Traditional business consulting is well-suited to traditional businesses. After all, they’ve evolved hand in hand for more than a century. Heavily regulated cannabis, however, is another story.
Launching a cannabis business and keeping it primed for growth quickly can prove overwhelming. There are so many crucial systems to sort—supply chain logistics, manufacturing standard operating procedures, inventory management, human resources, payroll—and so little time to figure out what works best.
Mainstream business consultants have developed a one-size-fits-all structure that covers the basics, but cannabis consulting requires a more holistic approach to business operations. The industry has a uniquely wide variety of different regulations from state to state, not to mention an ever-growing number of business services on offer.
It’s no secret businesses are willing to invest a lot of money in consultancies. The field generated about $132 billion worldwide in 2020 alone. This is because of a symbiotic relationship that has gradually developed between consultants and business executives since the nineteenth century, when scientific principles of ordered structure (think divisions and subdivisions) were first applied to business-management practices.
Over time, traditional business consulting became highly siloed, thanks in part to financial regulations put in place after the Great Depression and in part due to a mid-century shift away from recommending specific structures in favor of detailed strategies for every aspect of a business. Today, business consulting typically adds value for executives by giving them access to very specific knowledge and research.
In young, rapidly developing industries, however, founders may get the most benefit from a specialty-agnostic consultant. A holistic, results-based approach to business consulting links leadership to a wide variety of solutions that can be tailored to each company, saving both time and money.
What does holistic consulting mean? It means understanding the big picture. Cannabis regulations are extremely granular and varied between states, and businesses, particularly multistate operators, likewise vary in both structure and strategy.
For example, take the wildly different regulatory landscapes that exist in an established cannabis market like Washington state, which prohibits vertical integration of cultivation, processing, and retail operations, versus a newer market like New Mexico, where businesses holding a vertical-integration license have additional allowances such as the ability to seek a courier license.
Companies face a very different set of challenges and opportunities depending on whether they operate in medical and/or recreational markets. Even different business models present diverse considerations. Regulatory programs impact how much a company controls its supply chain or has the ability to branch into delivery services, for example, creating different day-to-day operations and company structures.
A truly agnostic consultancy familiar with which services and solutions are available in each region will offer more value than a consultant limited to a particular framework or limited stable of vendors. A more versatile approach also allows consultants to make room for the nuances of the industry, acknowledging how fast regulations can change and trends like delivery can take hold.
Another reason founders would be wise to seek out consultants with a results-based approach is to protect their balance sheets. New businesses require a wide range of services and technology solutions through startup and expansion, and these quickly can accrue up a lot of billable hours—particularly when you factor in the bespoke nature of the consulting work involved.
A consultancy that bases its billing on results (or charges vendors instead of the consulting client) can help nascent companies conserve investment dollars as they navigate licensing hurdles and rapid industry pivots. Results-based billing also incentivizes the service provider to offer an effective, top-quality product and promotes long-term success versus a short-term project based on billable hours.
Together, agnosticism and results-based billing structures add up to greater efficiency. In an industry capable of generating huge profits but still vulnerable to fluctuations in wholesale flower prices, heavy taxation, supply gluts, and competition from the illicit market, that efficiency is good news for the bottom line.
Traditional consulting may indeed be an adequate fit for more established business sectors where solutions are more universally transferable, but too many cannabis founders have found themselves playing the telephone game with multiple consultants, spending precious hours evaluating dozens of different service options from accounting to HR to point-of-sale. It’s time to disrupt the structure and strategy of consulting itself for a more holistic, results-based philosophy.
Brian Mayfield and Adam Benko are cofounders of MJstack, a software-as-a-service and operations consultancy that combines institutional knowledge of mature and emerging markets with enterprise expertise. The company helps entrepreneurs avoid regulatory pitfalls and operational headaches so they can focus on growing their business.
