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Md. cannabis industry may lure ‘pick-and-shovel’ entrepreneurs

Shad B. Ewart, chair of the Anne Arundel County Community College Business Management Department. He teaches a class on entrepreneurial opportunities in emerging markets including the cannabis business. (Bryan P. Sears)

Shad B. Ewart, chair of the Anne Arundel County Community College Business Management Department. He teaches a class on entrepreneurial opportunities in emerging markets, including the cannabis business. (Bryan P. Sears)

OCEAN CITY — Maryland’s fledgling medical cannabis industry could open the door to entrepreneurs who would cater to highly regulated growers processors and dispensers, according to the chair of the Department of Business Management at Anne Arundel County Community College.

As the state edges closer to serving its first medical cannabis patient perhaps later this year, experts say the industry will create a “green rush” of jobs not only for highly regulated businesses but for nearly unregulated ancillary businesses.

“In the gold rush in the 19th century, there were some people that made money by finding some gold nuggets, but the people who made the most money were the people who sold the picks and shovels,” said Shad B. Ewart, who teaches a class in entrepreneurial opportunities in emerging markets. “The picks and shovels are all of those supporting businesses on the outside.”

Ewart estimates the new medical cannabis industry could create upwards of 2,400 ancillary jobs. More if the state were to legalize recreational use of the drug.

Ewart made his remarks during a session at the Maryland Association of Counties annual conference.

First created in 2013, the medical cannabis program has been hobbled by missteps and litigation.

Earlier this year, the Maryland Medical Cannabis Commission awarded the state’s first of 15 grower licenses to Stevensonville-based ForwardGro. Eight more grower licenses along with four processor licenses were issued earlier this week. More than 100 dispensaries could also be licensed in the state.

And even if licenses were to become available, the sheer expense would freeze out many people, including his students, Ewart said.

“This is what I encourage my students to do in class when they don’t have the economic wherewithal — 18, 91 20 year olds — to try and get some of these licenses here,” Ewart said.  “So what I encourage them to do is look at those picks and shovels, those ancillary jobs.”

Computer tech, security — electronic and physical — agricultural supplies, HVAC, plumbing, lighting, electricians, packaging, and business systems.

“Yes, this is a controversial topic. Yes, we are talking about a plant that has a psycho-active element to it, but these are businesses. These are people who need to hire people. They need to fire people. They need to account for stuff. They need to market. They need accounting, and they need human resources, as well. ”

Those businesses will also need insurance, banking and payroll services and retirement plans for employees.

Some of the new cannabis businesses have acknowledged the struggles of getting started, particularly in the finance area.

“It was hard to find a banker,” said Gail Rand, chief financial officer for ForwardGro. “We do have one and I’m glad about that.”

Rand said she is only aware of one bank — Severn Savings Bank — that will work with businesses in the cannabis industry.

“There’s a lot of restrictions around our banking relationship that we’re working through,” Rand said.

For example, Rand said, her company can’t write checks but can pay employees and vendors through electronic withdrawals.

Despite being legal for medicinal purposes in Maryland and other states, the drug is illegal by federal law.

ForwardGro has a payroll company and plans to pay employees via direct deposit, but Rand said she knows she’ll eventually encounter an employee who will not want to be paid that way.

“We’ll figure it out,” she said.

Rand added that a reluctance to work with businesses in her industry has made it more difficult to provide benefits such as retirement plans. She said ForwardGro did eventually find someone to provide a 401(k) program but that the rates for their plans were not competitive.

Ewart, the business professor, said that gray area where states are legalizing some use of the drug despite federal restrictions will continue to pose a risk for the industry. He said comments made by U.S. Attorney General Jeff Sessions have raised questions about whether the federal government will crack down on businesses in states where marijuana has been legalized.

“There’s a sword of Damocles hanging over this,” Ewart said. “An isle of illegality in a sea of legality. I can’t tell you how it is going to go.”

Still, Ewart remains upbeat about the industry and its potential to create ancillary jobs.

“I would say it’s going to be positive,” Ewart said.

 

 

 

 

 


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