As we’ve covered previously, Pasadena, California’s cannabis business application works slightly differently than other cities across the state. Most cities ask for a cannabis operator to submit their site details. Cannabis real estate is one of the most important aspects of a licensing application in most municipalities.
However, Pasadena has opted to vet operators before moving on to Phase 2, during which potential licensees will be asked to submit their location details. The City will be using a merit-based approach in selecting which applicants will have the opportunity to pursue permits.
The deadline to submit your application is 11:59 p.m. on January 31, 2019. Therefore, you should be putting the finishing touches on your Phase 1 materials. According to our experts, the city of Pasadena will be paying close attention to the following criteria.
Prove you have the funding
Pasadena’s cannabis regulators will be reading your application closely to make sure you have the capital to back up your venture. We estimate you will need at least $2 - 3 million on hand as a cannabis retailer or cultivator. This is due to a few key factors:
High real estate mark-ups. Real estate price in the Pasadena area have shot up two to three times the normal value.
Operating expenses. Show that you can cover at least six months of operating costs and build-up costs before your venture opens. We estimate that an operator should budget $500,00 - $1M for your initial operating budget.
Contingency fund. Pasadena will be looking for you to build a safety net in case anything goes wrong. Show you have a savings account to dip into if need be.
Team up with an existing operator
Your best bet for making it through the first round of Pasadena’s screening is to team up with a local operator who has been licensed in the past and knows how to comply with changing regulations. Though California’s market is still pretty nascent, try to find someone who has as much legitimate experience as anyone can have in the state. Remember, section four of the application specifically asks for “Qualifications of Owner and Operators.” Finding someone with industry experience is of paramount importance to your application.
Focus on community benefits
As California’s cannabis market matures, more and more cities are scrutinizing the community benefits plan. Pasadena, like many other local governments in California, is interested in how operators will be involved in giving back. While donating money is always welcome, go a few steps beyond to stand out from the crowd. There’s more pressure than ever on applicants to show a willingness to give back to the community.
Cannabis operators should consider the following options to include in their community benefits plan:
Start a community initiative. Again, while nobody will say no to free money, initiatives show a lot more commitment to community improvement.
Focus on education. Offer seminars for adult-learning, fund an after school program, or do something to benefit learning. Public education is perennially underfunded across the US, so recognizing that you can use your profit for good goes a long way in the eyes of application reviewers.
Work with a local nonprofit. Try to find a nonprofit with a strong presence of visibility that does not receive much government funding. This can be difficult. Nonprofits that do receive government funds or have high visibility often don’t wish to collaborate with a cannabis operators, as cannabis may be perceived negatively by their donors. Some cannabis operators avoid this awkward conversation by establishing their own nonprofit. Then, you can either filter your community benefits plan through your nonprofit, or your nonprofit can partner directly with an established organization.
Start a cannabis incubator. Clearly, it’s expensive to get involved in the cannabis industry. Application fees alone present a high barrier to entry for many small cannabis business equity applicants. Consider setting up an incubator program specifically for the cannabis industry people who want to get involved but can’t afford to.
A few other tips about your community benefits plan: though it’s a good idea to be creative, make sure you keep an eye on the feasibility of your plan. Pasadena’s council will be scrutinizing your plan to see how carefully you’ve thought through the details. What business model will you use to implement your plan? Do you have the fund set aside to get this plan up and running? Consult with an expert to make sure what you’ve proposed is even possible.
Last but not least, review the application requirements to make sure you know exactly what you need to submit on time.