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Recreational marijuana approved in three states, read this before dreaming of opening up shop

(FINANCE NEWS) With recreational marijuana legalization passed in three more states, you might be thinking now is a great time to launch that lucrative pot business. But first you need to consider the following.

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Slow your roll, pal

With recreational marijuana legalization passed in three more states (CA, MA, NV), you might be thinking now is a great time to launch that lucrative pot business. But first you need to consider how you’re going to deal with all the money.

bar

All dressed up with nowhere to go

Banks in Colorado still don’t offer most services to businesses in the marijuana industry because of the clash between legal state and illegal federal marijuana regulations. With the federal ban, banks are reticent to become involved; they have to comply with federal banking laws and report back how they obtain their money. 

According to Pew Charitable Trusts, 40% of marijuana operations in Colorado don’t even have bank accounts. Those who do use banking services are limited to opening checking accounts. 

Federal banking regulations make it impossible for pot businesses to use credit or debit cards. As a result, businesses are finding themselves with piles of cash and nowhere to put it.

Some companies are opening shell businesses to make their money look more accessible to the banks. “There are large amounts of cash floating in the system that makes money laundering very easy,” said Colorado Attorney General Cynthia Coffman, who is working to convince federal regulators to allow the banks to work with marijuana businesses in states with legalization.

Safety first

The high-volume cash flow is cause for concern. This year, dispensaries in Oregon have already sold $160 million worth of marijuana productions.

With that much revenue in cash, businesses have an increased risk of burglary.

Niche security companies specializing in protecting marijuana operations have sprung up in Colorado, Washington, Oregon and California; part a cash-heavy dispensary business plan has to be armored vehicles and bulletproof glass.

In Oregon and Washington, a company called PayQwick has developed a cashless intermediary that facilitates sales. The company calls itself a “money transmitter” and is registered federally. Sprout News asked PayQwick founder and CEO Ken Berke how his platform is legal when every other way seemingly is not.

“So, if this is all possible under current statutes, why has no one else managed to pull this off? The answer to this is the very source of Berke’s confidence in his growing business: it’s possible yes, but damn-near impossible. ‘One, the software platform is no easy trick,’ Berke begins. ‘It’s very complicated. Number two, getting licensed to do what we’re doing is no easy feat either. It’s a long, arduous process. You need a full Bank Secrecy Act and Anti-Laundering Control Act compliance program to do it. There is a lot of brain damage that is involved in trying to do what we’re doing.’”

Oregon’s sales reflect the obvious boon that a “weed PayPal” service could be. The question remains why more dispensaries have not caught on.

If you’re thinking about developing your own dispensary or marijuana brand, now is the time; but don’t forget to consider how to protect yourself and facilitate your business in a new economic era.

#CanniCashFlow

Becky Nathanson is a Staff Writer at The American Genius. She has a Master's degree in music from Indiana University and a Bachelor's degree in music and creative writing from the University of Michigan. In addition to writing, she has performed as an opera singer on major international stages. When she isn't making her voice heard by pen or in song, she is a serious amateur chef.

Business Finance

First impressions matter – how to win over investors immediately

(BUSINESS FINANCE) Impressing investors is nerve-wracking, but these tips can help you to nail your first impression.

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Going in for your first pitch meeting with investors can be nerve wracking—especially if you haven’t yet met these investors in person. Fortunately, if you land a solid first impression, you can set the right tone for the meeting, and make the rest of the presentation a little easier on yourself.

But why are first impressions so important, and how can you ensure you make one?

Let’s start with a recap of the benefits of a strong first impression:

  • A reputation framework. Our brains are wired to make quick judgments about our surroundings. Accordingly, we tend to judge people based on our first interactions with them, with little opportunity to change those initial judgments later on. If you strike investors as a smart, likeable, and capable person early on, they’ll see your pitch deck in a whole new light.
  • Memorability. First impressions stick with people. If yours stands out from the other entrepreneurs pitching these investors, they’ll be more likely to remember you, specifically, and therefore may be more likely to eventually fund your project.
  • Personal confidence. If you know you’ve nailed the first impression, you’ll feel more confident, and as you already likely know, confidence makes you a better public speaker. You’ll speak more deliberately, more passionately, and with fewer mistakes.

So how can you make sure you land this impression?

  • Arrive in a nice vehicle. Show up in a luxury vehicle, or at least one that’s been recently detailed, sends a message that you’re already successful. This isn’t a strict necessity, but it can speak volumes about what you’ve already achieved, and how you might look when you drive to meet your future clients.
  • Dress for the occasion. Along similar lines, you’ll want to dress nicely. You don’t need to have ridiculously expensive clothes, but you should wear standard business attire that fits you properly and has no signs of wear. It’s also a good idea to get a haircut, shave, wear tasteful makeup, and make other small touches that improve your overall appearance.
  • Smile. Smiling is contagious, and it instantly makes you more likable. Don’t force a grin (or else you’ll look like a robot), but do flash a genuine smile as often as appropriate during the first few minutes you meet your prospective investors.
  • Use your investors’ names. When you speak to your investors, try to address them by name as often as possible. People love to hear the sound of their own names, so it might help you win their favor. As an added bonus, it will help you reinforce your association with their name and face, so you eliminate your risk of calling someone by the wrong name later on.
  • Warm up with something personal. It’s tempting to get down to business right away, especially because your investors’ time is limited, but in most cases, it’s better to warm up with something personal—even if it’s only a few lines of a conversation. Tell a funny joke you heard earlier in the day, or share an anecdote about how your morning has been going. It makes you seem more personable and charismatic.
  • Find a common link. If you can, try to find something in common with each of your prospective investors. You might comment that you got your tie at the same place they did, or that you use the same type of pen. Look for subtle clues about their personalities, lifestyles, and hobbies, and forge a connection through those channels. People disproportionately like other people like them, so the more commonalities you can find with your prospective investors, the better.
  • Watch your posture. Your posture says more about you than you might think. Keep your back straight with your shoulders back, and walk confidently with your hands out of your pockets. This is crucial for projecting confidence (and feeling it internally as well).

If you can land a great first impression, you’ll set the stage for a killer presentation—but don’t think you’re out of the woods yet. You still need to make sure you have a fantastic pitch deck in place, and enough knowledge on your startup idea to handle the toughest investor questions. If this is your first pitch, don’t worry – it does get easier – but the fundamentals are always going to be important.

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Business Finance

Parody on capitalistic currency highlights cryptocurrency’s appeal

(FINANCE) This goofy parody showcases why traditional currencies are mocked while cryptocurrency solves some inherent problems with finance.

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In a video parody of capitalism by Hello Generic, actors poke fun at what makes capitalistic currency so principally ridiculous. While the parody itself is clearly geared toward traditional currency, it also inadvertently makes a strong case for cryptocurrency and why people are putting their faith into it.

In the video, the actors are stranded on an island on which they attempt to establish an economy. The first action that they consider is using coconuts as their form of currency—an idea that is quickly overshadowed by the notion of using seashells to represent the coconuts (clearly a jab at the idea of a federal reserve). The video then explores how easily concepts like inflation and debt can develop completely regardless of the wishes of the people; since the coconuts (read: gold) aren’t actually being used, it’s all too easy to grab a few more seashells than are backed.

It’s no secret that many people in America don’t trust the government not to screw up their money, which is why it’s also not surprising that so many people are turning to cryptocurrency as an investment vehicle.

Cryptocurrency certainly has its drawbacks – it’s volatile, unprecedented, whimsical, and subject to influence by completely unpredictable circumstances – but it’s also easy to see why some view it as safer than traditional money.

Since cryptocurrency is decentralized, one mustn’t worry about its value depreciating because of politicians or failing international relations, nor do people have to stress over its value becoming inflated or manipulated by governments.

Similarly, cryptocurrency has a definitive cap on how much can be sold. Since there is a limited number of cryptocurrency tokens available at any given time, borrowing more than is available isn’t even an option; instead of grabbing a seashell whenever you want to spend or buy more than you can, you’re rightfully stuck with your finite number of coconuts.

To make the claim that cryptocurrency is more stable than traditionally capitalistic currency would be absurd, but cryptocurrency is definitively less susceptible to the same problems that make our currency as unstable as it is. Given the government’s past usage of our currency (usage that has led to our country’s massive debt) it’s no wonder that more people are turning to a government-free form of finance.

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Business Finance

How small companies can compete with free shipping

(BUSINESS FINANCE) When running a smaller shop online, how can you compete with free shipping from giants like Amazon that can afford it?

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It’s hard enough for small businesses to compete with big retailers. But online shops also have to consider the additional cost of shipping. With stores like Amazon and Walmart.com offering very cheap or even free shipping, how is a smaller shop to compete?

Shopify, an e-commerce platform for online shops and point-of-sale-systems, posed this question to Thea Earl, product manager for Shopify Shipping. On the AskShopify blog, she offered some tips for managing shipping costs.

First, Earl points out that while “free shipping is an excellent marketing tool,” if you can’t afford to offer free shipping, it helps to offer a “really clear flat rate.”

Customers who think they’re getting a good deal may balk if they’re surprised by an exorbitant cost to ship. If you can consistently offer a flat rate, and let the customer know right off the bat, they’ll “know what to expect when they hit checkout” and won’t get sticker shock at the last minute, causing cart abandonment.

If you want to offer free or very cheap shipping, consider raising the prices of your products, even by a dollar or so, to help cover delivery costs. Note the ratio between the profit margin and the cost to ship.

Perhaps for highly profitable items, you can afford to absorb the shipping costs, while slightly raising the prices of less profitable products to offset the balance.

Lastly, Earl realizes that small business owners have no control over whether or not a carrier raises its prices to ship.

You do, however, have control over the packaging. Be smart about the types of packaging you use. Measure products and buy envelopes and boxes that are just the right size to save money on weight.

Paper and poly envelopes are lighter, and therefore usually cheaper than cardboard boxes. Also, Earl points out that most carriers have at least a few options for free packaging. Utilize these free options whenever you can.

And of course, you could always join a group like Shopify to take advantage of their bulk mailing partnerships with carriers like UPS, USPS, and DHL.

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