Worcester Business Journal

wbjournal.com | August 3, 2020 | Worcester Business Journal 9 Retailer ..................................................68 Cultivator ...............................................42 Manufacturer .........................................35 Microbusiness .........................................2 Transporter combined with other license ....................................2 Independent testing laboratory ................................................2 Third-party transporter ............................1 no shake or trim – with a hollow central chamber for optimal burning and a 24-karat gold paper wrapped around the end, intended to be a unique final touch. But their product is about more than simply heightened aesthetics. "What we've seen with going tighter and making that air hole is we're doubling, if not tripling, the burn rate of a normal pre-roll," Phillips said. e Yamna cannagars are intended to be an upscale alternative to standard pre-rolls, which is why they retail for about $50, compared to about $15 for the typical pre-rolled joint. "As you know, different costs money, different gets expensive," Phillips said. "We don't want to be antagonistic," he continued. "We just want people to know that there is a different tier." He likened the concept to different types of liquor sold for different prices. A long wait e Yamna business model is simple enough at face value. And as only the second fully operational cannabis microbusiness in Massachusetts, there's not much competition to speak of. So little, in fact, Yamna has actually collaborated with the other microbusiness – Gibby's Garden. is collaboration was likely helped by the fact Gibby's Garden operates next door, in the same building. Right down the road is Caroline's Cannabis, which was the state's first small business marijuana retailer. Yamna and Gibby's even went through the licensing process at virtually the same time, with Gibby's maintaining about a five month lead. "We got to connect with them and watch what the steps were like," MacConnell said. "But also though, it was also stressful to see that they were ahead of us and yet they also still had no idea why it was taking so long for them." e lengthy wait times involved in getting a cannabis business off the ground have become a point of contention in the state's young industry, particularly for small businesses and those falling under the disadvantaged business umbrella, including those owned by minorities, women, members of the LGBTQ+ community, veterans and people with disabilities. e o-repeated refrain from critics is it's unsustainable to pay for and maintain business property while waiting to get through the application approval process. Applicants oen have to eat their rent for months or years before they are allowed to start even attempting to bring in revenue. e problem is exacerbated by traditional bank loans remaining virtually impossible to secure while cannabis remains illegal on the federal level, and is even further complicated by venture capital firms and large multi- state corporations who are known to offer funding in exchange for large stakes in would-be small businesses. As the clock ticks on, entrepreneurs find they have few palatable options. is was the case for Yamna, which took two years to be given final approval, as well as Gibby's. For Gibby's, run by Kimberly and Fred Gibson, the formal application process from start to finish lasted 13 months, culminating in their final approval to commence operations on June 30, 2019. at timeline doesn't include the process of developing a community host agreement with the town and securing real estate, both of which must be done beforehand. e process required a lot of patience and the Gibsons said they relied on family and friends feeling confident enough to continually invest in the promise of a startup in what is generally quite a lucrative field. Both the Gibsons and MacConnell and Phillips funded their businesses through family and friends. "If you're not familiar with running a cannabis business, you have to do a lot of figuring it out yourself," Gibson said. She described a phone call with a lawyer during the application process who said he could guarantee obtaining their license if they agreed to pay him $100,000. "We never heard from him again, but that's what some of the bigger licensees can do," Gibson said. "ey can pay somebody a salary like that to do this work, or they can buy a third-party consultant." A thorough process e Massachusetts cannabis microbusiness license was conceived as a licensing model to promote small, local business by requiring less capital, further incentivized by lower fees, said CCC Chairman Steven Hoffman. "We have nothing against the bigger players, but we want to make sure there's space for these smaller entrepreneurs to participate in this industry and the microbusiness license category is an attempt to do so," Hoffman said. Aside from Yamna and Gibby's, Hoffman said, six microbusinesses have provisional applications and five more are under review. While it's difficult to ascertain precisely why the microbusiness application pool remains significantly smaller than the hundreds of applications vying for the more traditional license options, Hoffman pointed to two challenges applicants oen have: navigating the host agreement process required to take place between companies and towns before submitting applications, and obtaining capital and financing. But once an application is actually submitted, a lot of work has to happen behind the scenes, too. Once a licensing application is submitted to the CCC, Hofman said, four things happen. First, an intake review verifies the application is complete. If any information is missing, CCC will request the applicant to supply any necessary materials. en, once the application is deemed complete, the CCC has 90 days to take action. During those 90 days, the CCC performs background checks on applicants, which are done through a third- party and typically take two to three weeks. irdly, the commission verifies host agreements with the towns to make sure local regulations have been met. Hoffman said towns have 60 days to respond. If they do not respond, the CCC assumes there are no issues. e fourth and final step is when the commission dives into the actual application, wherein the objective is to review the business plan and assure it is structured in such a way the business will be able to meet regulatory requirements. Only aer all of those steps is an application submitted to the full commission for review for a provisional license. Once a provisional license is issued, he said, the timeline falls back to the applicant, who he said must notify the CCC when they are ready for the final inspection. "We have adopted a deliberately moderate pace in terms of rolling out this industry, specifically to allow all the smaller players to catch up and not have the market completely developed and mature before they had a chance to catch up in terms of the licensing process," Hoffman said. Hindsight is 2020 In reflecting on their experiences starting their microbusinesses, the teams behind Yamna and Gibby's were of slightly different minds. e Yamna team was divided on whether or not they would apply for a microbusiness license if they had an opportunity to re-do the process. MacConnell said he would have strongly considered simply applying for a traditional tier one cultivation license and manufacturing license, since they didn't ultimately save any time during the application process. Phillips was slightly more optimistic, noting the opportunities for microbusi- nesses appear to be expanding, partic- ularly under new regulations to allow businesses like theirs to eventually deliv- er their products directly to consumers. "ere might be some cool things coming to the microbusiness platform that can be super valuable to the community as well as us, so it's kind of a lottery still," Phillips said. e Gibsons, in turn, did not hesitate to say they would choose the same licensing option again. Although it was hard work – Fred Gibson lamented sleepless Sunday nights stressing about funding – giving up was never an option. "It was not even a consideration," he said. In that vein, their advice to others looking to break into the state's microbusiness model is to be as prepared as possible. "Really crunch the numbers, have an incredible team behind you and don't ever give up," he said. "Just keep plugging – there will be good days and there will be bad days. Just keep the faith." "Understand that it's a marathon," Kimberly Gibson added. Once your business is up and running, she said, the revenue is real. And quick. Final licenses issued by CCC Microbusiness licenses, intended to help protect small, local entrepreneurs, make up a tiny fraction of final liceneses issued thus far by the Cannabis Control Commission. License Number of final type licenses issued Source: Massachusetts Cannabis Control Commission Kevin MacConnell (left) and Tim Phillips hold parts of the marijuana plant they use to make Yamna's cannagars. W

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