Choosing the right professional to help get your cannabis business licensed is as critical of a choice as any you will ever make. The 2 of the most common options cannabis entrepreneurs select is a cannabis consulting firm and a law firm. So who should you choose?
We believe wholeheartedly that the best choice is a cannabis consultant along with a few lawyers, thanks to their expertise in corporate, tax and IP laws. Your attorneys will be critical on some in some areas but not as the project manager of your operation and we’ll explain why.
But before you read too much further, you may want to pop over to another blog post on this topic where we break down all the different options you have for consultants. We also created a list of 9 things to look for when hiring a cannabis consulting firm to make sure you’re hiring a qualified consultant/group.
To properly set the stage the article at hand, it is worth noting that the cannabis legalization movement would never have been possible without lawyers. We all owe these crusaders the deepest appreciation for the opportunities both social and economic that we have today. It’s rather unfortunate that the licensing processes designed and implemented by the state and municipalities have largely overlooked and bypassed the value these barristers created for us in favor of the corporate and land-use legal background that is now required to add the most value.
Nature of the Cannabis Licensing Laws & Applications
While the laws creating California’s licensing structure may seem overwhelming to some, they have been painstakingly written (and updated) to allow business operators to interpret them fairly well on their own. They carve out requirements for operators across several business models with regards to items like security, location and inventory management in as close to plain language as possible.
For most aspiring cannabis operators, the confusing part of the cannabis license is the application and approval processes, especially at the local level. If you aren’t already aware, neither of the three state agencies that license cannabis businesses will even consider an application without being able to confirm local approval. Once you have earned this consent, most often in the form of a Conditional Use Permit voted on by the City Council or County Board, then you may apply with the BCC, CDFA and CDPH. Thankfully, the state agencies processes are fairly straightforward and free of political judgements. A cannabis consulting firm worth their salt will have navigated these waters many times over whereas a lawyer or firm may not have had the same experience or even training.
So the real fight for a license is squarely focused in your host city/county but only once cannabis permits will be considered and issued, often in very limited amounts, and far too often of late, during a very narrow application time-frame. You have to be ready to apply when the opportunity arises and frequently have to have a company formed and even rights to property lined up.
Best Uses for a Team of Lawyers
As a result of this time crunch, it is best to use a lawyer with vast experience setting up the proper corporation model for your business, best navigating the rights and responsibilities among partners and fellow investors. Hammering out the details of a complex relationship for a business that will have a magnifying glass on its every move and will require, handle and most likely need to recruit significant sums of money takes talent and time. If you don’t have all the capital you’ll need to get licensed and open for business in your bank accounts, you need a great corporate formation attorney who will produce the documentation that needs to accompany every application.
If you are not going to be vertically integrated from dirt to cash register*, you will be required to do business with other licensed members of the cannabis supply chain who complement your license type. As such, you will need contracts that outline your relationship with these partners, which may very well define just how successful you are going to be and what your valuation ends up. Acquiring advantageous contractual rights has made plenty of traditional businesses, like beer distributors, more valuable than the suppliers of the good or service produced or consumed in the transaction, and the same will be true in the cannabis evolution.
Of course, there are other areas of a company that may require legal assistance and oversight like Human Resources, Taxes and real estate negotiations. Acknowledging the unlikely possibility of a Unicorn practitioner or two, no one attorney is going to be able to adequately handle all of these types of matters, so what you must try to accomplish is building up a legal team to help you rather than a single lawyer that is running the show.
*To learn more about the licensing process download our FREE eBook:
But What About Licensing & Applications, You Ask?
Getting back to the main topic of this post – Who to hire to get a license? – the answer is decidedly against most lawyers for a few key reasons.
- They have busy practices to run and can not typically devote the manic energy needed for a week(s) straight to get a winning application written, let alone manage the process with several other professionals contributing their work product, like architects, security and equipment firms, financial analysts, HR and insurance professionals, while also attending city meetings, working with city hall staff and so much more. You are a client, among many, for most successful lawyers.
- The legal principles in play are pretty basic and undefined at this point, especially and by their own admission in cities considering applications for the first time. There simply is no precedent or common practices to even lean on at this point. The state of the law is at best new and unrefined, but many could argue it’s not yet established on so many levels – tax, banking, federal issues including IP – that no one can truly be sure of anything in this space.
- The application process is not traditionally legal in nature. The cannabis business is not being built in courts of law (yet); it is being formed in the meetings and chambers of the City Council, subject to often turbulent political pressure and uncertainty. Those throwing their hat in the race for a local permit are using creative writing, complex premise design and business plans to sway city staff and paid evaluators to select them for processing. Once they win, they become applicants for Conditional Use Permits and, go through a process with the Planning Commission that is focused on the Project itself – the layout, the neighborhood, and rarely the law. There are some lawyers that focus their billable hours on Land Use and Development who can certainly add tremendous value to a project, but they will be most likely found lacking in the other areas mentioned above, and too expensive to be proper Project Managers.
Where A Professional Cannabis Consulting Firm is Needed
So if it’s not a lawyer that should lead your team, then what criteria should you apply to select the best Cannabis Consultant to get your application the best chance to be approved? Look for the Pros on the other side of the lawyer’s Cons list.
You need to hire a firm that has mechanisms in place to overcome what lawyers typically can’t do for their applicant clients, like:
- The cannabis consulting firm must be able to supply a complete team, captained by an experienced Project Manager, that can find, manage and devote whatever resources are required to not only hit the deadline but quell any objection the local officials may have with an overwhelmingly detailed application.
- This firm should include experts at the application process, each of the elements that are required to win as well as the steps required to earn a Conditional Use Permit (CUP) that will fall right in line afterwards. Your application is more than a narrative, pitch deck or presentation, it has to be substantive enough that the City believes it can be put into action effectively and professionally without embarrassing them.
- Your consultants must be able to properly communicate with you, providing transparency and feedback at all times. All too often we hear about client’s of lawyers and other consultants being kept in the dark for too long, and due to improper time management and leadership, were forced to turn applications that lacked the detail necessary to win an application.
But What About Lobbying & Political Connections?
We are often asked by prospective clients how strong our political pull is in a given city looking to get the upper hand. I can keep this one pretty simple from our side – we don’t work in the lobbying arena so we won’t be much help there. All we can do is present your application in the best light possible and hope that the evaluators follow their own rules and do what is right for their community.
The folks asking about our connections have frequently talked to a local attorney who claim to have the inside scoop or some network to leverage to earn them an advantage. This is not impossible but very hard to come by. If you think that a lawyer can give you the inside lane and get your application approved more quickly, there is still the very real possibility that your application will be rejected if it is selected and potentially contested on appeal.
After meeting with several elected officials discussing the merits and risks related to legalized cannabis, you can be self-assured that these officials are keenly aware of the bright lights that accompany this application process and its results. Their political future may, in fact, lay in the balance of even bringing up the idea, let alone executing some shady approval process. So be very skeptical if your lawyer will be able to pull enough strings to get you selected without merit. Similarly, a cannabis consulting firm should face this same level scrutiny.
If you are trying to change the ordinances in your city to allow you the opportunity to apply, your interests may very well be served by an attorney, but personally delivering a passionate argument yourself may go a lot further.
Almost universally, those companies that assemble a team that includes talented, ethical consultants and blend in lawyers trained and experienced in cannabis matters do very well in the merit and objective selection processes. When you combine these professionals with your own entrepreneurial spirit, talents and instinct to identify the best way a city can responsibly bring cannabis to its community, tax coffers and job rolls, you can submit winners too.
If you are in the market for strategy related to starting a cannabis business or are looking to build a winning team and submit applications, we have a network of professionals ready to serve your best interests and be solid members of your squad.