I don’t know about you, but the past year and half has really kicked my butt. The global pandemic is part of it, but the company I co-founded, Goddess Growers, is still awaiting a much hoped for craft grower license award and there have been significant delays. While the wait has been excruciating, today I want to talk about what I’ve learned while waiting. In many ways, our team feels better positioned than ever to actually operate one of these craft grows. That’s the silver lining.

When I think about building out a cannabis cultivation facility from the ground up, I am reminded of the quote: “Aut inveniam viam aut faciam.” That’s Latin for “I shall either find a way or make one.” It’s what Hannibal said to his generals when they told him he could not cross the Alps with his elephants. With this in mind, I share obstacles we hit and some pearls of wisdom that helped us along the way.

Align Yourself with Great Advisors, Accountants and Lawyers. Early on, several of our advisors (and seasoned cannabis cultivation operators) said to align ourselves with excellent lawyers and accountants. I use the word align because, while we have excited investors waiting in the wings, no one (understandably) wants to give us a dime prior to being awarded a license. So we can’t call up our lawyer every time a question comes up. For the time being we are bootstrapping it. I regularly stalk cannabis accountants and lawyers on LinkedIn, listen to free webinars, “cold call email” for phone introductions, and offer to meet (one accountant even took me to breakfast). Each person I speak to, article I read and webinar I attend offers pearls of wisdom. This is why networking is so crucial and something you need to take the time to do.

Set Up Your Corporate Structure. Setting up your corporate structure early on serves several purposes: protection for your assets, clear ownership and a process to make decisions between you and other members/managers. In our case, we set up LLCs for various parts of our business. Do you own your real estate? Or plan to? Hold the real estate in a separate LLC and have your cultivation pay rent. You can claim depreciation on the building and it breaks away an asset and revenue stream from the cultivation (i.e., 280E) in a very above board, legal way. Do you plan to create your own intellectual property? For example, a proprietary cannabis chocolate bar recipe? Do you plan to trademark your amazing brand? Create a separate LLC that owns all trademarks and intellectual property and explore licensing your brand back to your cultivation and charge a royalty. 

Power. I mean electricity, not political (though one could argue you need a good dose of the latter, but that’s a blog for another time). In conversations with other craft grow applicants, a constant worry is pulling enough power. When we first rented our warehouse (pre-pandemic, pre-purchase; we were canna-newies) I called ComEd and asked if we could “pull more power to the warehouse.” They said “yes.” I hung up the phone and checked that off my list. Fast forward and we meet our seasoned canna contractors, ACS Construction. They immediately asked if we would have enough power supply. I promptly said “oh yes, I called ComEd and they said “yes,” we do.” Josh Rogers, ACS Construction CEO, politely smiled and asked if I had spoken to the area engineer. The who? I think you see where this is going. I not only spoke to the area engineer, I Google-stalked the ComEd Head of Economic Development and quickly found that we would need to cross train tracks, wetlands, contaminated soil and build a separate substation to pull the roughly 4000 amps we would need. Oh, and it could take up to a year to do all this; exactly 6 months more time than we had to be up and running upon receipt of a craft grow license. And the tally to do this? North of $1.1M. Gulp. Worth mentioning – ComEd has a ton of economic credits in place, but our initial out of pocket would still be seven figures. And something about “crossing wetlands” didn’t sync with the environmentally friendly mandate of our company. On top of it all, and most importantly, the time it would take to pull the power was much too long for our purposes. 

Enter Verde Solutions. Remember the free webinars I mentioned? Well I heard Chris Gersch, Founder and CEO of Verde Solutions, present on the benefits of using alternative energy to power your facility at one such webinar. I don’t know about you, but before meeting Verde Solutions, I was under the impression it would cost more to use alternative energy. Not true. In fact, using alternative energy, saves a lot of money, both up front and over time. And, it is renewable energy. I quickly called Chris Gersch and got a quote. Still expensive – about $942k out of pocket, BUT, after credits over the next 2 years I will get my investment back for an Internal Rate of Return (IRR) of 31.4% (IRR is basically estimating the profitability of an investment and 31.4% is freaking awesome). Oh, and I can be up and running in 8-12 weeks. 

Funding. OK, but how am I exactly funding this $942k? I don’t know about you but our team wants to dilute ourselves as little as possible with equity. So I set out to find another way. And I stumbled on this gem: C-PACE Illinois. C-PACE is an innovative tool that “enables commercial property owners to obtain up to 100% long-term, fixed-rate financing for energy efficiency, renewable energy, resiliency, water use and electric vehicle charging building improvements.” So, basically everything we are doing in our buildout (spoiler alert – you can only finance up to 25% of total project cost – still, that’s some serious scratch). Alright, but you’re thinking – this is cannabis and you can’t get a loan from a bank. Well, the beauty of C-PACE is that it is private funders, and some of them are canna-friendly. And you get to pay this low interest loan over 30 years alongside your mortgage (squeal). Note: you will need to make sure C-PACE is legislated into the county where your building is located. Currently, it is legislated in Champaign, Cook, DuPage, Kankakee, Kane, McHenry, Ogle, Peoria, Will, and Winnebago. If your county isn’t on this list (ours isn’t, Lake County) don’t lose hope. Remember Hannibal, this is elephants and we’re crossing the Alps. Email your State Senator and State Representative. And the Mayor. In our case, we emailed all three and they were very responsive. Lake County is in the final stages of legislating in C-PACE as I type this article. You also need to make sure your contractor is registered with C-PACE. Ours completed the registration and reported back it was painless and fairly fast.

In a new industry, it is all about finding a way. There is always a way. In cannabis, there are plenty of shut doors, no’s, cannots, impossibles, etc. If you listen to them long enough, it is easy to see why 80% of grow’s fail. But if you find a way to filter out the bad – maneuvering, molding, pivoting along the way – you will make it. Inveniam viam. I taped Hannibal’s quote to my bedside table. It’s the last thing I see at night and the first thing in the morning. In a new industry, it is all about finding a way. There is always a way.

Disclaimer: I am not an accountant or lawyer and the information provided should be taken anecdotally only.