#1- California Cannabusiness: from ILLICIT to LICIT... finally
Chris: Hello everyone! Welcome to the inaugural episode of Cannalaw Connections. I am your host Chris Hoo. I am a California attorney, admitted to the state bar for about ten years, specializing in testing labs and manufacturers for cannabusinesses. I just got back from the MJ Biz Con, the marijuana business conference in Las Vegas, for the past week. A lot of people were talking about the regulations and the upcoming licensing requirements for California. It’s definitely on people’s minds, and if you are up to date about what’s going on, they actually just came out with the emergency regulations just today. So, I’m in the middle of reviewing that. Besides that, I’m here to talk with my two very special guests. They have combined over forty years’ experience in criminal defense and law enforcement. I have Terry Blevins who is a retired police officer. He is a volunteer speaker for LEAP, which is; Law Enforcement Action Partnership. They are law enforcement working on drug policy reform, harm reduction, and police community relations. He is also the founder of Armaplex Security, which provides security for cannabusiness licensees. Our other very special guest is Brian Yin, who along with me, has also been practicing law for over ten years. He is a criminal defense attorney, and he is the founder of Brian Yin and Associates. Thanks for being here with me today guys!
Brian: Thank you for having us.
Terry: Thanks for having us Chris.
Chris: Cool! Alright, so let’s get right into it. Terry, you come from law enforcement. That’s your background. When we think of law enforcement we don’t think “drug policy reform people”. We think, lay of the law, we are going to follow the laws and that’s how it is.
Can you tell us a little bit about your journey from a police officer and your experience with the war on drugs to your evolution as a drug policy reform advocate?
Terry: Sure, Chris. I came from a really conservative family. My parents were missionaries and pastors. Then, in high school, a lot of my friends smoked marijuana and I smoked marijuana as well. I didn’t really see a big deal about it. A couple of years later, after I graduated high school, I wanted to become a police officer. I found out that they were really restrictive about allowing people who had tried any kind of illegal substance, and I almost wasn’t allowed to be a police officer because I had tried marijuana. So, that was my first indication that our culture was really hypersensitive, especially against marijuana, and that really it was an illogical way of looking at things. Then, throughout my career as a police officer I saw a lot of injustice that was done in the name of the war on drugs, a lot of people and communities that were marginalized, especially people of color, and I saw a lot of injustice. I saw people’s assets that were seized through the civil asset forfeiture program, which in my opinion is completely unconstitutional. I just saw a lot of things happen that really made me realize that we needed a lot of drug policy reform and a lot of change in our criminal justice system and a change in our attitude in general. Then, I had the opportunity to work in cannabis security and I felt like it dovetailed really nicely with the advocacy work that I was doing. And so, that’s why I love what I do every day. I get to basically advocate for drug policy reform in everything that I do. One of the big issues that a lot of the opponents of the legalization of marijuana talk about is the public safety issue, and the public safety concerns. A lot of those we can address with security. So, I am really fortunate to get to do that.
Chris: Great! I’m glad to hear that. Thanks Terry. How about you Brian?
What’s been your experience with the war on drugs as a criminal defense attorney, and as a citizen?
Brian: Well, especially before the recent legislation in regards to marijuana, just looking at it overall in general, it becomes really easy to become just a really focused target of prosecution most simply because you’re possessing or using or otherwise. Ignoring selling or trafficking which are understandably a little bit more serious, simply using can really have them come down on you very, very hard. Depending on how much you have alone can really raise things up to very serious penalties and felonies and otherwise. With recent legislation in regards to only marijuana that has changed rather dramatically. Things that used to be felonies have come down to misdemeanors, infractions, even just straight out legalization. Nowadays, at least for marijuana, you would have to try really really hard to be caught with a felony. Maybe not so much for the other drugs like heroin or cocaine or otherwise that’s still a very focused target for prosecution. At the very least in regards to marijuana that war has changed rather significantly.
Chris: Okay, interesting. The next question goes for both of you. You both are parents. How has being a parent affected your view on the war on drugs and legislation efforts? A lot of these people use the effort, “What about the kids? What about the kids?”.
So, as parents, what is your opinion about the legislation of cannabis and commercial use?
Terry: Well, as a grandparent, I can tell you that I have a grandchild who has childhood epilepsy. The only thing that keeps him from having seizures is CBD oil and he was on a cocktail of drugs prior to that and they really weren’t working that well. So, from that perspective it’s one of the things that really, sort of, jolted me into doing more advocacy work. Then, specifically to address your question; I think that as parents we really have to work with our kids and educate them. Let them know the dangers of using certain substances. One of the things that concerns me a little bit is people driving under the influence of marijuana and that’s something that we still have to address. We don’t have the science to really do it properly, but in general these are things that we just really have to talk to our kids about.
Chris: Absolutely, I am definitely an advocate for education and talking to kids. How about you Brian?
Brian: My kids are pretty young. My oldest is not even seven yet. So, I think that’s a conversation that’s pretty far away. We still call alcohol “adult drinks” and things of that nature to our kids. That’s usually good enough to get them to stop asking about it. When it comes time, the house that I was raised in, in regards to any type of elicit substances, simply wasn’t talked about. They just never addressed it and I ended up discovering that stuff on my own. For better or worse, I figured it out. When it comes to my kids, my knee jerk reaction is to tell them to stay away from everything. In reality what I’ll likely do is, much like Terry says, talk to them about it. Talk to them about why people do it, how it’s used, and why it’s dangerous in certain situations. In the end, they’ll grow up and make their own decisions. It will be out of my sight and I’m gonna hope that I’ve spoken to them enough about it, and educated them enough about it to make smart decisions. So, if they do decide to indulge in something legal like alcohol or marijuana or otherwise that they’ll do it in a smart way that doesn’t put them in any kind of dangerous situation.
Chris: Absolutely. So, it sounds like the answer for both of you is education and communication with your kids, which is a good policy for everything right?
Chris: Great, cool! Terry, back to you. I was gonna ask you; what is the relationship now between federal, state and local laws with regards to commercial cannabis businesses? What do you think is gonna be the outlook for the future? I know that on January first officially we are officially gonna have licenses and regulations available at the state level.
So, what is the relationship between federal, state and local now, and what do you think is the outlook for the future?
Terry: Well, as we all know, marijuana is still a schedule one narcotic. Which is completely insane, because in order for it to have been listed as a schedule one narcotic the government had to stipulate that there is no medicinal value. Now we all know that that was a complete lie. As a young police officer, I felt that I was lied to. I have a certain amount of resentment about that, about my government trying to brainwash me into thinking that it was this horrible thing that had no medicinal value. But, it’s being still listed as a schedule one. It’s still a federal offense. With the current administration we are not very hopeful that that will change, that it will get removed as a schedule one. The hope that we have is that they will continue the way that they have recently with very little enforcement efforts. We’re hoping that there’s not any money in the federal budget for federal marijuana enforcement, which is great, and we have the Cole Memo and the Rohrabacher-Farr amendment. We have allies in the federal government. We have congressmen that are very pro-marijuana. We have over thirty states now that marijuana is legal in some form or another. So, I think that even the federal government now is getting the hint that the will of the people is that they not do federal enforcement. We still have pockets of it that are happening that real injustice. I think in California we are probably in the best position nationwide, because California has been very independent and very clear about the fact that it is the mandate of the people that it be legal. And so, I think from the cannabis operators and investors the main thing that we need to focus on is: we need to be compliant. I was a federal law enforcer and I know how they focus their enforcement efforts. I believe that what they will do is that they will go after the operators “bad actors”. They will go after the cannabis businesses that are not licensed or that are laundering money or that are involved in organized crime or that are allowing diversion of product to minors. As long as we try to stay as compliant as we can with state law and not cross state borders and those kinds of things, I think that those are the businesses that are going to have the best chance of avoiding any kind of federal enforcement action.
Chris: Interesting, so is what you’re saying Terry is that they key in the future to avoid getting caught or having problems with law enforcement is to be compliant? To follow the regulations?
Terry: Exactly, because if you think about it we know that sometimes we demonize law enforcement and I know that sometimes bad things are done, but I know that they generally do try to do things in a fairly logical way. What you do is, you look for the low hanging fruit.
Chris: Easy pickins’.
Terry: Exactly, so what you do is, think about it this way- If you know that the California state government does not want the feds coming in here and enforcing federal drug Laws on legal regulated businesses that are doing things correctly, what are you gonna do? You’re gonna go after the ones that you can say, “Hey, we found a connection to organized crime”, or “they were laundering money with organized crime”, or “they were crossing state borders”, “they were taking their marijuana back east”, or whatever. Those are the ones that they are going to be able to defend their actions much more easily whey they go after people that are doing clearly illegal things in addition to just the federal marijuana laws. So, yeah, the businesses that stay legal and that do things correctly those are the ones that I believe aren’t gonna be touched. I’m not really concerned about it to be honest with you. Just recently even though Jeff Sessions has a really illogical view about marijuana, he has really been emasculated in a lot of ways to be honest with you for a lack of a better word because nobody is doing what he says even regionally.
Chris: Sounds like he has also admitted that his hands are tied. There’s no money there. There’s no actual local power.
Terry: He is. Just recently I saw an article, they did a press interview that came out where regionally the D.A. was saying that they weren’t going after businesses that were selling CBD and THC oil in states where it is was legal if these businesses were doing things legally and paying their taxes. That was, sort of their general policy apparently.
Chris: Olay, thank you. Brian bringing it back to you, prop. 64 passed about a year ago, almost exactly a year ago. That legalized the recreational sale and commercial activity for cannabis.
What have you seen in terms of trends or changes in terms of before and after prop. 64 and what do you think the future outlook is gonna look like for commercial activity of cannabis, possession, cultivation, etc?
Brian: Well, before proposition 64 marijuana, while maybe different to certain degrees was largely treated the same as almost any other drug that you would find yourself with. Like heroin or cocaine or anything else you could get caught up with it. You could end up getting caught up with a felony if you had it in your car and you were transporting it. You could potentially even go to prison over it, as ridiculous as it sounds. After proposition 64 things, for at least marijuana, wildly changed. One, simple possession is completely legal depending on the amount that you have as long as it below a certain amount. Even selling, nowadays, can only be considered a misdemeanor. Where, before, it was essentially an automatic felony. Now the only real ways to get felonies for having anything do with marijuana mostly now depends on your background. If you were some kind of 290 sex registrant, you were previously convicted of some kind of serious or violent felony like mayhem or rape or kidnapping and then you got yourself mixed up selling large amounts of marijuana, then you would get yourself a felony. You would really have to do a lot to get yourself into that kind of trouble. The things for marijuana before and after proposition 64 has really changed how everything is handled. Now you can have legal dispensaries. It doesn’t necessarily have to have medical uses anymore, and you can quite freely use marijuana openly as long as it’s basically like tobacco. You are not using it within certain school grounds, just as long as you stay away from certain businesses, you don’t sell to certain people, you’re of a particular age, it’s being handled a lot more like alcohol. While maybe it’s not quite to the same legality as alcohol, it’s well on its way.
Chris: Great, thank you. So, let’s get into the meat and potatoes now because we’ve talked about criminal defense, we’ve talked about law enforcement with regard to cannabis, but we’re in a new era. We are moving towards commercial cannabis licenses starting January first. It’s not even a crime anymore. We’re making money off of it. We’re in business now. So, let’s talk about the licensing requirements. Like I said, today they just came out with emergency regulations for commercial cannabis licenses. So, we’re going to review them and see exactly if we agree with them. See if we can make some changes in the five days that we have to comment on them. Besides that, we already know somewhat, or we can take a gander as to what requirements actually are. We have a good idea about what they are. So, for you Terry, what are some of the upcoming security challenges you see for these commercial cannabusinesses when getting licenses? We are coming from an illicit market we’re going to a licit market now. (I just learned that word. Illicit and licit are actually opposites.)
So, what are some of the upcoming challenges for licensees?
Terry: Well, like you, I haven’t had a chance to completely dive in and look at the new state regulations. Being familiar with the proposed regulations and having a pretty good idea that they probably haven’t changed that substantially, the most obvious thing that cannabis businesses need to do is file a security plan with their license application. Because you need to get your municipal license first before applying to the state, depending on the municipality that can be something very simple or something very complicated. Different cities and counties have different levels of regulations regarding security. So, you have to file a security plan. Security businesses are going to have to have electronic security measures like video surveillance and alarms, intrusion alarms, panic alarms, certain other electronic measures. You’ll probably be required to have a security guard, at least during business hours, and we provide all of those services. Then the additional security measures that you’re going to have to have are the transportation of your cash and your cannabis product and we do that as well. So, when you’re developing your cannabusiness plan you have to take into consideration all of those things. Some people ask me, “So how much should I expect to pay?” and what we’ve seen is on average most cannabis businesses should expect to pay roughly ten to fourteen percent of their gross sales for everything security related including the transportation of their product and of their cash. Some dispensaries may be a little bit lower than that because they don’t’ have to pay as much to have their product moved, they’re not the ones that are incurring that cost. Then, the cultivators and manufacturers who are taking the brunt of that might be closer to the fourteen percent.
Chris: Wow. Ten to fourteen percent, so just like another tax basically is a way to think of it. Okay, interesting. Thank you, Terry. Brian, back to you. In the commercial cannabis license, you also have to do a background check, you have to get your fingerprints, you need to reveal your entire criminal history. I don’t want to bore everyone with reading through the conditions that you need to disclose on your application, but I’ll name a couple of them: Convictions of a crime related to crime or embezzlement, convictions of a violent felony, convictions of a serious felony, weather the applicant is on probation or parole for a felony conviction, and weather the applicant has as a licensed physician ever made patient recommendations for medical cannabis. So, these are some serious disclosures that you have to make. This is really delving into your history and what your criminal background looks like. What do you think of these disclosures Brian?
Are these disclosures constitutional?
Brian: It’s difficult to say necessarily. Being able to sell marijuana is very, very new. So, the only way that I was able to try to liken this to any other regulated industry is something like trying to obtain an alcohol license to sell alcohol out of your establishment. Looking at the requirements that they have for disclosures and otherwise, they do ask for your criminal history. As far as I can tell, they don’t make it quite as specific as serious or violent or otherwise, but they do ask if you have been on probation, if you’ve been on parole, and if you have ever been convicted of any crime. Asking for these things, in itself, is not unconstitutional. The governing board for alcohol licenses is allowed to suspend or revoke your alcohol selling license completely if you have been convicted of some kind of crime that at least reasonably is related to whether or not it makes you immoral, or questions your morality in relation to your selling of alcohol. If we want to look at it in that same way, there has been plenty of constitutional challenges to the way the alcohol board governs their licenses and in relation to as long as they say that it’s reasonably related to morality in regards to selling alcohol they can suspend or revoke your license or deny you a license. In that regard, if they can somehow say… due to your convictions or criminal history, due to the fact that you are on probation or parole, maybe perhaps depending on exactly what it is you have been convicted of or you are on probation or parole for, we don’t have to allow you to have a license to sell marijuana. As of right now, I don’t see a lot of grounds for saying that it’s unconstitutional, unless it’s something that has been going on in California as it is. Depending on what exact crime they are talking about it’s certainly open for discussion.
Chris: Okay, so it sounds like you are saying that these disclosures are not uncommon. They are commonly tied to getting a commercial license.
Chris: Okay, great. I’m gonna come back to you Brian about these conditions. I have more questions about them, but Terry I want to turn back to you. Can you tell us some of the security time and money pits that would-be licensees run into? I know that with some of the clients that I’ve been working with we get surprises all the time. One of the most common questions that I get when people want to get a license for commercial cannabis is: How much is it going to cost? How much money will it take? How much time will it take? I always say, “take your estimate and double it, triple it”. That’s what I’m talking about the money and the time pits.
Can you tell us some of those common licensing pits?
Terry: You mean as far as costs that licensees are going to incur related to security?
Chris: Right. Where it unexpectedly becomes more expensive or takes more time than expected.
Terry: Well, I’ll tell you I heard some figures this week that were just outrageous. Actually, within the last couple of weeks, someone called me and told me that they had been quoted twenty-seven thousand dollars for a security plan. We’ve never charged more than ten thousand for even the most complicated security plan that we’ve done. Then, after that someone actually told me that they were quoted forty thousand dollars for a security plan! I don’t even understand how a person could justify that, to be honest with you.
So, if anybody is charging you forty thousand dollars for a security plan, I think you probably know this, run in the opposite direction. If you ever want to call me, even if you want to use someone else, I give free advice all the time. I am more than happy to help you pick the right person for that. Obviously, we do it. I have noticed that people get a little bit of sticker shock when they look at certain electronic systems.
For example, one of the things that we see in other states that have a more mature market especially cultivation and manufacturing, they’re really expected to have very sophisticated electronic security systems that involve access control either with proximity cards or biometric access, cameras, quite a few cameras. Sometimes the cameras will have sophisticated night vision, and they will have artificial intelligence where the camera itself actually serves as an alarm to detect motion and that sort of thing, and pretty sophisticated independent alarm systems, but those can all be integrated. Those systems can be pretty expensive. A system like that for a twenty thousand square foot grow facility, that could run you a hundred thousand dollars or more. In a manufacturing site where you have a lot of employees in and out and shipments coming in and out and a lot of activity and a lot of areas that you need covered with cameras that could be a hundred and fifty thousand dollars easily.
Now, you can get away with doing something much less sophisticated than that but, our concern is that in these other states they are installing that type of system. So, we are just concerned that at some point the state of California is going to come back and maybe increase the regulations, and businesses will be required to have more sophisticated systems. Sometimes there’s the cost of the security officers as well. The average, right now, cannabis security officers we charge about twenty-six dollars an hour for those. So, if you want to see how much your security guard is going to cost you figure out what your business hours are, add thirty minutes on either side of that and multiply it by twenty-six and that’s what you are probably going to pay for a security guard. Now, if your municipality or county requires you to have security guards overnight, you may have to pay for guards overnight as well. Those are all things that you have to take into account.
I actually, this is a shameless plug, but I actually on our Facebook page, the Armaplex Facebook page, I have a post where I list a power-point presentation and I go through some of these things outlining what the different people can expect, what they will be expected to do from the cities, and roughly what things will cost. I’ve gotten a lot of feedback. People thought it was really helpful.
Chris: Absolutely, I’m glad you did the shameless plug. I’m doing a shameless plug as well. Definitely the information is out there, so you should check out the people in the business, their websites. My website, Terry’s website, it’s very educational. I put up the requirements for licensing as well. I think that should be common knowledge. People can check it out, see what they need to do, and decide if they need help to do it. I’m also glad Terry that you mentioned the local municipalities and the counties.
What kind of interesting or special security requirements have you seen at the local or county level?
Terry: Well, one of the things that California cities seem to be doing that isn’t from what I understand, super, common in other states is that all of the municipalities where we have done security plans so far are all requiring that you give the police chief or his or her designee twenty-four-seven/three-sixty-five access to your live camera feed so any time day or night they can go in and look at your live feed of the interior of your facility and they also have access to historical footage. One of the common questions that I get from people is: Do any other industries have to do that? I have to say honestly, no. We are the only industry that is required to basically give the police department a live feed to our entire site. I do think it’s ridiculous, but one of the arguments that I do give in favor is: We are trying to change the attitude towards cannabis businesses. In particular, some of the police leadership are really getting dragged kicking and screaming, so some of them, if we are okay with the fact that we give them twenty-four-seven/three-six-five live feed access to our business it gives them a little more of a warm and fuzzy feeling, and at times I understand that with certain police chiefs that has actually been the convincing argument. With certain city councils, they rely on what their police chief says. If their police chief comes in and says, no, this is a blight. Crime will go up, it will be horrible if you allow cannabusinesses. Some police chiefs that when they were told they would be given twenty-four-seven access, and will see everything that goes on. You or your officers can come to our business any time, walk in without a warrant and do an inspection or whatever you want to do, sometimes that is actually one of the things that has gotten them. I know that we shouldn’t have to, and I understand that maybe somebody listening is getting a little bit of ire about that. I understand that, but it is what it is. We just have to do what we have to do to try to convince some of these old-timers with antiquated attitudes to come around.
Chris: Absolutely Terry, I’m glad that you touched on that as well. Because we’re moving from an illicit market to a licit market now, we have trust issues obviously. We have a history of twenty-one years of medical marijuana use in California, and hundreds of years of an illicit market. So, the people who are taking the first leap of faith are going to be the people who want to get the licenses. Even if they come from the culture of, we don’t trust government, we don’t trust law enforcement, we do our own thing, they’re gonna have to take the leap of faith and say okay, since there is a regulated market now, let’s try it out. Let’s see if this is gonna fit our culture, our needs. Definitely, thanks Terry. Brian, final question to you, back to that short list of disclosures that I gave you, I’m gonna repeat a few of them just so that we can have some starting off points for the conversation. I was talking about, convictions of a crime related to fraud or embezzlement, convictions of a violent felony, convictions of a serious felony, whether the applicant is on parole or probation for a felony conviction, whether the applicant has ever as a licensed physician made patient recommendations for cannabis.
Can you give me some common examples of the conditions that I was talking about and what do you deal with at your law firm to help get these conditions removed?
Brian: Well, in regards to thing such as violent or serious felonies there are some that can be serious but not violent, and others that are serious and violent or otherwise. I mentioned some of them before, but just reading off of a random list. You have to try really hard to get yourself into this kind of trouble in relation to marijuana. These kind of major, major felonies, things like murder, or voluntary manslaughter, or rape, or sodomy, or 290 registerable offenses, being sex registration offenses where molestation of minors or otherwise kidnapping or assault with intent to commit a specific felony, like any of those that I just previously mentioned. Those kinds of serious crimes, that’s not all of them, but those kinds of serious crimes are the ones that they are talking about. Things that are of a series of a violent nature that’s is going to get them into trouble with getting a license. Now, to try to clear these unfortunately, is very, very difficult. Some things like fraud or embezzlement might be a little bit easier, then depending on the amount that was taken and otherwise maybe it still counts as a misdemeanor. No matter what though, first you would have to get it expunged, which is only the beginning of your journey in trying to clear your record. Expungement, literally means that they take your guilty plea, enter a not guilty plea and dismiss your case. Now, as great as that sounds, it doesn’t mean that it’s erased from your record. All it means is that if anyone looks at your record, they’ll see that it was expunged, but they’ll know that it happened. Then, on top of that, the fact that it’s not the most helpful is that in any situation that you have to ask for a state license to be able to do whatever it is that you want to do like become a doctor or a lawyer or a cop or in this case, trying to run a dispensary you still have to disclose your conviction even if you have had it expunged. The next step then that you would likely have to take, especially if you were trying to clear a serious or violent felony you can do in one of two ways. The recommended way is to go for a certificate of rehabilitation. Essentially what you have to do is write a motion and make an application in whatever county you are living in at the time, and they have very strict requirements. You have to be living in California before you make your application, for a continuous five years. Then depending on your crime add another two to five years on top of your wait times. Anywhere between seven to ten years of your conviction that you are trying to clear is the amount of time that you have to wait before you file for a certificate of rehabilitation. Assuming you get that, that doesn’t clear your record either. What is also acts as if you get it granted is an automatic application for a governor’s pardon. Then, the governor only grants these things twice a year, which I believe is Easter and New Year’s. Supposing you get it in, it might be years before the governor even looks at your application. If he looks at it, and miraculously it’s granted, that’s about as good as you’re gonna get. Now does that even clear your record? Not necessarily, but it’s gonna put you in the best position possible. It will remain to be seen whether or not that’s gonna be enough to get you on the path to obtain a marijuana license, but that’s about as good as it’s gonna get.
Chris: Okay, so it sounds like what you are saying is that if somebody has one of these convictions that we were talking about right now they should not count on applying for a commercial cannabis license on January first.
Brian: Yeah, especially if they are gonna call it something disqualifying, that’s gonna keep you from getting a license, there’s really a lot that you need to take care of first before you get that far.
Chris: Interesting, thanks Brian. So, do you two have any other comments or questions or opinions that you want to express on our show? Some of the discussions and things that we talked about or any other topics?
Terry: I guess just want to reiterate to businesses or operators that are interested in getting into the legal industry, to really focus on compliance. I’ve noticed that some operators thought that they were gonna be able to get away with certain things and it’s one of the most highly regulated industries in California and you have to start trying to be compliant upfront. As the owner of your company it’s not enough for you to be compliant, you have to create a culture of compliance within your organization. So, from the very beginning you have to let your employees know and your managers that doing things correctly, and in a compliant way is very important to you and to your company. Create that culture because you are not always gonna be there to look over their shoulder. You need to create this overall environment whereby everybody on your team realizes that they could lose their jobs and you could lose your business if you do things that make you vulnerable to some type of enforcement activity and you are gonna have a business that’s worth a lot of money, and you don’t want to jeopardize that by doing something that could cause you to lose your license or have an employee do something. One of the things that we find in security, we find that in order to get your team members to really do things in the manner that you want them done is to treat them with dignity and respect. It’s really important to show strong leadership, to hold people accountable, but also to treat people well and they are more likely to do things the way that you want them done if you show really good leadership and treat people correctly. The other thing that that avoids is insider theft. That’s one of the big problems in the cannabis industry, insider theft. Almost always even the armed robberies and the burglaries that happen, we find that almost always some sort of a connection to either a current employee or a former employee, giving information or even being involved in it. So, if you treat people badly, what we find in security is that a lot of the times people that commit crimes against a current employer or former employer feel justified because they were treated badly by their boss. So, it’s just all about, I believe over all showing strong leadership and treating people with dignity and respect.
Chris: Absolutely, I absolutely agree Terry. One of the things that I find interesting about getting a commercial cannabis license is that you need to submit, not at the state level yet, but in some cities, you need to submit employee handbooks and training manuals to show exactly how your employees are gonna be running the business. Then, absolutely you’re in charge of all of the employees, even if they mess up it’s your license, you’re responsible. You’re answering for them. Training and employee morale is definitely of the utmost importance for running a commercial cannabis business. Brian do you have anything to add?
Brian: Just jumping a little bit on Terry’s train in regards to remaining compliant, I would one hundred percent agree with that in regards to how you do things and otherwise, not necessarily in relation to just the marijuana license. Like we were saying earlier, once you start racking things up on your record it becomes difficult to clear. If you really are intending on obtaining a marijuana license try to keep yourself as clean as possible. Believe me when I say that the prosecutor’s office is not happy about this kind of stuff, and they will look for every reason to make sure that this goes forward as troublesome as possible. If they can ruin you to the point that you will not be able to continue with obtaining a marijuana license or going forward with your business, they’ll do it. It doesn’t matter how much money you put into it, it doesn’t matter how many people you’re employing, it doesn’t matter how great a business you’re doing or otherwise. It’s all a big sob story to them, and it’s one of the hundreds of sob stories that they’re going to hear. I tell lots of sob stories, all of varying degrees of effect. I’ll tell you, my going to a prosecutor saying, “look you really need to cut my guy a break because his marijuana business is really, really thriving and if you give him this conviction, it’s gonna hurt him real bad”, they do not care. Believe me, like Terry was saying earlier, they’re being dragged kicking and screaming into this the whole way. On top of that, what really draws their ire now is the fact that with the changes in the laws and everything else the burden is shifting around to the point where they have to prove that a person doesn’t qualify for this dismissal, reduction, or otherwise. They’re really having to do a lot more work now than they did previously and they’re unhappy about it. So, like Terry has been saying, and like you have been saying compliance is extremely important. It’s really better to take your time, to do it right, and to keep yourself out of trouble, especially if wanting to continue with this business is important to you.
Chris: Absolutely, thanks Brian. Just to piggyback off of that, we just have to remember, step out of cannabis world and remember that cannabis is still a schedule one federal illegal drug. We in California are such rogues and we wrote in prop. 64, and we’re creating a licensing structure, but the only defense if you ever do get charged by the federal government is “I’m complying with California regulations. I’m following the California law.” That’s your only defense. From a business side and from my side as a cannabusiness lawyer you need to think about the money too, because in the regulations they have the fees that you’re gonna pay if they catch you out of a compliance. If they catch you not following some of their regulations they actually have a fee schedule for what they will be charging you. These fees rack up. They are cumulative, and they can get into the tens of thousands of dollars. So that’s, lastly my shameless plug for hiring a compliance attorney. They keep you out of hot water. Like you said, pay the money upfront, set it up correctly, to begin with so that you don’t have to spend money cleaning it up later and paying fees for not following the regulations that are already there to begin with.
Brian: I’ll just add in to anyone listening, take your time with people like Terry. Take your time with people like Chris, because if you don’t and you end up messing up, you will end up taking your time with people like me. Believe me when I say that I am the last person anyone wants to see professionally. So, just do it right, and you will have an excellent business.
Chris: Great! Thank you so much Brian and thank you so much Terry for joining us for our first episode of Cannalaw Connections. I’m your host Chris Hoo, and I’ll see you all next time. Thank you.
Brian: Thank you.