Marijuana Business Magazine - March 2018

M arijuana business owners seek- ing protection from potential interference by the feds should consider diversifying into products and services outside the marijuana industry. That could include starting a non- plant-touching business line – or at the very least, having a business plan ready to launch if circumstances warrant. It’s something that has always made good business sense, particularly in the marijuana industry. And it makes even more sense now after the end of the Cole Memo protections. Spreading your bets could make you a lower priority for the feds if they take widespread action. “Diversification, new product lines, these are things that people should have been doing anyways because of the inherent uncertainty in this market that’s always existed, even with the Cole Memo,” said Darren Weiss, an attor- ney for infused product maker Verano Brands in Maryland. Weiss also advises cannabis business clients in other legal markets. “Anyone using the Sessions develop- ment as a springboard for diversifica- tion is a little behind the times,”Weiss said. “This is proof positive of the need to think like this in an uncertain marketplace.” Easy Pivots Weiss noted that now is a particu- larly good time for retailers and infused product manufacturers to act. “For people who are in the retail world or manufacturing world, it is a good time. Not just because of this decision,”Weiss said of the Cole Memo’s demise. “Diversification is not only a safety valve, but a smart busi- ness strategy that spreads the risk of a product line failing – across multiple products.” The pivot is relatively easy to make for manufacturers of marijuana-infused products. Why? You can use many of the same processes and equipment to make products that don’t contain marijuana. For example, if your com- pany makes cannabis-infused chocolate, you can develop lines or brands infused with other products that aren’t federally prohibited or as strictly regulated, such as hemp-derived CBD.Those products could fall into categories like medical, health, nutraceutical and holistic. “There are a lot of products you can come up with to be not so reliant on cannabis,”Weiss said. Just ask Julianna Carella, who founded the Bay Area edibles brand By Omar Sacirbey Marijuana business owners can expand into non-MJ ventures to avoid putting all their eggs in one basket SPREADING YOUR BETS The New Normal ALTERNATE PLANS At one of his stores, he carries as much as $200,000 in product and oper- ates with just enough inventory to meet demand. “We’re already riding that line of what we can have,” Franks said. “In the event that [U.S. Attorney General Jeff ] Sessions’ guys come into town and start pulling up floorboards, I don’t know that there’s much we can do about it. We’re all pretty unprotected.” You should sell out your product rather than stockpile it, Franks noted. Because it’s an agricultural commodity, cannabis is date-oriented. In Washington state, every package has a harvest date.That date doesn’t even consider the time required for cur- ing the marijuana after it is cultivated. A product can easily look like it’s a year old, Franks said.That makes it hard to hold on to unsold product. In the meantime, he’s philosophical about what the future may hold. “Even if something occurs, there’s not much you can do about it,” Franks said. “You sort of have to get raided before you can do anything.” Kc Franks is the owner of two Lux Pot Shop cannabis retail stores in Seattle. Darren Weiss is an attorney with Verano Brands in Maryland. 62 • Marijuana Business Magazine • March 2018