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Detroit, Bankrupt a Few Years Ago, Seems Uninterested In Reaping Medical Marijuana Millions Now




City officials have sued to overturn voter-approved ordinances to expand access to dispensaries.

3 min read

Opinions expressed by Entrepreneur contributors are their own.

Detroit, a city that in recent years had to file a multi-billion dollar bankruptcy, is in danger of missing out on generating millions of dollars in taxes and fees with the legal medical marijuana industry.

As Michigan gears up to begin medical marijuana sales, including holding educational sessions around the state for those interested in the marijuana business, Detroit is something of a no-fly zone when it comes to cannabis.

An attorney who consults for the marijuana industry in Michigan told the Detroit Free Press that she has advised prospective marijuana business owners “to stay away from Detroit” out of concern the city will not soon untangle the legal knots currently surrounding regulation of medical marijuana.

Related: Massachusetts Won’t Allow Cannabis Cafes or Marijuana Home Delivery After All

A Complicated History

There’s a long history of difficulties and legal battles surrounding marijuana laws in Michigan. Approved by state voters in 2008, medical marijuana became legal in the state the following year under what is now considered a poorly written Michigan Medical Marijuana Act.

How poorly written? According to one local law firm, the act failed to even make it clear that marijuana dispensaries are legal.

The act launched many rounds of legal action. The Michigan Court of Appeals found the state’s “inartfully drafted” marijuana law left state residents unclear about the circumstances in which they could use marijuana (much less grow, transport and sell it).

In 2016, state lawmakers, attempting to clear up the confusion, passed the Medical Marihuana Facilities Licensing Act (yes, they spell it with an “h”). It sets out rules for licensing marijuana dispensaries.

Detroit, however, may not participate.

Related: California Studies Viability of a Public Bank for Marijuana Businesses

Detroit Legal Quagmire

The marijuana issue in Detroit right now is bogged down by a lawsuit won by Detroit officials against, essentially, the city’s own voters. The city at one point had more than 200 medical marijuana dispensaries. That number was cut down a few years ago as Detroit officials began to develop a new plan on how to license dispensaries.

The plan included reducing the number of dispensaries to 50 and basing them in industrial areas. However, in November 2017, 60 percent of Detroit voters approved city ordinances that would have opened the medical marijuana business to more entrepreneurs.

The city then sued to overturn that referendum. A judge ruled in the city’s favor last month, throwing out most of what voters had approved.

With the rules still up in the air in Detroit, many believe that medical marijuana businesses will simply move to the suburbs, costing the city money and jobs.

Medical marijuana advocates now plan to file another lawsuit against the city, claiming leaders are ignoring the will of the people. For Michigan and Detroit, it’s just another chapter in what has become a very long and complicated medical marijuana story.

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Minnesota Study Adds to Growing Evidence Medical Marijuana Reduces Opioid Use




This study, plus an earlier on in Israel, bolsters anecdotal evidence that in states where marijuana is legal, opioid overdoses decline.

3 min read

Opinions expressed by Entrepreneur contributors are their own.

Could at least a partial solution to the opioid crisis be sitting on the shelves at the local medical marijuana dispensary? A new report out of Minnesota, and one earlier this year from Israel, both found that marijuana is beneficial to people with chronic pain conditions and those suffering from cancer.

More than half the participants in the Minnesota study found that cannabis offered a high level of benefit in treating chronic pain.

In addition to alleviating pain and anxiety and improving sleep, the use of medical marijuana also led many in the studies to either reduce or eliminate the use of prescription pain medication.

Related: Detroit, Bankrupt a Few Years Ago, Seems Uninterested In Reaping Medical Marijuana Millions Now

Marijuana In Minnesota

Minnesota voters first approved the use of medical marijuana in 2014, with patients enrolling into the state program in July 2015.

In August 2016, the state added “intractable pain” to the list of conditions approved for treatment with medical marijuana. The state defines intractable pain as “pain whose cause cannot be removed and, according to generally accepted medical practice, the full range of pain management modalities appropriate for this patient has been used without adequate result or with intolerable side effects.”

“Intractable pain” is often treated with opioids. To determine the effectiveness of the program, the state commissioned a $51,000 study of patients in the first five months that intractable pain qualified as a condition treatable with medical marijuana. The study focused on 2,245 patients enrolled in the medical marijuana program for intractable pain between August and December of 2016. About 64 percent of the patients were between the ages of 36 and 64, while 52 percent were female. The vast majority lived in the Minneapolis-St. Paul area.

Related: The Opioid Crisis Is Forcing Open Minds About the Lifesaving Potential of Medical Marijuana

Many of the patients entering the medical marijuana program were taking pain medications. According to the study, 62.6 percent of the patients were able to reduce or eliminate use of opioids after six months in the program. The study also found that:

  • 54 percent of patients said medical marijuana provided a high level of benefit
  • 62 percent reported a reduction in the severity of their pain
  • 27 percent reported an improvement in their ability to sleep well
  • Other benefits mentioned by patients included decreased anxiety and improved mobility and function

The patients also offered statements about the use of medical marijuana. One patient wrote, “This program has opened up a world for me I thought I lost. I started on this just a few short months ago and am totally off my (prescription pain medication). I also have had less spasms and cramping throughout my body. I even chanced getting on a motorcycle and going for a short ride with a friend before it snowed. Thought I’d never do that again.”

Others reported a reduction in pain but said the effect tapered off over time.

The study mirrors previous findings in the Israeli study, which involved patients diagnosed with cancer. The study in Israel reported that using medical marijuana also led to patients reducing or eliminating the use of opioids. The study concluded that cannabis is a “well tolerated, effective and safe option to help patients cope with the malignancy related symptoms.”

Lihi Bar-Lev Schleider, lead researcher on the study, told Rolling Stone, “Cannabis is a very good alternative to reduce opioid consumption, to increase quality of life, and to reduce pain, nausea and vomiting.”

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Is the Legal Marijuana Industry Sustainable for Entrepreneurs? What You Need to Know




Fun fact: The average marijuana dispensary or recreational store brings in about $974 in annual revenue per square foot, about the same as a Whole Foods store.

5 min read

Opinions expressed by Entrepreneur contributors are their own.

Though it’s been a subject of ethical and political debate for decades in the United States, marijuana is facing a new kind of scrutiny. Consider that:

  • More than 60 percent of Americans favor the full legalization of marijuana for adult consumption
  • The majority of states allow at least some kind of marijuana use (including recreational use or the use of medical or low-THC varieties)
  • 12 states plan to introduce new legislation this year to push for further legalization

Related: Investment In Marijuana Industry Has Grown 600 Percent so Far in 2018

The logical conclusion here is that marijuana has the potential to become a massive industry. And demand seems ample, since 52 percent of adults have smoked it at least once, according to surveys. So, it’s no surprise that many investors and entrepreneurs believe that legal marijuana poses an enormously profitable business opportunity.

But are cannabis businesses also scalable and sustainable? Or is this industry a short-term fad with limited profit margins? If you’re looking at entrepreneurial opportunities, here are some of basics of what you need to know:

The process

First, it pays to know the “seed to sale” process required to take marijuana from its seedling start to the customer stage. This is a process that now requires businesses, in California at least, to use a trace-and-track database. Such a database documents the path a cannabis product takes from growth to sale and provides transparency for and safety to customers. For more detail, Green Bud Initiatives, an investment cooperative that focuses on the farming end of production, has detailed the high-level process.

Modern growers also often use a “microgrow” approach, starting seeds in waves of production so there’s a constant turnover of new product. It takes about 120 days for a budding plant to grow to smokable size; but thanks to this rotational approach, growers can harvest 70 pounds of cannabis every 10 days.

Related: How Will Businesses Handle Legalized Marijuana in the Workplace?

From there, nurseries keep track of “mother” plants — genetic clones designed to keep product quality consistent — and replant the clones in small, humid rooms for cultivation. Grow rooms, designed to give just the right temperature, lighting, humidity and nutrients, then take the plants through their early stages of growth.

Once they’re mature, they’re dried, cured and trimmed by hand. Workers separate different components of the plant for different purposes, then box them up and send them to dispensaries and other companies.

Because the process is intensive and specialized, and because many of the stages are done by hand, scaling often means a proportionate increase in costs. Producing more plants means more space, more utility expenditures, more equipment and more employees to do the work. This makes it difficult to scale in a way that increases profit margins.

The profits

Speaking of profit margins, let’s explore how profitable a marijuana dispensary can be. According to Marijuana Business Daily’s 2016 Marijuana Factbook, the average marijuana dispensary or recreational store brings in about $974 in annual revenue per square foot, putting it on par with (of all places) a Whole Foods store. That makes it capable of generating far more revenue than a department store (at $180 per square foot), but far less than a luxury store (like an Apple store, at $4,799 per square foot). That’s a drop from the industry’s per square foot revenue projection, back in 2014, of $3,500 to $5,000.

The same factbook reported that 41 percent of dispensaries and stores surveyed considered themselves to be “modestly profitable,” with 18 percent claiming to be “very profitable,” 29 percent “breaking even” and 11 percent “losing some money.”

These numbers were also down from earlier projections; but wholesale cultivators have seen a brighter outcome: they’ve reported higher profits, with 29 percent reporting they have been “very profitable” and another 31 percent reporting that they have been “modestly profitable.”

Forecasts overall, meanwhile, remain optimistic. According to the fourth edition State of Legal Marijuana Markets Report (as reported by USA Today), legal marijuana sales are expected to hit more than $23 billion by 2020. Accordingly, entrepreneurs are expecting even more demand in the coming years.


Another important issue here is the possibility of shortages, which could make the industry much more complicated. Because the supply chain is new and limited (owing to its finite number of licenses and to other restrictions), California is expecting product shortages in the next few years.

For the short term, this could drive up both demand and profitability, but could also make it more difficult to enter the market. If prolonged, shortages could make it nearly impossible to introduce a new operation or grow an existing one unless you’re willing to experiment with a new approach.

The bottom line

So, is the marijuana industry a lucrative business opportunity? That depends on what you’re trying to do and how you’re doing it. Getting into the legal marijuana game isn’t a get-rich-quick scheme. Like any other business, legal marijuana entails many important fundamentals you have to learn before you can dive in.

Related: Marijuana Legalization Advocates Look to 2020 for Referendum in Florida

Some sectors, like wholesale cultivation, are more profitable and easier to enter than others, but there’s no segment of the industry that’s seeing unprecedented growth in either revenue or profit margins. Therefore, before you try to start your own business, or invest in someone else’s, make sure you understand the complexity and novelty of the supply chain, as well as the factors that may limit expansion in the cannabis industry’s future.

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The Challenges of Growing a Cannabis Business




This interview can help you understand the economic realities of starting a cannabis business.

4 min read

Opinions expressed by Entrepreneur contributors are their own.

Before migrating to the cannabis industry Amanda Ostrowitz J.D., worked as a regulator. In fact, her last job before co-founding her own marijuana company was at the Federal Reserve Bank of Kansas City.

A few years ago, Ostrowitz decided to leave the banking industry to focus on the cannabis space, founding a tech company that offers a marijuana-focused legal research platform, CannaRegs. In just a few years, her bootstrapped business grew to become a multi-million dollar firm, sought after some of the largest publicly traded cannabis companies out there.

Ostrowitz was recently a guest on Wonder Women Of Weed, a periodical show and column featuring accomplished female leaders in the cannabis industry. At one point, we (co-hosts Javier Hasse and Adelia Carillo) decided to ask her about the main challenges cannabis businesses come across as they scale.

Challenges change constantly. As soon as one gets resolved, the next one pops up, the entrepreneur explained. “I say if I go a week and nothing new (or no new problem) hits, then I must not have done anything that week. Anything you think, as a regular business person, would take you one day to do; give yourself three, because you are going to come into some new obstacles,” she said.

Scaling is a lot about giving up control. But, growing is also about taking calculated risks. Even though hiring two new employees could help you make more money, are you ready to expand your workforce? Can you afford it?

This does not mean that you won’t make mistakes because, believe us, you will. However, assessing the risk and potential reward of each move will help you minimize the bad decisions.

The banking issue

As you might be well aware, the cannabis industry faces considerable challenges related to banking. While some of the regular banking services (like checking accounts) are available for marijuana businesses, the herb’s federal illegality makes access to other services, like credit card payments processing, pretty hard.

Surprisingly, limitations apply not only to plant-touching businesses like cultivators or retailers, but also to ancillary services firms. “I’m the bank girl, the former regulator,” Ostrowitz said, pointing out that CannaRegs never touches the plant. “But, we’re still having banking issues,” she added.

“Our bank is wonderful as far as conventional banking goes, but merchant services have been extremely challenging for us lately. We take credit cards from clients and run them monthly and our merchant services provider cut us off . . . We have enough money coming in each month to pay everyone, but my challenge this week is to figure out how to get it into the bank.”


“I’ve learned that I can get anything done if I put my head to it and find the right people. But also, what I’ve learned is you can’t take someone who’s not passionate about what you’re doing and teach them to be passionate about it,” Ostrowitz said, responding to our final question about the biggest lesson she’d learned in her years as an entrepreneur. “You really sometimes have to be okay moving on and building new staff, even when that feels like a painful thing.”

But don’t worry. She concluded that training new staff and adding new people to your team is always exciting and will bring new life to your organization.

Check out the full interview in the video, produced in collaboration by Benzinga, Industry Power Women and Direct Cannabis Network.

Find more advice on how to scale a cannabis business in Entrepreneur Media’s upcoming book, Start Your Own Cannabis Business, available for pre-order on Amazon.

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Massachusetts Won't Allow Cannabis Cafes or Marijuana Home Delivery After All




For awhile Massachuesetts was considering rules that would have made it the Amsterdam of legal marijuana in the U.S. but, upon further consideration, it won’t.

3 min read

Opinions expressed by Entrepreneur contributors are their own.

Looks like the right to use marijuana outside of a private home legally is not going to become a reality anytime soon in Massachusetts.

However, legal sale of adult-use marijuana remains on schedule to start July 1, although rules governing the industry are still being drafted.

The Massachusetts Cannabis Control Commission voted in late February to delay action on licensing “social consumption” establishments for recreational marijuana. The idea of creating cannabis cafes where people can go in, buy marijuana and use it right there — like a person entering a bar and ordering a beer — proved too controversial for many of the state’s leaders.

Any action on establishing cannabis cafes was put off until the fall of 2018, with a new proposal drafted by February 2019 at the earliest. The commission also delayed allowing home delivery of recreational cannabis, another controversial issue.

Related: Cannabis Industry Likely to Employ More Than 400,000 By 2021, Study Projects

The Cafe Plan

The idea was to license a limited number of establishments with the right to both sell and allow the use of marijuana on their property. It would give consumers a place to enjoy marijuana outside of a private residence. Like every other state where cannabis is legal, public consumption of cannabis is currently prohibited.

The move also would have opened another avenue for entrepreneurs looking to get into the legal marijuana business.

A similar pilot project is underway in Denver. However, the Massachusetts plan went further. Massage therapists and yoga instructors also could have applied for a license to allow marijuana use in their establishments in the form of cannabidiol oils and other such non-psychoactive products.

The proposal would have limited how much cannabis a person could buy and use in one place at one time and give budtenders the right to cut off customers.

Related: Cannabis Industry Heads to Washington to Tell Congress What It Needs to Thrive

Hard Sell

Despite the precautions in the proposal, it proved a hard sell for state law enforcement, prosecutors, the attorney general and Gov. Charlie Baker. “The pressure campaign conducted by the governor, attorney general and others proved difficult to overcome,” Jim Borghesani, a spokesman for marijuana legalization advocates, said in an email to MassLive.

Baker opposed the legalization of adult-use marijuana, which Massachusetts voters approved in November 2016. In urging a slowdown on cannabis cafes, Baker said in February that “people should crawl before they walk and walk before they run.”

Cannabis Control Commission member Shaleen Title advocated for the delay rather than rushing it though with so much opposition. She also won approval for the idea of offering an exclusive period in which licenses for home delivery and social consumption are only awarded to microbusinesses, co-ops and applicants from communities impacted by the war on drugs.

She wanted a five-year exclusive period, but the commission did not reach agreement on the length.

Follow on Instagram to stay up to date on the latest cannabis news.

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