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Lessons from Blunt Strategies: Effectively Launching & Growing a Cannabis Business

Laura Ginsburg and Leili Fatehi of Blunt Strategies discuss their experiences helping cannabis businesses in Minnesota grow and scale.

 

Laura Ginsburg and Leili Fatehi, Partners & Principals of Blunt Strategies, discuss their experiences with the Minnesota is Ready campaign. They share insights on navigating the unique challenges in Minnesota, such as the absence of a ballot initiative, and emphasize the importance of engaging local stakeholders in crafting legislation. They also provide advice on launching and growing a cannabis business, including prioritizing compliance, strategic communications, and building relationships within the industry and advocacy community.


Topics in this discussion:

Education and community engagement in the legalization process

Strategic communications


So I want to start off by talking about your experiences with MN is Ready. What were the biggest lessons and takeaways learned from that campaign? 

“You need to have a really strong sense of how you're going to navigate that and have the stamina to stay with it throughout the process. ”

Yeah. So, you know, we had a fundamentally different challenge here in Minnesota than in a lot of other states. A lot of other states have been able to legalize by putting the issue on a ballot. Here in Minnesota, we don't have ballot initiatives and we are a purple state. So we had to come up with a fundamentally different style of campaign in order to first get a pro-legalization legislative majority elected and then be able to put a piece of legislation through it and get it passed.

This ended up actually ending up being kind of a blessing in that it allowed for the infrastructure in this state that supported the advocacy and ultimately the policy to be led by local leaders, local business owners, local advocates. And that's reflected in, I think, the principles and just the way the policy itself ended up being written. It's really different from legalization policies in other states. So in terms of I mean, summarizing that all as what's the lesson? The lesson is that, you know, engaging local stakeholders to craft a piece of legislation is going to produce something that aligns with the values of where you are. And that ended up being, you know, something really critical in a state like Minnesota to getting something passed. Yeah. And picking up on the idea of it being a blessing in disguise to have that engagement both, you know, at the capital level as well as out with advocates and folks in our communities, we really had to focus on education. It was really a great opportunity to talk about prohibition and its pernicious results and why there was more to this than, you know, just the idea of legalizing cannabis for business reasons or, you know, adult use recreation reasons.

And it gave us a great way to have far more nuanced conversations and to really get into some of these educational components would help folks firsthand that it's about much more than just smoking weed.

So for other states who are looking to legalize, whether they sort of do things by ballot questions or not. Do you think that is ready is a replicable way of doing things? And if so, like, how would that work in those states and how is it also not replicable? And then also, where would you tell someone to start? How did you guys sort of decide to launch and then is ready? Where did that idea come from? 

Yeah. So think that the model is definitely replicable and think it actually is a really great model for some of the states that have not yet legalized that do have some of the similar dynamics and challenges that we have here in Minnesota. That being, you know, mean especially among states that have legalized through legislation, almost all have had Democratic supermajorities, not just a majority.

And so I think that there are quite a few lessons to be learned from is ready in terms of how you structure a campaign to have those community conversations and those conversations with legislators to begin softening the ground and getting everyone to a place where they can have productive conversations about cannabis and then you know how to do a campaign that gets all the way from softening the ground to doing the electoral work. You know, we set up political PACs, we did electoral spending. And then to actually putting together the piece of legislation itself, in terms of where we got the idea for MN is Ready. So Minnesota has, I think among all states, one of the longest and richest histories of grassroots advocacy in the space of cannabis. So we have had, you know, two issue-specific pro-legalization, political parties that have reached major party status so real strength in grassroots advocacy. But what was missing, was the grass tops work, the work to take that and, you know, expand it to a broader set of stakeholders, and bring sort of those competencies that are needed to then get things done at the legislature.

So when we started MN is Ready, we launched it and this has been a pro bono project for us getting cannabis legalized. We launched it because we felt like that's where we could add the most value was not in reproducing the work other people were already doing and doing really well, but to fill in those gaps and help amplify and elevate it. Yeah. And I would say where it is not replicable is in the sense that no two campaigns are ever going to be the same. So to what Leili was saying, absolutely there are some core principles and components of this model that we think are really transferable and accessible elsewhere. And we would not, you know, presume that that we could put this exact model into effective use anywhere else. You really do need to have the relationships at the grassroots levels and the grass tops levels and the patients and durability to stay with it. Because especially if you're doing it in a state where you need to go through the legislative process, every state has their own oddities of how they function and what the rules are and how votes happen.

And you need to have a really strong sense of how you're going to navigate that and have the stamina to stay with it throughout the process. So the one thing that I think is really, you know, interesting to be thinking about as other as other folks might be thinking about how they could approach this in their own states where it might seem at first blush impossible or nearly impossible is that you're going to have to really commit to being in it for the long term and looking at other models like ours, taking what's going to work for you and adapting where it's different.

Awesome. Well, it's incredible work. And it's so, so cool to see in Minnesota. And I'm hoping that other states will take the foundation of what you built and, you know, adjust it to to their needs. Switching gears a little bit to your other work in Blunt Strategies, I want to talk a little bit about what it's like to launch a cannabis business and how to best succeed and grow in that space. So for someone who's new to the industry, what are your key recommendations as that business launches, builds and grows? 

So here in Minnesota, when we are working with local cannabis businesses, you know, we largely are telling them that there's three buckets where strategically they need to be thinking. One is obviously with respect to their business plan and the compliance protocols and the importance of getting all of those things right. And here in Minnesota, we have hemp-derived THC market. A lot of the industry members are already working in that space. So it it allows, you know, for them to begin kind of setting that track record with their existing business. The other bucket is having a strong public affairs strategy. And by that we mean beginning to really develop those strong, trusted relationships with the folks that are working on the regulations, with the folks, you know, the local government, folks that are going to have an interest in this, all of these different stakeholders, because there is asymmetry of information kind of on both sides.

And right now, there's really a need among the policymakers to to have trusted people in the industry that can help them, uh, think through the implications of the rules and regulations surpassing so, you know, really playing that role of becoming kind of a leader and having that public affairs strategy.

And then the third is community engagement. The most important thing you can do as a cannabis business from a standpoint of building your brand, building that trust, and also serving your business model is to be really active and engaged both in your local community as well as with others that are in the local cannabis industry. We're seeing a lot of innovative business ideas and business model ideas being born right now because, uh, people who are interested in operating in this space are beginning to come together and brainstorm new ways of structuring their businesses and working together to really incubate a local strong industry.

You mentioned a little bit about compliance in that last answer, and I want to dive in a little bit more there. How should a company best take healthy risks while also remaining compliant? And what are some of the best tools and resources a business can kind of access while they're struggling with that issue around compliance? I know it can be a little tricky, especially state-to-state.

Yes. So, you know, the compliance planning needs to be robust and kind of holistic in terms of what are the kinds of risks you're mitigating against and what do those protocols look like. You know, it's it. Some of it is, you know, here in Minnesota is largely ambiguous because we haven't had the rulemaking yet to really set what those standards for compliance are going to be. It is going to require the local businesses to get an understanding of what are the industry best practices, what are the best practices from other states, what are the tools that are out there that are available to help you with, you know, putting together a strong compliance infrastructure and plan the place? No one should be taking risks as ever with consumer safety. That is a place to not take risks. It is both unethical and it is a bad business practice and it will get you in trouble with the law. So that is a place where we don't recommend people taking risks. There should be a strong precautionary approach that carries over to, you know, how you're managing your supply chain, all of that.

Where there are some risks, you know, especially in a marketplace that is governed by constant uncertainty and changing circumstances, there are windows of opportunity that are going to open up for people to do innovative new business practices or, you know, new products, new marketing, whatever it may be. As long as you're following that first principle of not creating risk for the consumer or for, you know, the broader community, those may be places where taking some risks pays off. I mean, this industry has really been built on people who are very good at kind of reading the letter of the law and finding those spaces that do allow for the flourishing of good ideas. But again, even in doing that, it's important to engage, you know, legal counsel and have really a plan around it. So you're mitigating your risks as much as possible. Yeah, I would say definitely cosign everything that Layla just said. And also just really, especially for folks that are just getting into the industry or are newly getting into this part of the industry budget for experts to help you.

You can never go wrong with getting a second opinion and especially with the ambiguity in laws and rule-making as we're kind of waiting for everything to roll out. As you mentioned in your question, federal and state, it's very difficult to sometimes understand if you're following rules everywhere or just somewhere. And it's never going to hurt to have a second opinion, even if for some reason you were to fall out of compliance temporarily. If you have a legal person who's helping you or some other expert and that you can at least demonstrate how you interpreted what was in, you know, written down verbatim, that's going to help you as well. So I would just say to make sure you budget for that, I think a lot of folks get excited to get in the industry and they want to focus on making products and getting out there and, you know, getting great packaging and branding. And that stuff is so important. And you really have to make sure that you are conserving in your business, plan some resources to make sure that you're not going to do all of that work only to be in trouble the second that you try to take something to sale.

In terms of budgeting other resources, as someone who is starting out in cannabis, I want to talk a little bit about strategic communications. Firstly, just what that means to you guys and what that means in the cannabis industry, and how important it is to a cannabis business that's starting out.

Yeah. So we think of strategic communications as being literally anything that you are communicating that somebody is going to hear, you should be thinking as being, you know, part of that umbrella of strategic communications.

When it comes to strategic communications, it's really exactly what it sounds like. Your communication has to be strategic. It's beyond having a great brand name or a tagline or a clever product name. You need to really be thinking strategically, especially in this space, about the fact that you're going to possibly be open to extra levels of scrutiny at legal levels, at consumer levels. And so anything that you say, whether it's on the back of a product, whether it's on your website, whether it's out of your mouth to a consumer in a store or wherever else, you need to be thinking strategically about what you're saying and why. And this isn't to scare people or make them think that they can't say anything without getting a legal opinion. But it's really thinking about, again, when you're thinking, how am I going to go to market? How am I going to safely work in this industry so that my business can grow and thrive And I don't, you know, end up getting myself in trouble or getting cut off at the past before I've even really started.

This is another space where it's a good idea to engage an expert, especially one that understands and can help translate the law and what's happening around you. And especially in an emergent market, you know, a place where like legalization is just and you're you're basically beginning to form the industry. That's when your strategic communications really has the potential to have maximum impact because the things that you are saying and who you are saying them to is going to shape the norms and the standards of the industry. It is going to shape. You know, if you're talking to the media with the public narrative and feeling is and it's going to shape the way policymakers feel about it as well. And so that's the thing that we often talk with clients about, is that, you know, when you're thinking about communications is more than just your marketing. Think about the ways as an industry leader, what you are communicating and to whom can help advance not just your interests, but those of all cannabis policy stakeholders in your state? Yeah, because effective marketing, when you're in an established industry like let's even take like the beer market, for example, you're trying to differentiate, right? Because everybody there's a, there's a common understanding, there's a common foundation and language that especially for consumers in that space and regulators and municipalities and other areas of government, they're already working at a benefit of having a shared understanding in an emergent market.

That is not always the case. It's certainly not the case in something like cannabis, where we have a lot of undoing and destigmatizing to do so. To that point, you do have to think really strategically about how, when, where you speak to whom and what you say. And again, it's not meant to scare folks from saying anything, but rather to understand that there's a huge opportunity in a space like this, and it's not something to take lightly. But I think you know, what you were saying, Laura, about the, you know, the differentiation. Think that gets to your second question, which was about the importance of having brand narratives. Now that's where you can differentiate and you should be differentiating yourself is in that brand narrative. And I think that is especially important for smaller businesses. What we did here in Minnesota, I mean, the central premise of the piece of legislation we passed was to block MSOs from coming into this state, Minnesota. We are working on fostering a local Minnesota first business, you know, an industry model that is led by local businesses, midsize to small.

And these are folks that have brand stories to tell. And it's what consumers you know, it's it's this has set the expectation of consumers in terms of what they're looking for when they want to buy a cannabis product and what allows a local company to build brand loyalty and develop a customer base against, say, a brand that's available in all 50 states and doesn't have that story. So yeah, we spend a lot of time with clients just getting them to tell us the story of their business, how they came about, what it is that they hope to do. And, and those brand stories become really important.

So when a business is starting out and they're trying to sort of start out on a really strong foot from both an operational lens and from a strategic perspective, what do they need to get started and how do they best prioritize those things, whether it's technology or systems or people or hiring someone to sort of help around strategic comms? What is the best way for people to get started and prioritize those?

Okay. So I would say there's kind of like the flashy answer, like the more fun answer of you need to be able to go to market with something that is enticing and whether and that could be, you know, whether you're a service operator or you're a grower or you're you're processing like, you know, to Leili's point, what is your story? How did you come to this? Why are you special? What are you doing that's different or what are you doing? That's very much the same. And you can bring consistency and continuity and systems because if you're telling that story correctly, you're going to get some great earned media opportunities. You're going to get folks seeking you out, You're going to be open, you know, to word of mouth and things like that. If you're not ready on the back end to meet expectations, you will cut yourself off before you've even had a chance to really start to bloom, because that is your first impression and your first opportunity to, you know, meet whatever whoever your consumer is, whether they want to bring you product, and you're going to be using commercial dryers to help them, you know, begin the processing phase or whether you are, you know, actually putting a product into a consumer's hands if you can't meet the expectations you set. They're going to go somewhere else.

This is something we think a lot about at Order.co, the ideas of operational efficiency and spend efficiency, and making sure that cannabis companies have all these infrastructures in the beginning so that as they grow in scale and if they potentially become MSOs, that they have all these systems in place so that they are ready to scale at a fast pace. So awesome to hear that you guys are aligned there. Another question in the same vein. 

When do people need to invest in kind of like having a lawyer or political relationship building or lobbying within their state? Is that something people should be doing from the from the get go of launching a company or is it something they should sort of feel more established and then start those relationships?

Yeah, I think, you know, beginning to build the relationships, that's the thing, especially building relationships within the industry and the advocacy community. That is just a thing to do. Day one, to start, as soon as you start thinking you may want to operate in this space those relationships, the knowledge you can gain from it, the connection to what is largely going to be like an important segment of your consumer base.

There's never a reason to delay doing that. In terms of engagement at a lobbying level. Again, think it's important to begin developing those relationships. You know, it becomes more important as you actually have a sense though, of what it is that you're looking for in policy-making, though of course, if you're. Helping on just general advocacy in say, the area of like that's always going to be good because you will have those relationships and that capital with those policymakers before you start coming asking for things specific to, you know, your segment of the industry or your business. And then in terms of retaining, you know, legal counsel and certainly a, you know, good cannabis expert like accountant falls into that category as well, these kinds of things. Once you start getting serious and, you know, you're going to want to put together a business plan and you're going to want to apply, you know, put together a business is going to need a license. I think the sooner the better you engage them.

I think it'll ultimately end up being a cost savings because this is a heavily regulated area and it's an area where the laws are going to continue to change. And these are professionals that will help you set up a business that has the durability and the flexibility to both allow you to flourish now, but also be planning for what changes may be coming in the marketplace so that you can adapt to those.

Well, this has been incredibly informative. I so appreciate you both sharing all of your expertise and advice. I think this will be incredibly helpful for cannabis businesses who are starting out. So thank you both for your time today and hopefully this will be an ongoing conversation and we can kind of get into more nitty gritty later on.

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