19 Ways to Fail in the Weed Industry


Like moths to a dab torch, people continue leaving lucrative jobs, leveraging their homes, and draining their 401(k)s to pan for keef in the great Green Rush.

And yet, it's not that easy—obviously.

I spoke with local lawyer Samuel Grosz, who explained why he starts any client consultation involving cannabis with a 20-minute series of caveats. He specializes in tax, real estate and marijuana law, and he's seen his share of train wrecks—though his input here should not be considered legal advice.

I'm a medical patient, and after working at a great dispensary, a failed dispensary, and a medical grow, I've observed a few potholes to avoid. We decided to break down some of the common traps that lie ahead. Here's what not to do.

1. Loan your kid money to start a dispensary.

You aren't going to get that money back. Even if he or she did a solid job supplementing tuition through dormitory pot deals, do they have a fighting chance in a hyper-regulated and hyper-competitive industry?

2. Start worrying about taxes in March.

Regardless of your social-media skills or your product's sleek packaging and great quality, being unprepared for taxes will end your business within the year. Remember, Al Capone did not go to jail for selling booze and murdering rivals—he went to jail for tax evasion.

3. Learn how to grow pot from a hydroponics store.

Gardening-supply stores know how to sell gardening equipment; they don't know how to grow weed. If you read the ingredients list, many of the mass-produced nutrients are water and chemicals. Talking to friends with healthy vegetable gardens is more effective.

4. Be your own bookkeeper.

The road to hell is paved with good intentions. It doesn't matter how familiar you are with Microsoft Excel, you won't regret paying someone who's qualified. Doing your own bookkeeping is sort of like performing surgery on yourself—an accountant is also much cheaper than a tax attorney.

5. Don't tell your landlord.

Guess what? They have noses! And eyes! And if there are sheepish 20-somethings walking around with small, brown bags, it won't take long for them to find out. The fine print of most rental agreements states that you must comply with all state and federal laws.

6. Believe that anyone, including you, can grow great weed.

Yes, it's easy to sprout and grow a few marijuana leaves. But you need more than YouTube videos and sunshine to grow something better than ditch weed. The research conducted by good growers equates to a bachelor's degree.

7. Make more money from your weed by shipping it to California.

The quickest way to get the federal guys with ski goggles and search warrants to knock on your door is to rent a U-Haul and make a short trip down south.

8. Live like a king.

We understand the excitement of seeing the profits from your first harvest. Before you head to the Mercedes dealer, take a moment to notice that most successful dispensary owners haven't bought new cars, don't have summer homes on the coast, and still wear the same flannel shirts they wore in college. Cash is king, and you will need plenty on hand to grow your business.

9. Make significant agreements with a handshake or text message.

Yes, a company actually entered into an agreement to purchase over $1 million in equipment via text messages—guess how this turned out? You have now entered a legal business, so you can't just send Eddie the Enforcer to straighten out a disagreement.

10. Interpret legislation and rules by yourself.

Ignorance of the law is not a good defense.

11. Name your new product "Dummy Worms."

Besides the possible trademark infringement, you'll lose your license if the Oregon Health Authority interprets your bad pun as marketing toward minors.

12. Name your business "Bob's Best Buds."

Some banks that cash checks from businesses clearly dealing with marijuana and shady contractors will tack on extra charges for "discretion."

13. Assume customers will always pay this much.

It's easy to see $20 prices on a gram of flower and think growers are raking it in. The majority of profits goes to overhead and licensing fees. Be aware that prices change depending on supply and demand.

14. Don't carry insurance.

Dispensaries and grows are targets for thieves, and pot's legality doesn't make it less valuable. Anyone in the business knows a friend or colleague who has been the victim of theft.

15. Spend tons of money on merchandise.

You have no idea when a new city or state tax will be imposed, and if it does, you'll regret the recent order of 4,000 PDX carpet-themed shirts. Oh yeah, and don't forget how much you owe your investors. Keep your shelves full, but your backroom empty.

16. Lease a location in a city that bans marijuana sales.

Some cities, like Gresham, have banned the sale of marijuana. So you find a store with a Portland address, and you're good to go, right? Wrong. Just because the address says one city, the property may actually be located in another city. If you signed the lease, the landlord can make your mistake very expensive.

17. Argue that your shitty location will be fine.

If you build it, they won't come. Unless your building is easily accessible to someone making a rash decision to exit a major thoroughfare, give it up. I don't care how easy a right turn, quick left, and another left look on paper.

18. Hire an expensive consultant.

Hiring a consultant costing $20,000 per month and requiring you to hand over 20 percent of your company is not a sure way to success—unless you're the consultant.

19. Be your own best customer.

Finish processing those transfer forms before making sure the Sour Bhotz are still potent.

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