The True Cost of Your Cannabis Licensing Application

Higher Yields Consulting Cannabis Licensing: The True Cost of Your Application

Putting together an award-worthy application for cannabis licensing requires a lot of time, hard work, and capital. Industry hopefuls must understand the true cost of winning a cannabis license, as well as the potential revenue streams that license could make possible. 

Higher Yields Consulting Cannabis Licensing: The True Cost of Your Application
A view of a general cannabis sign on the front of a building.

From there, you can determine whether you want to work directly in cannabis or an ancillary industry. In the case of the latter, our Pivot Program can help! If you plan to go right into cannabis, though, your state directly impacts the cost of the application. 

The bottom line is knowing what you’re getting into. Follow along, and we’ll guide you through all of the costs associated with your licensing application.

Seek Out Expert Consultants

The first and most important investment any applicant can make is in a consultant. In fact, your choice of consultant can make or break both your budget and your application. More often than not, you’re better off with a consulting firm with a history of helping clients submit winning cannabis licensing applications. 

As opposed to lawyers, consultants offer the most thorough and affordable full application support. But before you hire one, be crystal clear on exactly what you’re getting. Some consultants aren’t clear as to what is and is not included, which essentially forces you to spend more money later on in the process.

As Emily Seelman, our Senior Technical Writer put it, at Higher Yields, “We pride ourselves on making it straightforward. We tell you ‘Here is what we include in our full coverage, and here’s what we don’t.’” 

Consider 280E Structuring & Cannabis Licensing Fees

As is the case with any business, you want to stay on the IRS’s good side. In cannabis, that means structuring your business to be compliant with Section 280E of the Internal Revenue Code, which stipulates that cannabuisinesses cannot write off expenses because cannabis is still federally illegal.

Or, in the words of our Founder and CEO Cory Waggoner, “You can’t write off your mileage on your way to a bank robbery.”

Depending on the company’s size, it costs $5,000 to $10,000, plus state fees, to structure as a 280E business. That being said, it comes with plenty of benefits — like making you a more credible cannabis licensing applicant. If needed, the CPA who sets up your 280E compliance can even serve as the interim CFO on your application.

Application Fees

When it comes to the application itself, fees will largely be determined by the market in your state. If you apply in a state with high competition — like New York, Florida, Virginia, or Arizona — then the cost will surely be higher (think five to six figures).

On the other hand, low competition states offer a more affordable option with licenses being available for mere thousands. While these states — like Oklahoma or Massachusetts — make it less expensive to get in, their licenses are inevitably less valuable.

Other states, still, offer an option in the middle. Rather than charging a straight cannabis licensing fee, they make a portion of it refundable if you don’t win. This lowers the risk while maintaining the value of awarded licenses.

Work With Experienced Attorneys & CPAs

Cannabis-specific attorneys and CPAs play key roles in the application process as well, but not immediately. Although they both can do a lot, they tend to be expensive and lack expertise outside of their focus areas — legalese and accounting.

Higher Yields Consulting Cannabis Licensing: The True Cost of Your Application

Conversely, an experienced consultant will be able to tell you, “You should have an attorney review this,” or “This is something a CPA needs to set up.” That way you get everything you need without unnecessary costs.

Secure Real Estate

Another crucial component of your application will be securing real estate. In fact, it turns out to be one of the biggest upfront costs for new operators. For this reason, carefully mapping out and choosing cannabis real estate is one of the most important steps you’ll take.

As far as the cost of real estate goes, it varies. The size, geographical location, and number of potential buyers or tenants all impact the final price of the property. 

Even then, Seelman explains, “In competitive states, landlords or property owners will sometimes charge a deposit to engage in a letter of intent or a contingent purchase or lease agreement.”

Mapping Out Floor & Security Plans

With a location secured, you’ll need to map out a functional and profitable floor plan. In some cases, this task will be included in your consulting fees. If not, you’ll have to outsource it to an architect or engineer.

However, they don’t need to be stamped, official drawings. The floor plan is mostly for the state to see that your layout is designed for both safety and compliance.

Additionally, you’ll need an outline of your security plan. Like the floor plan, this may be included in your consulting fees, but overlays can cost an additional few thousand dollars., otherwise.

Licensing boards usually require cannabis security plans to be detailed and specific. All the way down to camera placement, window tint, and even your landscaping. Shrubbery, for instance, could be used as cover by would-be burglars, and you can be sure that the cannabis licensing board will point this out.

Assemble the Right Team Members & Operators

An expert team is the core of your operation, so you should assemble your team carefully and deliberately. Work closely with your consultant to assess the value of each candidate — especially the ones who charge to be on the application.

Also, be sure to thoroughly vet their history. Cannabis experience is a must, but an unclean record can sink your entire application. The same goes for any companies you work with. Always know what exactly they bring to the table and how it will improve your own operation.

Furthermore, Seelman warns “Some companies will charge for a letter of support. While there are some good reasons, you probably won’t need it. If this comes up, talk to your consultant to see if it strengthens your application.”

Hiring Lobbyists

In addition to your official team members, you’ll want to hire lobbyists. Their connections will add merit to your cannabis licensing application and boost your credibility. Although this system is far from ideal, cannabis is a highly politicized industry that’s fueled by a network of social connections.

Whether you have a single lobbyist or in excess of ten, Seelman explains that they should either have cannabis experience, tobacco experience, or a vast network of connections — preferably all three. Together, you and your consultant can weigh their expertise with their fees and make a decision.

The True Cost of Cannabis Licensing

From consulting fees to real estate, applying for and winning a cannabis license gets expensive. If you do it thoughtfully and with intent, you can maximize your chances of winning while keeping your expenses reasonable.

Certainly, though, the most important aspect is knowing what you’re getting into. Otherwise, the costs will keep adding up, which can quickly leave you overwhelmed.

Are you ready to invest in your cannabis operation? Book a consultation today, and learn more about what’s included in our consulting packages!

Building a Cannabis Investing Network for Native American Tribes

Higher Yields Consulting Building a Cannabis Investing Network for Native American Tribes

With oil and tobacco declining as investment opportunities for tribal nations, building a strong cannabis investing network may be a viable option instead. 

The pro-business yet family-focused atmosphere within Native American tribes affords unique advantages in the cannabis industry, as does their independent status. But there are also a number of risks to keep in mind and prepare for. 

Higher Yields Consulting Building a Cannabis Investing Network for Native American Tribes

Read on to learn more about the opportunities and risks that Native American tribes should be aware of when preparing to set up their cannabis investing network.

Advantages for Tribal Nations in the Cannabis Industry

As a sovereign nation on sovereign land, your tribe is immune to many federal regulations, including heavy cannabis taxes and real estate restrictions. A cannabis investing network can be a great way to right social injustices perpetrated against Native Americans and bring money back to the people without excessive taxation.

While regular cannabis establishments have to go through their local government’s planning and zoning divisions, permitters, and inspectors, most tribal nations don’t have to deal with all that bureaucracy. Instead, you’re able to draw on a collaborative community to get things done much faster and without the red tape.

There’s also a lot of crossover from the gaming industry into cannabis. So if you own a gaming establishment already, you can easily translate your knowledge of inventory, cash handling, security measures, and other operational considerations into a cannabis investing network. 

Most importantly, tribal nations own a powerful story that makes them stand out from the rest of the competition in the industry. In cannabis, everyone is a startup. Most brands will have to make up their story and imagery, but for tribes, that story is already deeply rooted in the culture itself. 

Protecting Against Potential Risks

While the opportunity to create a strong cannabis investing network is great, tribal nations should also be aware of the risks to take precautions against them. 

It’s true that your tribe isn’t required to tell the state or federal government anything, but no communication at all would be a missed opportunity. If possible, it’s best to learn and operate within some of the state’s regulations while maintaining some of your own internal ordinances.

Not doing so can result in a dilemma similar to that faced by a South Dakota tribe in 2015. In response to rumors of an impending federal raid, the tribe ultimately decided to burn their entire cannabis crop and start completely over in better compliance with state regulations. 

Higher Yields Consulting Building a Cannabis Investing Network for Native American Tribes

Another tribe in Washington called us in for an audit on their compliance. They didn’t feel the need to be told by the state how to comply, but they did want guidance on whether they were compliant. It’s always better to be safe than sorry when it comes to your state’s regulations.

In the event that issues arise, operating separately from the state also means you’ll need to conduct investigations yourself on your own people. As a solution, we suggest creating a charter document or agreement with the state, which can also solidify your tribe’s own internal regulations. 

Next Steps for Your Cannabis Investing Network

If you’re looking to create a cannabis investing network within your tribe, a consultant can help you set up regulatory structures both internally and at the state and federal levels. Be sure to choose someone who has experience working with tribes and is familiar with the culture.

For example, we worked with a tribe in New York to help them create a business plan and set regulations. We also spent about a week with them working on site selection. Native American tribes often have the necessary land available, but it’s important to know what pieces of land work for what parts of the business. 

The process is complex and involves many people and resources, including HR, construction, technical writers, lawyers, and accountants. You’ll need to understand the state market and whether you will operate independently or within the state program to determine if a vertically integrated model is right for you. 

Keep in mind that if you go fully independent, you won’t be able to work with anyone. Working with the state to meet certain requirements, on the other hand, would allow you to work with other businesses if the need or desire should arise. 

At HYC, we are passionate about righting social wrongs and creating generational wealth for Native American tribes. Get in touch with us to discuss whether a cannabis investing network is the right move for your community.

Applying for vs Buying Cannabis Licenses

Higher Yields Consulting Buying Cannabis Licenses: New vs. Existing

When it comes to buying cannabis licenses, there are two basic pathways you can take: applying for a new license or purchasing one that already exists.

According to the National Conference of State Legislatures, 36 states allow medical-use cannabis and 18 states allow adult-use. Thus, the state you intend to operate in will greatly affect the best option for you. Other factors to consider include upfront costs, the risks involved, and your future plans for the business. 

Higher Yields Consulting Buying Cannabis Licenses: New vs. Existing

Read on to learn more about the pros and cons of the two pathways for buying cannabis licenses so you can make the best choice for your business.

Option #1: Apply for a New License

Going through the licensing process comes at a gamble, as winning a license isn’t guaranteed. But with the right resources and planning — and the right location — it can be less expensive up front and give you more options for setting up your business. 

Benefits of Applying for a License

Buying cannabis licenses through the application process gives applicants more flexibility to choose their location, as well as freedom to build their business from the ground up.

Most first-time applicants become interested in applying because they’ve heard that their home state is opening up, and staying local certainly has its advantages. The licensing and permitting process is smoother if you’re able to attend meetings and visit establishment locations in person. 

Depending on the state you choose, applying for a new license could also save you money. Most applicants spend around $200,000 to $300,000 compared to the $1 million or more that an existing license can cost to buy. Also keep in mind that non-competitive states like Oklahoma are cheaper and easier to acquire licenses in.

Finally, while applying for a new license has a fairly steep learning curve, it’s a great opportunity to learn about the industry in-depth and make solid network connections for future growth. 

Downsides of Applying for a License

A common mistake when applying for a license is waiting too long to start the process. This can weaken your chances of winning the license, thereby increasing the risk of losing not only money but also time, energy, and other resources. 

High-competition states exacerbate the risk involved. In New York and New Jersey, for example, you have the potential to generate far greater revenue than in a saturated state like Oklahoma, but they’re also much more competitive and thus much harder to get into.

If you don’t have lobbyists behind you, your chances of winning shrink even smaller, as you’re likely going up against teams with plenty of time, resources, and as many as 10 or more lobbyists advocating on their behalf. 

If you do succeed in winning a license, you’ll also have to expend more time, energy, and resources building the business from scratch. And if you’re entering a less expensive, more saturated market, you’ll need to create an exceptionally strong brand to stand out from the crowd. 

Option #2: Buy an Existing License

Buying cannabis licenses from a previous owner removes some of the risk, since you’re directly paying for a license instead of hoping to win one. But the tradeoff is potentially higher costs and absorbing any mistakes made by the previous license holder. 

Benefits of Buying Cannabis Licenses

If you can afford it, buying cannabis licenses eliminates the guesswork of the application process. And it can pay off fairly quickly: A license valued between $10 million and $40 million could be worth upwards of $100 million in five years. 

But it is possible to find someone willing to sell their license at a reasonable price. Operators who are burned out or not doing well may be willing to sell for less than other license holders. Alternatively, you can buy from a company that has the ability to win licenses but no desire to operate a facility themselves. 

Higher Yields Consulting Buying Cannabis Licenses: New vs. Existing

At HYC, we’ve developed a model where we’re able to apply our expertise to win licenses and acquire cannabis-friendly properties, then make them available to our clients at affordable prices to help them get a foot in the door to the industry. 

Our Dome project enables aspiring cannabusiness owners to purchase a license and cannabis real estate for as little as $3.5 million and build a potential $40 million-per-year company. It’s a perfect opportunity for people who want to operate but don’t want to go through the stress and hassle of securing property and winning a license. 

Downsides to Buying Cannabis Licenses

Of course, if you purchase an existing license, you don’t necessarily get to pick the state in which you operate. And you have less control over your business’s operations and design. 

You also have to deal with any restrictions that were placed on the license, such as time constraints or transfer restrictions. If the previous license holder was given a social equity discount for which you don’t qualify, you may even have to pay that discount back upon purchasing the license.

Worse, you may find yourself owning someone else’s mistake. Any compliance issues or bad history associated with a license — even those that happened under the previous license holder — may need to be disclosed when you renew the license or expand to another state. 

Choosing the Right Path for You

The best thing you can do when considering which path you will take is find a consultant that you trust to help you navigate the process. 

I previously worked with a client who was all set to buy a license. But first, I asked them to answer a few questions: What restrictions are on this license? Are there any liens or marks against it? Are the license holders under social equity, and who will be responsible for the price increase?

They couldn’t answer any of these questions and ended up dodging a huge bullet. That’s why, whether applying for or buying cannabis licenses, it’s important to get in with a consultant who really understands the process and requirements.

For more guidance on buying cannabis licenses, reach out to schedule a consultation.

Marijuana Reform in Sports: Fighting the Stigma & Changing the Culture

Marijuana Reform in Sports: Fighting the Stigma & Changing the Culture

Cannabis in sports is a loaded, but relevant, topic. Although it lacks empirical evidence, the argument against marijuana reform in sports is often emotionally charged. As a result, stigma is emboldened and reform stagnates.

Marijuana Reform in Sports: Fighting the Stigma & Changing the Culture

As members of the cannabis community, the onus is on us to help change the culture. The first crucial step in doing so is learning about the issues that stall marijuana reform and perpetuate stigma in sports.

Here is your guide to fighting against the stigma of cannabis in sports.

The Political — Not Scientific — Origins of the Debate

The modern athlete is a machine. Rigorous training and nutrition programs paired with cutting-edge technology ensure athletes perform at their best. Additionally, stringent supplement protocols keep them safe and out of trouble with governing bodies, like the International Olympic Committee (IOC) or the NCAA.

Normally, when an organization bans a substance ㅡ like anabolic steroids, harmful stimulants, or narcotics ㅡ an array of authoritative research supports the ban. However, the ban on cannabis is far from normal.

Rather than being based on cold, hard science, the issue of marijuana and marijuana reform in sports is largely political.

Comprehensive research on elite athletes’ cannabis use doesn’t exist, but some former professionals estimate upwards of 80% of ex-NFL and NBA players regularly use cannabis. In fact, research suggests the use of THC and CBD can enhance sleep, reduce anxiety, and generally improve well-being. So what’s the problem?

Stigma Surrounding Marijuana Reform

The issue of marijuana reform doesn’t stem from any harm cannabis can cause. Nor does it come from any unfair ergogenic benefits it provides. No, the real problem with marijuana in sports is stigma

For decades, marijuana and those who use it have been demonized. The utter hatred that accompanies cannabis has created an ideological rift that makes marijuana reform seem nearly impossible. This stigma doesn’t just harm the industry, though; it harms athletes, too. 

The widespread — albeit uneducated — perception of athletes who smoke is that they’re just potheads who do it to get high. In reality, this couldn’t be further from the truth.

Elite athletes are beasts of human beings, and most of what they do is deliberate. Cannabis is often used to wind down and improve sleep, thus boosting recovery. It can also be used to cope with the chest-crushing pressure athletes face on a daily basis. However, THC remains a banned substance in the eyes of the IOC.Marijuana Reform in Sports: Fighting the Stigma & Changing the Culture

Interestingly, the U.S. championed this ban in the 1990s. Using sports as yet another weapon in the War on Drugs, the United States bullied the IOC into enacting a ban on cannabis under the guise of protecting the youth.

The Double Standard

As always seems to be the case in sports, a double standard exists. Many would like to compare the suspension of would-be Olympian and star sprinter Sha’Carri Richardson to 28-time gold medalist Michael Phelps, but comparing the two proves difficult. 

While we are sympathetic to the circumstances, Richardson consumed cannabis during an in-competition period — the only time cannabis is banned. Conversely, the infamous photo of Michael Phelps smoking marijuana was taken three months after the 2008 Olympics when he was not in competition.

The double standard that acts as a barrier to marijuana reform exists not between these two athletes but two methods of pain management: cannabis and opiates. While cannabis, an efficacious method of pain management, is banned by the IOC, highly addictive opiates are freely prescribed. 

According to a 2020 study, athletes are at a higher risk of opiate addiction. In fact, opioid use among NFL players was reported to be 52% during their careers. Some research even suggests that cannabis use can reduce the effects of opiate withdrawal! 

So not only can marijuana serve as a viable alternative to opiates, but it can also help solve some of the problems they cause. Yet marijuana is still banned. How does that make any sense at all?

Pushing for Marijuana Reform in Sports

As of right now, the road ahead seems to involve more research. Conducting more studies, collecting more data, and drawing more conclusions will help our cannabis community build up an irrefutable base of evidence to support marijuana reform.

However, research can’t operate without funding, and a good chunk of research money comes from the federal government. Federal legalization may be necessary to fund significant research into cannabis.

Another less expensive step we can take is to support athletes who use cannabis. So we’d like to give a shout-out to Sha’Carri Richardson: We support you. We believe in you. Most importantly, we’re confident your bravery will inspire true change.

For now, continue the conversation and get involved in the debate. Get in touch with us to discuss being a guest on our podcast.

Navigating Cannabis Real Estate to Find Success

Higher Yields Consulting Navigating Cannabis Real Estate to Find Success

Green zones play an important role in cannabis real estate, which, in turn, plays an important role in winning a license. In fact, many states don’t even accept applications if real estate hasn’t already been secured. However, challenges exist with green zones that can make securing real estate difficult.

Higher Yields Consulting Navigating Cannabis Real Estate to Find Success

In addition to a lack of inventory in green zones, state and federal regulations present themselves as challenges, too. Although the road to success may seem rife with obstacles, it can be navigated with the right research and preparation.

Here’s how to overcome these challenges and find success with cannabis real estate.

The Weight of Federal Regulations

Despite being legal in most of the United States — and all of Mexico — federal legislation has yet to legalize cannabis. As a result, it remains illegal for any FDIC-insured bank to receive or process money that has anything to do with the cannabis industry.

Naturally, this makes life difficult for a cannabis real estate operator: If a property owner has any federally backed loans tied to a piece of property — as most do — they cannot lease to a cannabis operation. Their only option would be to sell, which would mean giving up a lucrative asset.

The Safe Banking Act Offers Relief

Luckily, the Safe Banking Act saves the day. Introduced by Rep. Ed Perlmutter of Colorado’s seventh District, this legislation loosens the government’s grip on cannabis-related finances. Broadly, the Safe Banking Act prohibits the government from punishing banks that work with legitimate cannabis operators.

Specifically, this bill allows:

  1. Institutions to provide general banking services to cannabusinesses.
  2. People and banks to sell affordable, federally backed loans to the cannabis industry.
  3. Cannabis real estate operators to lease their properties rather than be forced to sell.

The Safe Banking Act has opened new doors for operators as well as those in ancillary fields — in particular, cannabis real estate.

State Restrictions, Green Zones & Setbacks

Unfortunately, both the federal and state governments create challenges for cannabis real estate operators. For instance, space in green zones — areas in which cannabis operations can be legally located — is getting harder and harder to find. 

Further, cities continue to tighten regulations known as setbacks, which dictate the specific distances cannabis businesses must be located from facilities like schools, rehab centers, and day cares. Denver officials, for example, are adding fitness centers and public swimming pools to their list of setback regulations.

Recently, I worked with a client who had bought a medical-only dispensary attached to a cultivation facility with the goal of switching from medical-only to recreational. When the original owner had won the medical-only license, however, there were no setback restrictions in place for residential areas.

Higher Yields Consulting Navigating Cannabis Real Estate to Find Success

If we had kept the same medical-only license, the client would have been grandfathered into the property regardless of the new setbacks. Since we had to reapply for a recreational license, though, the new setbacks kicked in and we were forced to find a new location. 

The Promise of Emerging Cannabis Real Estate Markets

Although shrinking green zones prove to be both a nuisance and a challenge, new states offer opportunities. In particular, emerging states like New York, Massachusetts, Oklahoma, and New Jersey all have potential locations still up for sale.

These emerging markets present new opportunities for securing lucrative cannabis real estate. Doing so may give you a leg-up when the markets take off.

Moving Forward With Cannabis Real Estate

With all of the challenges, finding success with cannabis real estate can seem overwhelming, so we’re here to help. At Higher Yields Consulting, we find opportunities whether or not there’s supply because we create supply

We go out, knock on doors, and offer creative deals to property owners in green zones. This not only ensures the functionality of the industry but also builds generational wealth for property owners and their families.

Part of making the industry effective also involves tearing down the stigma that surrounds marijuana. By bringing the community together and giving back, we’re building a new, positive image for the cannabis industry.

Are you looking to secure real estate for your operation? Reach out today and get started!