Opening your first cannabis business all by yourself is tough, which is why most cannabis businesses get outside help when they’re first starting up. When looking for vendors to help you out, a key thing to look for is that they exclusively work for cannabis clients – or at least that they are clearly committed to supporting cannabis clients in some way, with a strong track record in the industry.
You might not think this is important, and wonder why it matters when you’re hiring an outside security, accounting, or construction firm, say, when all they’re doing is screwing in a surveillance camera, balancing books, or installing fixtures. If that’s the case, you might think, why don’t I just support a local vendor instead? Here’s why it matters so much that your vendor specializes in supporting cannabis clients.
Cannabis is complicated
Cannabis businesses have hundreds of different rules and regulations that have to comply with, many of which will be unfamiliar to vendors that aren’t dedicated to the industry.
Take security for example. There are often dozens of different security regulations alone for cannabis businesses, and each regulation may involve multiple different requirements.
A single regulation, for example, may require you to install several different types of alarms – door alarms, panic alarms, silent alarms, and motion sensors – or it may say to install and orient your cameras to cover all areas where cannabis is handled and stored on the premises, which can mean 10+ cameras in even the smallest dispensary.
Cannabis is unforgiving
In cannabis, a single slipup by an inexperienced vendor can have a significant impact.
Not filling out your paperwork properly can cost you a chance at a license or delay your launch for months. If your launch is delayed, you’re stuck paying for real estate and other costs while bringing in zero cash flow. You’re also giving the competition a chance to establish themselves in your territory, giving them first movers’ advantage and potentially even forcing you to move if your state limits the number of cannabis businesses allowed in one area.
Once you’re operational, even single mistakes can result in fines and the suspension or loss of your license.
In many states and across many cannabis verticals, margins are tight. One or two avoidable mistakes can mean the difference between being competitive and falling behind.
Cannabis is holistic
By that I mean that cannabis businesses have a lot of moving parts and a lot of contingencies across departments and processes. You have to be able to see the complete picture, to understand how a cannabis business works as a whole and not just the isolated part you’re working on.
For example, to be able to design a surveillance system that covers every area where cannabis is handled and stored, your security company has to understand the typical facility layout and workflow in a cannabis business.
If you have an IT company designing and setting up your network, they have to understand how important connectivity to the state track-and-trace system is to your operations, and implement a resilient network without single points of failure accordingly.
Experienced vendors are with you for the long haul
Having to switch vendors once you’re operational is a huge pain. It means having to go through the research, vetting, onboarding, training, and acclimation phases again. Aside from the stress and distraction involved, you’re sure to lose out on some productivity and revenue.
In recent years, we’ve unfortunately seen examples of vendors suddenly dropping their cannabis clients in order to avoid the regulatory hassles of the industry. Twilio, Paychex, and Visa are just some of the names of vendors that have abandoned their cannabis clients midstream, and those are just the ones we know of publicly.
One thing these vendors have in common is that cannabis clients were a small part of their business, and they never really made the cannabis industry a key focus. Your vendors don’t have to serve ONLY the cannabis industry – we know plenty of good firms like Solink and Star Micronics that are committed to the industry but also support a lot of other fields – but they should have a solid background in it and not seem like they have one foot out the door.
Experienced vendors can introduce you to other trusted vendors
When you’re looking for vendors in certain areas, it’s nice to be able to ask your current vendors you already trust for references. That way, you can get on a call with one vendor and suddenly have support in every area of your business – construction, interior design, software, marketing, training, etc. It saves you a lot of research and having to sit through one discovery call after another.
If you’re new to industry, finding and vetting vendors can be difficult. Any vendor can put Cannabis as an industry on their website. Do they actually have experience in the industry? Do they have a good reputation? A vendor dedicated to the industry will not only know all the other key vendors but actually worked with them on projects or managed clients together.
Saves time
As mentioned earlier, a single error by an inexperienced vendor in the licensing and startup process can set you back months or scuttle your launch altogether.
In addition, in the buildout process, you’ll often be working with a lot of different vendors, many depending on the others to complete work in a timely and effective manner, and all working on different overlapping schedules. If one vendor slips up, it can mess up your whole launch plan.
For example, as an IT vendor, we depend on the internet and electrical companies (vendors you unfortunately don’t have much choice on) to do their thing before we come in there. Sometimes these vendors don’t deliver on time, and we’re stuck rescheduling. Then the GC has to delay construction and the floor tile installation, and the inspection has to be pushed back, etc. etc.
Saves money
Time = money, of course, especially with the costs of holding onto a property that I mentioned, but beyond that, your vendors can also overspend on your buildout. A common mistake is to overdo things to make sure you’re compliant and to try to set your business apart – installing more cameras and access control than you need, buying better cameras than you need, installing a bunch of fancy digital menu boards and kiosks, etc. What you’re doing here is digging a hole for yourself that will make it hard to eventually turn a profit, especially in a market that’s competitive or will be competitive.
We’re not saying to cut corners on compliance or build a boring dispensary that looks like every other dispensary out there, just that you should spend in a smart and strategic way on your must-haves, and consider opening your doors and start bringing in revenue before investing in your nice-to-haves.
An experienced cannabis vendor can help you find the right balance here. For our part, we’ve helped clients cut their IT and security buildout costs in half or more compared to the quotes of less experienced vendors.
Saves sanity
Opening a business of any kind can be stressful, but opening a cannabis business takes it to another level. Competition, start up costs, and regulations are high. Regulators in many states tend to give out conflicting guidance and are often too busy to help. You may experience active opposition from local politicians and community figures that don’t want you in their neighborhood. If you’re in a newly legal state, you’re essentially trying to do something no one else has done before. There’s no definitive “How to Open a Cannabis Business in X State” book you can read or class you can take to get you where you need to go.
Having someone on your team that’s been through the startup process in the cannabis industry before, and can handle a lot of the work of opening a store for you, can help take away a lot of the uncertainty and stress.
About Cure8
We’re the world’s leading cannabis IT and security services firm. We’ve helped plan, launch, manage, and scale hundreds of cannabis facilities throughout North America. If you’re looking to get started with an experienced cannabis IT and security firm, set some time with us here.
