If you’re new to the New York cannabis industry, you’re probably getting inundated with goods and service providers vying for your business. We’ve been in this industry since 2016 and have seen the industry grow, and with that, have seen the good, the bad, and the ugly of the industry. Here are our TOP 3 THINGS to spend your money on during your application process in New York (or any state for that matter):
3. AN ATTORNEY THAT HAS ACTUALLY BEEN PART OF A FULL LICENSING PROCESS
Oftentimes, we’ve seen clients come to us with their attorneys already selected and paid for. However, those attorneys are frequently inexperienced and charge enormous retainers. So, our biggest tip here is to dig into where they gained their experience. Did they have a client in the State they’re licensed in? What was their role in that process? With detail, can they describe the items they supported the client with?
Not surprisingly, when cannabis becomes legal in a state, a slew of attorneys hang a “cannabis attorney” sign on their door and suddenly claim to be cannabis experts. If the cannabis industry is new in your state, that means your attorneys are new in cannabis. This frequently translates to the attorney using your payments to learn about the cannabis industry. What takes an experienced cannabis attorney 30 seconds to recall, can take a new attorney 5 hours of research to learn.
Our recommendation is to select your consultant first. A quality consultant will have already worked with and vetted many attorneys and can help support you in the questions you should ask. They may even help vet the attorney with you! The consultant will be able to dissect what the attorney is offering to support you with and what the consultant is already being paid to do.
A good attorney is worth their weight in gold. Know exactly what you need them for so that you can strategically use them throughout your application project, and use your consultant for the rest. This results in a (1) better quality product and (2) lower costs. A good rule of thumb? Your consultant should be able to support you on about 70% of your application project, your attorney should have a role in about 20% of your project, and a good CPA and other vendors should have a role in about 10% of your project.
2. A QUALITY ACCOUNTING FIRM THAT SPECIALIZES IN THE CANNABIS INDUSTRY
Frequently, we see clients that already have accountants on board to support their financials and tax needs in the cannabis industry. However, those firms are oftentimes long-time accountants of the client or are family/friends of the client. This generally means that the account does not know the cannabis industry just yet. We suggest utilizing an accounting and CPA firm that understands the cannabis industry. Why? Because the ramifications of not starting correctly are far too overwhelming. IRS Code 280E is a very real and troublesome part of your business and will be so until the federal government decides it wants to deschedule cannabis (Can you believe cannabis is still listed a Schedule I drug, i.e. “high potential for abuse with no currently accepted medical use”?!), you are bound to operate by it. If your accountant does not know the consequences of IRS code 280, you could find yourself losing out on the legal loopholes and/or could find yourself facing some dire consequences with the IRS and state licensing authority.
Additional benefits of an experienced accountant is that they likely have been in the industry long enough to have worked with a variety of consultants and attorneys. This means that they can help support some of your decision-making by telling you who did a poor job and who did excellent work.
1. A QUALITY CANNABIS CONSULTANT
Boy, this one can be ROUGH if you do it wrong. We’ve seen consultants come and go. We’ve seen consultants lie about their numbers, lie about their work product, and even lie about their staffing! But when you have a good consultant, it is MAGICAL. We’re not just saying that because we’re one of the best cannabis consultants in the industry, but rather, because our CEO started the firm because she saw how poorly the industry was service clients. She left her law firm and started supporting clients over 6 years ago because she wanted to provide the work product and work ethic of an attorney, without the ridiculous prices. She also wanted to provide better options for consultants than the disorganized chaotic and often frantic services that were out there at the time. Her team has mastered project management and comprehensive full-service support at its finest. Why? Because she’s experienced (and paid for) services that never responded, were always behind, required her constant oversight, and served disappointing work products. Even if you don’t choose us (although we highly recommend you do!), here are some questions to ask as you vet various consulting companies:
- Does the price you are quoting me include everything that will get me from start through the submission of my application and any follow ups required by the state, such as a notice for more information?
- How many people are on your team? Exactly how many of those individuals are dedicated solely to my cannabis application project?
- What are the backgrounds of your application writing team?
- Do you outsource your writing team or are they part of your company? (Side note: We’re known as the “consultants to the consultants” because oftentimes consulting firms market themselves as cannabis application services, but actually outsource it to us…so you’re paying twice as much because you’re paying those firms to be the middleman. Yuck!)
- If they tell you their “win rate”, ask them specifics. What is your win rate in limited licensing states and what is your win rate in non-limited licensing states? This question is important because most companies blend their wins from all of the states they’ve worked in. Well, our win rate in Oklahoma, Colorado, California, New Mexico, and South Dakota is 100%. Why? Because these are unlimited licensing states where the hard work actually comes on the local municipal. The state licensing is glorified paperwork. This is very different than experience in the heavy hitter states like Pennsylvania, Ohio, Virginia, Florida, Georgia, Alabama, New York (circa 2018 and 2019). These states were hyper-competitive, limited licensing. They were enormous projects and required precision in execution. Asking them to clarify those rates, can really showcase the quality of your consultant.
- Is this data based on full project management and preparing the entire application? If not, what does this encompass? Oftentimes, companies will blend a lot of items into that rate. If they sell templates, they may mark that as a “win”. If they’ve provided one hour of consulting, but did not help on an application, they may mark this as a “win.” Ask them to get granular with the types of work they’ve done in those states. Specifically, in what states have you worked in full project management and full application preparation services?
If you have any questions as you begin your adventure into the cannabis industry, contact us today or at 888-453-0555.