MJBizMag September 2022 - 44

STRENGTH AT ANY SIZE
businesses to one of each license type.
That means that a business can have
only one retail store, preventing that
operator from dominating the state's
retail landscape.
Another increasingly common
strategy used by regulators to buoy
small-business participation in the
cannabis industry is offering micro
or small-business licenses. States that
already offer such licenses include
California, Massachusetts, Michigan,
New Jersey and New Mexico. Several
other states also plan to offer or are
considering offering microbusiness
licenses, including Connecticut,
Illinois, New York, Vermont and
Virginia.
Microbusiness licenses are often
significantly less expensive than
regular licenses. For example, when
Eric Parkhurst, CEO of Winewood
Organics, a vertically integrated
microbusiness in Ann Arbor,
Michigan, was still a caregiver,
his planned path to the state's
recreational marijuana market was
to start in the medical market with a
cultivation, manufacturing and retail
license that together would have cost
him close to $170,000.
While he estimates those three
business licenses would cost around
$100,000 today, that's still far more
than the $8,000 fee he paid for a microbusiness
license, which also allows
him to be vertically integrated.
Even as microbusiness licenses
make it more affordable to break into
the industry, in many states they also
come with limitations, such as caps
on how many plants can be grown,
limits or prohibitions on wholesaling
to other businesses and residency
requirements.
" Instead of leveling the playing field,
it gives us a whole different field to play
on, " Parkhurst said of microbusiness
licenses. " I don't think we can try to
compete with what (larger players are)
doing with the prices. We just tried to
do it differently. "
44 September 2022 | MJBizMagazine
Winewood Organics in Ann Arbor, Michigan, saved more than $150,000 in licensing fees
by operating as a microbusiness. Courtesy Photo
Indeed, microbusiness license
holders and other industry observers
say that while the microbusiness
licenses make it easier to break into
the industry, they do little to solve the
problem of how small businesses can
stay in the industry, much less succeed.
" Saying that a microbusiness license
is going to help small cannabis companies
compete with larger cannabis
companies is a joke, " said Chris Cox,
principal consultant at BeGreenLegal
in Sacramento, California.
In California, microbusiness licenses
require holders to operate three
types of businesses from a selection
that includes cultivation, processing,
distribution and retail. The license
types are far less costly than regular
licenses-roughly $4,000 versus
$20,000.
" Compared to the cost of just getting
into the industry and starting a viable
business, saving $20,000 annually on
your license is a drop in the bucket, "
Cox said.
Alicia Wingard, co-founder and chief
operating officer of marijuana retailer
Flora Terra in Santa Rosa, California,
agrees that microbusiness licenses make
it easier to break into the industry, but
they don't make it any easier to compete-especially
against larger players.
" We don't have deep pockets, "
Wingard said. " There are huge
companies out there that are willing to
work on razor-thin margins, because
they can. We have cultivation, sales-
the whole gamut-and it can be very
expensive. "
Falling cannabis prices have hurt
even more. Flora Terra based its
business model on pounds of flower
selling for no less than $1,400, but
1 pound today fetches only $800.
Now, Alicia and David Wingard, cofounder
and CEO, are considering giving
up their microbusiness license and
pursuing more retail licenses, believing
that is a better path to success.
" When we have additional stores,
we'll be able to generate more revenue
that way, " Alicia Wingard said.
Parkhurst of Winewood Organics, on
the other hand, couldn't be happier.
" I'd like to stay small because I really
like what I'm doing. It's my dream job.
My day is growing, processing and then
the retail-it's all of those things all at
once. I don't know if growing into a
traditional business sounds that much
fun to me, " Parkhurst said.

MJBizMag September 2022

Table of Contents for the Digital Edition of MJBizMag September 2022

MJBizMag September 2022 - 1
MJBizMag September 2022 - 2
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