultant. Look at their website and social media presence. If all of the consultantâs assets speak to you and address your gaps in knowledge, take the next step.
What is their track record in the cannabis industry?
Cannabis consultants generally fall into two categories: those who have owned and operated cannabis companies (or still do) and those who have not. For those who have, what was their company (or companies) like? Did they have success? Did they impact their communities and the overall industry positively? Did they treat people well? Would they be OK with you talking to some of their former employees?
For those who havenât operated their own companies, what companies have they consulted with, what did they do and for how long, and what value did the company get from it? This type of consultant should have a list of entrepreneurs as references â and it should be a longer list of clients because they havenât had to operate a cannabis company of their own.
Both types of consultants have value, but it all depends on your needs. Consultants who also operate cannabis companies may have a good track record but may be too distracted by their company to give the client true focus. And consultants who havenât owned a cannabis company before might not understand consumers and cannabis culture to help much with that part of the business.
What kind of deal does the consultant require for engagement?
This is an area where red flags can pop up for entrepreneurs. Consultants will likely be paid hourly or monthly fees with bonuses in certain circumstances. The amount of the fee and bonus depends on the scope of work (SOW) for the contract. If the SOW is long and complex, higher fees and bonuses may apply. If the SOW is fairly simple and requires a short engagement, the fees should reflect that. Any consultant worth their salt must be able to provide some kind of fee sheet for their services. And the contracts should be easy to terminate without undue burdens on the entrepreneur.
Consultants need not get a percentage of sales, an equity stake in the business, or any kind of fee that lasts in perpetuity. If the consultant provides services for free, then backend deals may be OK, but be careful they donât become predatory. Itâs easy to agree to a backend deal to get whatâs needed, only to learn later that you gave up too much. Run the contract by trusted advisors before you sign it.
Does the consultant align with your values?
At the end of the day, you are building your business with this consultant. Youâll be in the trenches with them. If they donât have alignment with your values and the company culture youâre looking to create, trouble will brew quickly. When that happens, money and time will be wasted. Entrepreneurs usually have to terminate the consultant and start over. Thatâs painful.
When doing due diligence on the consultant, look into their values and make sure theyâre not too far off from your own. This will ensure that youâre building your business with someone who believes in your vision and will do whatever it takes to make it happen.
As with any third-party contractor you hire, get at least three quotes from three consultants before deciding. This will help you truly understand who might be the best fit. Consultants are good at selling themselves, and itâs tempting to go with the first one you connect with. By getting three quotes, youâll get a stronger sense of which one may realize your vision best. While this takes more time, itâs well worth it.
Building cannabis companies is hard and having the right people behind you will be the key to your success.