Establishing communication channels with regulators, allocating inventory for direct sales versus wholesale distribution, and retaining employees in a tight labor market were among the topics discussed by operators of vertically-integrated cannabis companies in Michigan, Massachusetts, and Missouri during a January 25 Grown In Webinar. They also noted deepening, albeit still expensive, relationships with banks.
“We speak with our regulators on a monthly basis,” said Pete DeCaro, chief executive of Worcester, Mass.-based Resinate, who added that engaging with the state’s Cannabis Control Commission on events and initiatives ahead of time, “lets them understand what is coming so we know all the right rules.”
Due to a recent $200 million product recall associated with a Michigan lab testing company that impacted 400 retailers, Micah Siegal, general counsel and chief administrative officer for Lansing, Mich.-based Pure Brands, in recent months has had weekly conversations with the Michigan Marijuana Regulatory Agency. Pure Brand’s primary cultivation facility also shares a parking lot with the MRA.
Adam Diltz, who served as VP of Cultivation Operations for Chicago-based Verano Holdings before joining Independence, Mo.-based Illicit Gardens as chief operating officer, says his correspondence with regulators is considerably less today than what he experienced in other states. He added, however, that “he expects that to increase as most of the licenses are now commenced” in the state, which began its medical program in 2020.
One of Missouri’s first cultivators, Diltz said that approximately 80 percent of his company’s product is sold to retailers and manufacturers, with the balance sold in his company’s five dispensaries. Siegal said Pure Brands reserves approximately one-third of its inventory for its five stores with the rest sold at wholesale. Resinate sells 50 percent of its product to 85 dispensaries across the state and the rest through its two retail locations, DeCaro said.
All panelists discussed the challenges of hiring employees in today’s labor market, emphasizing the importance of retention through competitive pay, benefits and professional development programs.
On the subject of banking, while no operator was pleased to pay exorbitant fees for checking accounts, they all cited they had “concierge” access to bank executives and board members, most often via text message exchanges.
According to this group, the existential concerns of banking money generated from the sale of a federally illegal substance are steadily going up in smoke.
“When we were raising money, we had concerns from investors about our money being seized,” said Diltz. “But today it seems like more banks are getting in line to serve dispensaries.”