Obtaining a Cannabis license or permit can be an arduous process. Often times, applicants experience difficulty navigating the complex licensing bodies and local requirements. While each jurisdiction is different, many share similar elements in their Cannabis business applications. In general, communities want to see applications from businesses that stand out but complement their local culture. Here are best practices for a strong Cannabis business application:
1.Understand the Selection Process
3.Know Your Business
1. Understand the Selection Process:
Cannabis businesses are awarded licenses or permits based on their applications. Each municipality takes a different approach to their application process. Some may have a cap on the number of permits issued, others may not. Some cities use a scoring process to evaluate applicants, while other communities take a less traditional routes in their selection process.
Most communities use scoring for the selection process and list the requirements online. Certain areas are weighted more heavily than others. For example, the City of Hollister uses scoring for their applications. The Security Plan and Proposed Development Agreement have the highest value on their application. Since their values rank the highest in scoring, it is important to focus developing a strong plan in these areas of the application. Engaging local security firms and real estate businesses may strengthen an application-as they may have knowledge of local requirements for Cannabis businesses.
Some Cannabis licensing bodies offer preferences to businesses led by certain groups. Preference may be given to women, veterans and minorities to promote diversity in the industry. There have been concerns about the industry’s inclusion for these groups. Cities like Sacramento are considering reserving up to 40% of the city’s Cannabis permits for minorities to address the disparities.
Convicted felons and persons experiencing economic hardship may be able to apply for permits in some areas. Communities like the City of Oakland have opened up the permit application process to include individuals convicted of drug related offenses. Usually people with felony drug convictions are prohibited from participating in any aspect of a Cannabis business and/or application. Socio-economics have traditionally played a role in a person’s ability pay the application fee. Oakland’s Equity Program offers application fee waivers to residents making less than 80% of the city’s medium adjusted income.
2. Get Local:
A strong application is great when applying for a license, but relationships will help take the application to the next level. Like any business moving into a new community, it is important that the business builds community rapport. This is especially important with a Cannabis business which carries a lot of misconceptions. Although the reputation of our businesses has improved over the years, it can still be very controversial for some communities.
Safety and Economics
It is imperative that people understand the benefit having a Cannabis business in their community. Emphasize how Cannabis businesses bring economic prosperity to many communities through taxes and employment opportunities for locals. When possible, create business partnerships with well known local business to show the community your level of investment.
Security can be an issue for many critics of Cannabis businesses in their communities. Share your plans to ensure a safe climate for your business and the surrounding community. Ask for feedback as during the planning process. Let the community know that safety is a priority of the business.
It is a good practice to ensure that someone is identified as the face of the organization as the Cannabis business team is put together. This person should be personable, possess great networking skills and an ability to represent the business well. Having them join local advisory boards and attend municipal meetings is highly recommended. They also need to identify the key players and decision makers involved with the application process and they should also find someone in the community to serve as an informal “advisor”.
3. Know Your Business:
A strong business plan and leadership team will be a tremendous asset in the application process.
Strong Business Plan
A strong business plan is an excellent roadmap for the application process. A strong business plan possesses a healthy and realistic financial forecast as well as a SWOT (Strengths, Weakness, Opportunities, and Threats) analysis. A business’s ability to plan for the future can help ensure sustainability.
Team – Human Capital
Hiring the best people in the field is ideal for the application process. The ability to article the team’s experience in their industry is important. For example, a grower with experience and is known for specific strains in the industry leads credibility to your products. As does a chief financial officer who has worked successfully with multiple Cannabis business.
4. Capital Needs:
Having capital on hand is important in any business, especially in the Cannabis industry. Some cities are requiring proof of liquid funds in excess of $500,000 to consider a license application. Understanding your business’ capital needs and demonstrating your ability to cover those costs is critical to success in the licensing process.
Businesses should have a plan in place to offer competitive compensation for team members. Many startup companies may not have the capacity to pay top dollar, but business equity also can be an incentive for major talent depending on your business plan.
Applications should show that the business has enough cash flow especially in the initial stages. Cultivation and manufacturing can bring the greatest initial costs to the business and licensing bodies want to ensure that if a business comes to their community, the business will survive.
5. Follow Directions:
Government applications can be very convoluted. Often times this is used as a qualifying process and other times it is simply a product of bureaucracy. Whatever the reason, applicants must follow directions. Some communities like the city of San Francisco require applicants to obtain referrals from the Fire Marshal, Planning Department and the Mayor’s Office as part of their application process. Applicants may not understand the importance of these referrals; however, since the city requires them, it is important that applicant complete this process. Relationships with community stakeholders may shed some light on the application instructions.
Remember that each community is different and will offer varying support in the application process. Communities like Desert Hot Springs, encourages applicants to meet with a city official prior to submitting an application. These meetings can offer insight on their application process and as well as clarity to confusing aspects of the application.
There are communities that offer checklists like the City of Humboldt. Checklists are a great way to keep track of the application requirements and activities. In the event that a city does not provide an application checklist, applicants can create their own checklists based on the application and process outlined by the city. Checklists are a way for businesses to ensure that they are following the directions. They can also assist in creating a work plan to complete an application process.