This post was originally published on this site.
This guest column is from Jordan Isenstadt, a senior vice president at Marino PR who founded the agencyâs cannabis practice. Isenstadt previously worked for the New York State Senate and the Executive Chamber. 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.
Prospective cannabis retailers canât open a dispensary alone. It truly does take a village. You will need to identify multiple vendors for support as you apply for your license and once the license is secured.
While there are many wonderful cannabis lawyers, real estate agents, and other consultants, as with every industry there are also swindlers who are just out to make a quick buck. Having supported multiple dispensary openings, and being a âvendorâ myself, I have first-hand knowledge on some of the tactics used to con hopeful entrepreneurs into using a specific service or company.
Here are some red flags to be on the lookout for as you interview and partner with cannabis vendors.
Lawyers
If youâve gone to any cannabis networking event, youâve likely been introduced to at least a dozen cannabis lawyers. Itâs a growing specialty, especially because of the significant role lawyers play in the application process.
As you interview firms and solo practitioners, avoid anyone who guarantees that they can secure a license for your company. While lawyers who have application experience should be on the top of your list, itâs rare to find someone with a 100% success rate (and if they do, it should prompt further questions, such as how many license applications have you submitted?).
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There is no way to guarantee an application will result in a license, especially in markets where factors such as the applicantâs experience, demographics, desired location, and other factors are at play. Lawyers who brag about âworkaroundsâ should also not be trusted.
In the highly regulated cannabis industry, itâs best to keep your application above board.
Public relations experts
As a public relations expert myself, my biggest red flag (and this doesnât just apply to cannabis PR firms) is when an agency says they promise they can secure coverage in a specific outlet, from a specific reporter, or on a specific topic. You can only guarantee a specific placement if you are purchasing an ad, but you can never make that claim when working in earned media.
You should look for a hardworking team with a proven media track record and stellar relationships with reporters, but even the strongest relationships canât force a reporter to publish a story. Instead, as you interview PR firms, focus on identifying people you can trust, you get along with, and who can understand and fight for your company and story.
Technology providers
As part of the application process, you will need to identify various technology partners you plan to work with, such as the company who will manage your point-of-sale (POS) system. If you secure your license, these are businesses you will eventually need to pay for, but that payment should only come once you officially become their client.
Technology vendors should never charge dispensaries for the letter of intent (LOI) required in New Yorkâs license application. If they are requesting payment for a simple document they mass produce for multiple future clients, call it what it is â a scam.
Real estate consultants
Securing real estate is the biggest hurdle for a New York dispensary applicant. New York has created significant zoning rules around where a dispensary can be located â for example, a specific distance from a school or church â and how many dispensaries can be in a specific area.
Unfortunately, some shady real estate agents have gobbled up portions of local real estate that fit all of the cannabis regulations and are charging potential tenants exponentially more than market value. A dispensary requires a significant amount of startup costs and, because of issues in cannabis banking, it is more challenging to raise money or secure a loan. The last thing you need is to be on the hook for an outrageous monthly rental payment before you can even start serving customers. Donât settle for any real estate agent and find a partner who will get you the best location at the best price.
As youâve likely seen, a common thing to avoid is people who make guarantees or upcharge for their service simply because they are in a complex, highly regulated industry. While not every vendor who acts this way should be avoided at all costs, it should be a red flag and encourage you to ask more questions before engaging with their services.
Itâs also a great idea to ask potential cannabis vendors and consultants for references. Word of mouth still matters and a significant amount of business comes from referrals. If a potential lawyer, PR publicist, tech vendor or real estate broker cannot provide a client who would recommend them, that should be an immediate red flag.
After over six years in cannabis â a veteran in this emerging industry â most people Iâve met in this industry are smart, driven, and truly want to help other people to succeed.
But as more entrepreneurs invest their life savings into starting a cannabis business, itâs best to be cautious.