Starting a Cannabis "Micro Business" in Massachusetts

[joer1212]

Would this be a good personal investment?

My brother claims all I have to invest is about 30k for lawyers' fees, licensing and other expenses. He will purchase the commercial property for the business. He needs me because only someone with a net worth of over 500k, with a clean criminal record, can apply.

My issues are:

a) I have a civil service job in NY (not law enforcement). I'm not sure if I'm allowed to be involved in a federally-illegal business. Don't want to ask my employer and be on his radar.

b) I'm skeptical of the profit potential of such a business, as well as the thorny legal/logistical pitfalls of running such an operation (I have no business experience whatsoever, but my brother has run 3 mildly successful barber shops in the past).

My brother always texts me articles about the vast sums of money being made by cannabis entrepreneurs in Massachusetts. He says we are "missing the boat". He told me that in 3 years, the market will be saturated and the profit potential will not be as great as it is now.

I'm currently invested in a classic index fund portfolio, and have been doing fairly well because of the rising market in the last few years. I'm skittish about upsetting the apple cart. But 30k seems like a modest sum for the chance to potentially make 100k+/yr (my cut will be less than my brother's because he will be investing more than I will).

I have an appointment to talk to my brother's lawyer in Massachusetts on the phone on Tuesday. I have a list of questions I'm going to ask before I even consider this. Was wondering if anyone here knows anything about this industry and the pitfalls to avoid.

Thanks

FYI: A "micro business" consists of a small cannabis retail operation subject to certain volume and revenue restrictions.

[ILikeDividends]

#1) I know nothing about the cannabis industry, except that it is illegal at a federal level.

#2) I personally believe cannabis will become legalized at the federal level fairly soon.

If I'm correct in my assumptions, once it becomes legal, at a federal level, you will have Costco-sized, Walmart-sized, Amazon-sized, etc., operations pursuing that new market with total aggression.

In that context, what chance does a "local" enterprise in that market have to compete with the gigantic economies of scale that will pounce on that new market as soon as they can?  It reminds me of local bookstores getting crushed by, first, Barnes & Nobles, and then Amazon.

In other words, do you shop for your lettuce based on the brand of the lettuce producer, or based on price?  It will be the same with cannabis, once it's legalized.

In the end, cannabis is just another commodity; just like lettuce or pork bellies.

[joer1212]

#1) I know nothing about the cannabis industry, except that it is illegal at a federal level.

#2) I personally believe cannabis will become legalized at the federal level fairly soon.

If I'm correct in my assumptions, once it becomes legal, at a federal level, you will have Costco-sized, Walmart-sized, Amazon-sized, etc., operations pursuing that new market with total aggression.

In that context, what chance does a "local" enterprise in that market have to compete with the gigantic economies of scale that will pounce on that new market as soon as they can?  It reminds me of local bookstores getting crushed by, first, Barnes & Nobles, and then Amazon.

In other words, do you shop for your lettuce based on the brand of the lettuce producer, or based on price?  It will be the same with cannabis, once it's legalized.

You touched on something that my brother always mentions about this business.
He claims we have about a 3-year 'window of opportunity', where we can make a lot of money, before "the big boys" move in and monopolize the market. But, even then, we will be specializing in high-end "boutique" quality cannabis, not run-of-the-mill product. That's our angle in this business. Big corporations will likely be inclined to produce quantity, not quality. Even if they eventually caught up, and we only lasted 5 years in this business, it would still be a victory for us.

[ILikeDividends]

As a resident of California (where recreational cannabis is legal, and "local" growers are scaling up remarkably quickly in my very city) I can tell you with certainty that "quality" has nowhere near a 3 year time lag.  All you need is real estate, seeds, fertilizer, electricity, the legal cover, and one growing season (which is much less than a year, indoors), and you are off to the races.

Again, ask yourself, given identical quality, do you shop for lettuce based on brand or based on price?

Cannabis will be dominated by scale, not by brand.

[flipboard]

Would this be a good personal investment?

My brother claims all I have to invest is about 30k for lawyers' fees, licensing and other expenses. He will purchase the commercial property for the business. He needs me because only someone with a net worth of over 500k, with a clean criminal record, can apply.

My issues are:

a) I have a civil service job in NY (not law enforcement). I'm not sure if I'm allowed to be involved in a federally-illegal business. Don't want to ask my employer and be on his radar.

To paraphrase: you're evaluating a high risk plan.

b) I'm skeptical of the profit potential of such a business, as well as the thorny legal/logistical pitfalls of running such an operation (I have no business experience whatsoever, but my brother has run 3 mildly successful barber shops in the past).

My brother always texts me articles about the vast sums of money being made by cannabis entrepreneurs in Massachusetts. He says we are "missing the boat". He told me that in 3 years, the market will be saturated and the profit potential will not be as great as it is now.

I'm currently invested in a classic index fund portfolio, and have been doing fairly well because of the rising market in the last few years. I'm skittish about upsetting the apple cart. But 30k seems like a modest sum for the chance to potentially make 100k+/yr (my cut will be less than my brother's because he will be investing more than I will).

But, despite high risk, you haven't actually evaluated a proper business-plan, and you're going off handwavy numbers?

I know very little about this trade (and have little interest), but I seem to remember seeing an article about similar shops elsewhere in your country. The summary seemed to be they have to spend lots of money on physical security, both because of the goods involved AND also because of money handling issues (banks don't like you, dealing in cash, etc.).

This actually sounds like one of those classic cases where people suddenly become interested in too-good-to-be-true hairbrained schemes because of the prospect of fast money. Maybe there is money to be made, more likely the probabilities are considerably overstated.

[joer1212]

As a resident of California (where recreational cannabis is legal, and "local" growers are scaling up remarkably quickly in my very city) I can tell you with certainty that "quality" has nowhere near a 3 year time lag.  All you need is real estate, seeds, fertilizer, electricity, the legal cover, and one growing season (which is much less than a year, indoors), and you are off to the races.

Again, ask yourself, do you shop for lettuce based on brand or based on price?

Cannabis will be dominated by scale, not by brand.

Even if this is true, when we obtain a state cannabis license, we will be 'locking in' the right to open 3 micro businesses in different locations in a town in Massachusetts. So, we will have protected territories. Micro businesses will also have the exclusive right to do deliveries throughout the state.

[ILikeDividends]

As a resident of California (where recreational cannabis is legal, and "local" growers are scaling up remarkably quickly in my very city) I can tell you with certainty that "quality" has nowhere near a 3 year time lag.  All you need is real estate, seeds, fertilizer, electricity, the legal cover, and one growing season (which is much less than a year, indoors), and you are off to the races.

Again, ask yourself, do you shop for lettuce based on brand or based on price?

Cannabis will be dominated by scale, not by brand.

Even if this is true, when we obtain a state cannabis license, we will be 'locking in' the right to open 3 micro businesses in different locations in a town in Massachusetts. So, we will have protected territories. Micro businesses will also have the exclusive right to do deliveries throughout the state.

I don't believe you've thought this through to a possible federal legalization scenario.  I.e., once cannabis is legal at a federal level, it can be shipped via the post office or other common carriers (UPS, FedEx, etc.) Your state sanctioned "monopolies" will instantly become worthless when that happens.

Amazon, Costco, Walmart, etc., will all be able to compete with you on price and economies of scale.

[Frankies Girl]

https://forum.mrmoneymustache.com/ask-a-mustachian/would-you-invest-in-this-business/
YOUR thread from last year on this same subject, went over 3 pages.

This fucker is a troll.

No, I'm not. My brother was actually here, and he asked me to post that question. I've already decided that I'm not going to invest in the cannabis business, because there are just too many variables and uncertainties (and because I didn't like the vague response the manager gave to my email. It made me lose faith in his abilities. A more professional response would have been "you would need to seek the advice of a lawyer to answer some of your questions"). Despite the fact that I'm out, I think my brother asked a valid question.

Oh for fuck's sake. That's YOUR WORDS from the thread above last year. That's pages of folks that are apparently way better at management, business and even in the grow field - all telling you your brother is a dufus and no, he's dead wrong and he's also not allowed to even be involved legally in this type of business. Just go set your money on fire as that's as likely to see the returns as anything involving your brother.

The fact that you are still trying to talk yourself into thinking this is a good idea means you're being seduced by greed and losing focus of the actual facts. This is classic grifter/scam artist shit dude. Your brother is playing you, and you're letting yourself be played. He is not a competent business person and in any case he is not capable of running THIS type of business because he is a felon. Anything else you think, feel, whatever - it's all bull and you need to shut him down HARD the next time he brings this shit up and stop deluding yourself that you may have found a get rich quick scheme.

To summarize for everyone not familiar with the older thread the OP started LAST YEAR: The brother has a terrible work/money history, is a convicted felon, and legally not allowed to be involved in the business and wants the OP (and his elderly parents) to be the frontman/money supplier  - the brother brings NOTHING into this business venture other than his illegal activities experience and his stoner grow buddy who ALSO IS A CONVICTED FELON and not allowed to legally be involved per the long ass discussion on this SAME FUCKING SUBJECT PER THE LINK ABOVE MADE LAST YEAR. And OP needs security clearance and may not be allowed himself to be in a grow business legally - but especially should not enter into a business under the table with two convicted felons.


Seriously OP, if you're a troll, this is really awesomely troll-y because you're double dipping with this new thread. Kudos for such an enticing subject and getting folks riled up again!

If you're not a troll - please go back and read the thread you made last year, think about the fact that your brother is harassing you all this time trying to get YOUR money and reputation and legal standing to front him - a felon who has a terrible, horrible track record in every way. It just makes no logical sense.

[MrThatsDifferent]

https://forum.mrmoneymustache.com/ask-a-mustachian/would-you-invest-in-this-business/
YOUR thread from last year on this same subject, went over 3 pages.

This fucker is a troll.

No, I'm not. My brother was actually here, and he asked me to post that question. I've already decided that I'm not going to invest in the cannabis business, because there are just too many variables and uncertainties (and because I didn't like the vague response the manager gave to my email. It made me lose faith in his abilities. A more professional response would have been "you would need to seek the advice of a lawyer to answer some of your questions"). Despite the fact that I'm out, I think my brother asked a valid question.

Oh for fuck's sake. That's YOUR WORDS from the thread above last year. That's pages of folks that are apparently way better at management, business and even in the grow field - all telling you your brother is a dufus and no, he's dead wrong and he's also not allowed to even be involved legally in this type of business. Just go set your money on fire as that's as likely to see the returns as anything involving your brother.

The fact that you are still trying to talk yourself into thinking this is a good idea means you're being seduced by greed and losing focus of the actual facts. This is classic grifter/scam artist shit dude. Your brother is playing you, and you're letting yourself be played. He is not a competent business person and in any case he is not capable of running THIS type of business because he is a felon. Anything else you think, feel, whatever - it's all bull and you need to shut him down HARD the next time he brings this shit up and stop deluding yourself that you may have found a get rich quick scheme.

To summarize for everyone not familiar with the older thread the OP started LAST YEAR: The brother has a terrible work/money history, is a convicted felon, and legally not allowed to be involved in the business and wants the OP (and his elderly parents) to be the frontman/money supplier  - the brother brings NOTHING into this business venture other than his illegal activities experience and his stoner grow buddy who ALSO IS A CONVICTED FELON and not allowed to legally be involved per the long ass discussion on this SAME FUCKING SUBJECT PER THE LINK ABOVE MADE LAST YEAR. And OP needs security clearance and may not be allowed himself to be in a grow business legally - but especially should not enter into a business under the table with two convicted felons.


Seriously OP, if you're a troll, this is really awesomely troll-y because you're double dipping with this new thread. Kudos for such an enticing subject and getting folks riled up again!

If you're not a troll - please go back and read the thread you made last year, think about the fact that your brother is harassing you all this time trying to get YOUR money and reputation and legal standing to front him - a felon who has a terrible, horrible track record in every way. It just makes no logical sense.

Ha ha busted!

[joer1212]

As a resident of California (where recreational cannabis is legal, and "local" growers are scaling up remarkably quickly in my very city) I can tell you with certainty that "quality" has nowhere near a 3 year time lag.  All you need is real estate, seeds, fertilizer, electricity, the legal cover, and one growing season (which is much less than a year, indoors), and you are off to the races.

Again, ask yourself, do you shop for lettuce based on brand or based on price?

Cannabis will be dominated by scale, not by brand.

Even if this is true, when we obtain a state cannabis license, we will be 'locking in' the right to open 3 micro businesses in different locations in a town in Massachusetts. So, we will have protected territories. Micro businesses will also have the exclusive right to do deliveries throughout the state.

I don't believe you've thought this through to a possible federal legalization scenario.  I.e., once cannabis is legal at a federal level, it can be shipped via the post office or other common carriers (UPS, FedEx, etc.) Your state sanctioned "monopolies" will instantly become worthless when that happens.

Amazon, Costco, Walmart, etc., will all be able to compete with you on price and economies of scale.

That's where the "window of opportunity" comes in. We have a few years before that happens.

[2Birds1Stone]

Trolls gonna troll.