The Realities of the Legal Cannabis Industry in the U.S.

I’ve now attended cannabis conferences, expos, and trade shows across the west coast. I’ve visited dispensaries and grow operations in every state west of the Colorado Rockies except Idaho.

I’ve talked to everyone in the legal industry, listened to the keynote speakers, attended the educational classes, and here’s what I’ve learned about the pain points and realities of the United States cannabis industry as it stands right now.

Cannabis in 4-piece Grinder
I stay on my grind…

The Financial Rape of Dispensary Owners

It almost doesn’t matter what state you’re in – opening a medical or recreational marijuana dispensary is a risky business. It’s impossible to get funding with an FDIC-insured financial institution, so dispensary owners are turning to either more localized methods (credit unions or the few regional banks not swallowed up by the “too big to fail” dickheads) or getting creative to find funding.

Money laundering can be funny, as we’ve seen lawyers, entrepreneurs, and others sarcastically open merchant accounts as flower shops, head shops, hospitals, pharmacies, and more. It’s really hit-and-miss as to whose money the banks decide they want to keep, unless it physically smells like cannabis.

Of course, I would choose to launder money too if I were forced to carry large amounts of cash, making my business a target for crime.

Native American tribes are recognizing the need and beginning to offer assistance. If you haven’t been paying attention, many tribal lands have been fighting the government for their right to grow pot on their own federally recognized tribal lands. The argument is if it’s legal in D.C., it’s legal on all federal land. Unfortunately our government is racist and continues to raid the tribes, despite them doing nothing different than everyone else.

Weedmaps is charging an arm and a leg (thousands a month in most major markets) for being listed on their service, which has a terrible UI. This is just one example of the hundreds of proprietary software platforms and plugins aimed at dispensary owners to perform the same simple tasks as Salesforce or a homemade Access database.

I haven’t seen tech fleece an unwitting industry so bad since MindBody convinced every Mac-owning yogi in America to use their POS (Point-of-Sale, or Piece-of-Shit…works either way really) platform. If you’re a software engineer and want to make money in cannabis, just take whatever project you’re working on right now, slap the word “cannabis” on it, and jack the price up.

versability Brian Penny cannabis trimmer
Paper bags aren’t just for blind dates…

The Great Divide

One of many problems in the cannabis industry is the divide between activists and entrepreneurs. There are fantastic groups like Norml, MPP, and the Drug Policy Alliance working on issues, and smaller groups have now decided that these groups are too mainstream, so they’re forming even more liberal groups.

I would normally consider this fantastic, but cannabis legalization isn’t the place to take moral stances on other issues. It’s either yes or no, and then we work on fixing the laws. It takes baby steps.

Instead this divide is threatening to kill cannabis legalization in Arizona due to the two competing initiatives put forth by MPP and state offshoot Safer Arizona. Some activists understand we have to work with what we have and get laws on the books, changing them later. Others want to use cannabis to take stands on larger issues of taxation, environment, and other issues that are only smaller pieces of the bigger picture. Because of this, the conservative state I live in risks losing out on legalized cannabis next year.

The issue is across the board and represents the classic state vs federal rights debate, and my opinion on it is that there’s room in the industry for everyone. Some will end up selling out to large corporations like Phillip Morris, 7-Eleven, Annhauser Busch, etc. while others will combine their powers to form conglomerates that can compete. Others will remain small businesses.

This is the same evolution we saw in the tech industry and more recently in solar, as they compete with utilities moving toward the dropoff of solar tax subsidies in 2016.

All sides of cannabis need to work together. Yes there is stock trading and corporate marketing and all this other money in cannabis. It’s not a bad thing, and the industry is still less corrupt than the mortgage, insurance, wireless, video game, and other industries I’ve worked in and monitored throughout my career and life.

Eugene Oregon Cannabis Science Club 1 June 30 2015
The inaugural Cannabis Science Pub…

Standards and Quality

Quality standards are lacking in every state. Mislabeling, misrepresentation, and price-gouging are very real issues in every state and market. People are sourcing cheap materials and often cutting corners. Not everyone is doing it, but enough are that it’s noticeable and professionals gripe about it at every conference.

This is one of the issues that divides voters as people blame individual states for how they’re having to handle decriminalization in an environment where cannabis is still criminal on a federal level. It’s only with federal regulation that this industry can begin tightening quality and standards. Until then, each state is using different companies with different procedures.

It’s not fair to blame the testing labs either. In many states (especially those where cannabis isn’t recreationally legal), testing labs are having trouble calibrating tests and are having to do it on client samples. This makes batch testing more difficult than it is for a commodity like corn.

There are plenty of consultants, scientists, and companies working on both operational and production standards, but there are still issues with pesticides, molds, heavy metals, extraction methods, etc. It also doesn’t help that most state standards are focused on flower, largely ignoring concentrates. Full end-to-end standards are necessary.

Brian Penny Whistleblower Weed Police gonzoBrian Penny is a former Business Analyst and Operations Manager at Bank of America turned whistleblower, troll, and freelance writer. His work has appeared in Huffington Post, Fast Company, BBC, High Times, Hardcore Droid, and The Street.

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Brian Penny is a former Business Analyst and Operations Manager at Bank of America turned whistleblower, troll, and freelance writer.

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