In this episode, host Anthony Frischknecht, the author of From Black Market To The Man, gives us a quick rundown into starting a cannabis business. Starting this business as a challenge to himself, Tony was eventually able to grow it and is now running two dispensaries with an annual revenue of $6.5M in sales. Listen to this podcast as Tony shares what to expect and what to do when starting your own medical marijuana business.
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Cannabis Or Bust
What It Takes To Start A Cannabis Business
I was thinking about what to share with you on the subject of guts and what I mean by that. Whether you have started your business, it strictly takes a lot of guts to make that step forward not just cannabis but any business. To the entrepreneur that maybe comes naturally, but for a lot of us it’s not so easy to take that leap of faith in order to better yourself, better your situation in whatever you’re trying to do. Back in 2010, I had started looking to commercialize my grow and that required me to go on the search for warehouse space. This was pretty intimidating. I had a relatively small grow setting area with only about twenty lights. I was looking to double or quadruple the area that I needed to grow commercially. I had to step into a different mindset on how I was going to find the location, but also how I was going to afford it. You started mixing both those factors and get your heart race pretty good. In 2010, there were not a lot of landlords that were renting their warehouse space. You had to go find the space and then break it to the landlord what you were going to try to do was to grow medical marijuana.
It wasn’t illegal of course, but it actually had passed in 2000 but still, there were so many people that were unaware of what was happening in the Colorado market. A lot of the times we would encounter landlords that were not willing to talk to us about working in the medical production part of the system. Needless to say, there were a few of them out there. These landlords were open to the idea, but as some of you are probably finding out, that came with a price. Once you’ve found your space, you thought you were, “I found my spot.” I remember the first spot I found, it seemed like it would fit what I was looking for was an empty warehouse. There was a lot of empty warehouse space. It seems like what’s happening in the market in the majority of the newer markets outside of Colorado and California. Everybody’s sucking up all this empty warehouse space, which is creating its own issues for other people that are manufacturers. We found this space and I remember meeting the landlord at the front of this building. There’s a nice big pine tree out front. The grass was all lush. I was so used to working out of a house. It was a challenge for my mind to get over the fact that I was going to be able to do this in a warehouse.
Not only that, but I was going to be doing it out in the open in front of neighbors and law enforcement, whoever, city officials and building department. All these things add their own little bit of stress. I meet the landlord at this little space in this commercial district and introduce himself. He seems like a pretty normal guy and he starts to open the door to the front of the building. It was odd to me as we’re walking in this office space thinking, “This could be it. This could be where I’m going to create my amazing business.” I walked in the front door and there was a space, it’s about 1,200 square feet. You could have a receptionist there and a little office off to the left with that was about 600 square feet, an executive office and then a hallway about twenty feet down to another door.You have to have a visionary in your company, whether it’s you or your partner, in order to keep it growing. Click To Tweet
They started showing this space around and all I can think about is, “Let’s get to the back. I want to see the warehouse itself.” I went through looking up at the ceiling, looking down at the ground of the carpet. It wasn’t that exciting. I said, “Can we check out the warehouse?” He said, “Sure.” We walked down the hallway past two bathrooms and the door opens up to the first space and it’s completely wide open. There’s a wall about twenty feet in front of me and the length of the room was 40×20 feet. It was a big space and I’m like, “This is looking good.”
To the left of the door, as you walk in, there’s also a little lunchroom. I’m like, “This is perfect. This is going to be great for people to have lunch.” We have that setup and we got one space. In my mind, I’m thinking the smaller room is going to be our veg area. The landlord starts talking to me. We start discussing the power and how much power they have. It’s starting to fit into what I think will work. If you guys are out there growing, the space is worth nothing unless you have the power. Usually, you have one or the other. It’s hard to have both. The reason why I picked this particular place is because it used to be an old manufacturer welding space. There was a lot of power that they were using. I’m thinking, “We’ve got some good power, this will definitely work.” You don’t just need power to run the lights. You have to have power to run the air conditioning units. They took as much power or more than the lights do back then. Now, we’re starting to get in some more efficient lights, so that’s helpful. My mind starts running on how I can lay this thing out, how we can start building our veg area. He takes me into the backspace and we walk through these two double doors open up and that space is looking probably about 4,000 square feet. I’m like, “I could put 100 lights in here. This is amazing.” My mind is racing and so was my heart at the same time.
Looking at Steve and knowing he was willing to grant me this as a marijuana grow area. I was like, “I’ve hit the gold mine.” I started looking around the back area, asking him about the actual power units. There are some big transformers over by the main box. We’re looking at that and I started talking. He probably saw it on my face, I was like, “What do you charge for a space like this?” He said, “It’s $5,600 a month.” I was like, “That’s not bad at all.” I was paying for two houses at that time and that was costing me more than this space but it was a lot of space I had to take it on. There’s a lot that I had to undertake and be like, “I’ve got to fill this out and I’ve got also find all the equipment.” I did have a little equipment. I had probably enough to fill a quarter of the space but I didn’t care. I was like, “This was going to work. I can do this.” I started talking to some details with him and we walked towards the back parking lot, which is right out the back of the warehouse store and a nice big area. That’s where we were discussing everything.
I was looking around thinking of myself, “If you’re going to do it, this is probably the opportunity to take.” I have an idea that there’s a lot of you out there that I’ve been in that position where you want to take it. It may seem a little bigger than what you can swallow at the time, but to actually take that and swallow it down and say, “I’m in.” That takes a lot of guts to do that. I know that you guys out there that you understand where I’m coming from. For the people that haven’t been through that process, I’ll tell you that it feels uncomfortable. It’s going to put you in that position where you know that uncomfort means you’re growing not only as a person but a business owner. You’re taking on more under your management and maybe more than you think you can at that time in order to expand and grow.The entrepreneur needs to look for the future of the company all the time. Click To Tweet
As entrepreneurs, we have to do that. We’ve got to see that vision of growth and fill those spaces. It’s easy to get caught up in the details of building structures of your company. The entrepreneur needs to look for the future of the company all the time. I’m sure I’m not the only one that struggles with keeping that in balance as you move forward. That’s a big part of running a company. Whether you have a partner that’s the visionary or you’re the visionary, you have to have that in order to keep growing your company. At that time, I was the visionary growing the company and taking these big leaps and steps. I want to urge you to get uncomfortable as an entrepreneur and put yourself out there as either a manager or you’re the technical type and expand your vision, expand your horizon. Leaving with you is taking that step and using your gut takes guts. I hope you enjoyed this episode. I will talk to you next time. Bye for now.
About Tony Frischknecht
Born and raised in Colorado, Anthony always enjoyed the challenge of starting and building a business. That is why it became a natural progression at the age of 25, he became an entrepreneur, with two small construction companies. In 2005, he got his start in the medical marijuana industry in Fort Collins, Colorado, building a small MJ caregiving business, Highway to Healing.
By the time he was 35, he had two dispensaries with sales of $6.5MM annual revenue, including two indoor grow facilities, with a combined 20,000 square feet of production in Denver, Colorado. All four locations consisted of 19 city and state licenses. Anthony then joined a group of five industry leaders and started a successful cannabis brand O.penvape in late 2012. The maker of vaping products and edibles posted a top-line sales of $100 million in 2016 and sells a product every nine seconds. Its busy lab creates over 1 million grams of concentrated cannabis oil a year and it buys 10 tons of marijuana a year. Organa Brands is the only cannabis company with products on the market in 10 states, including at 1,200 dispensaries. Subsequently, Anthony has moved on to other ancillary businesses involving small scale extraction and commercial grow technologies.
If you ask Anthony about his favorite part of this industry? His response, “watching how fast it is evolving. It’s becoming a real industry and getting accepted by many, many of those who used to be skeptics. “ Due to this, we are seeing great leaps in innovation and technology. And this is exactly why Anthony says he is in admiration of this industry.
Anthony has been successful in the Cannabis industry for over 14 years and has been featured on the cover of Newsweek: October 29, 2012; The New Pot Barons and Cannabis Business Times: September/October 2016; Ten Questions