Winning Cannabis Licenses Around The World – Michael Mayes

michael mayes quantum 9

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Matthew: Hi. I’m Matthew Kind. Every Monday and Wednesday look for a fresh new episode where I will take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at www(dot)cannainsider(dot)com. That’s www(dot)cannainsider(dot)com. We’ve talked about CBD or cannabidiol on the show many times. Just to review thought, CBD is a non-psychoactive compound from the cannabis or hemp plant that has many benefits. Now our friends at Treatables have put together a one list chew that can help your dog or cat become more calm and balanced. Valerie wrote in to tell us about her experience with Treatables.

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While we tend to focus a lot on the North American cannabis market the rest of the world is also relaxing their prohibition stance on cannabis. Here to give us a perspective on the North American and international markets is Michael Mayes, CEO of Quantum 9. Michael welcome to CannaInsider.

Michael: Thank you and thank you for having me Matt.

Matthew: Michael to give us a sense of geography can you tell us where you are in the world today?

Michael: Yes. Currently I’m in Chicago, Illinois but we practice internationally so it’s rare for me to be in my home city but it’s nice being home.

Matthew: Michael what is Quantum 9?

Michael: Quantum 9 is an international cannabis consulting firm.

Matthew: Okay and what services does Quantum 9 offer?

Michael: Sure. We primarily are focusing on the licensing realm of cannabis consulting. So basically what we do is we work with high net worth individuals, private equity firms, and investors to obtain licenses in existing or emerging states or countries. So currently we’ve practiced in about ten countries and the experience has been amazing.

Matthew: Now how do you just jump on the scene and create an international cannabis consulting firm? I mean what was the evolution here? What were you doing before that and how did you get this started?

Michael: Sure. Well I first started as an investor in 2009 in Colorado’s first for profit medical marijuana market. Somebody back from Michigan where I’m originally from asked me to join a venture to go after some licenses in Colorado. We started with a basement operation and then expanded that to; we raised a million dollars in 2009 to obtain a 15,000 square foot cultivation center and all of the equipment inside of it. We grew that company to a 90,000 square foot cultivation center and two retail dispensaries. That operation is actually called Good Meds in Colorado and from that we found an incredible need for standard operating procedures, good manufacturing processes, the evolution of the quality assurance and FDA standards in recent and as a result we started helping other businesses with some of their best practices within the facility and then we were offered to do some licensing for a client and we had no interest at all in doing document writing work at all especially for the government.

But they made us an offer that we couldn’t refuse and now we’re doing licensing work all over the United States and around the world. We’ve done about 24 projects to date of which we’ve been successful with 22 of them so we’re boasting a 91.6 percent success rate currently which is very high within the industry.

Matthew: Wow that is a very high success rate congratulations on that.

Michael: Thank you very much. It’s a ton of work and we have a full team of consultants. We have around 35 consultants right now that practice in this arena from different facets from quality assurance to security; you name it and all of that heavy lifting is done by them guys. I’m just the guy at the front end of things.

Matthew: Yeah. I’ve seen some of the paperwork and detail that’s required to apply for a cannabis license and it’s just shocking how much there is. Its binders and its interpreting language from governments and municipalities. I mean it’s really quite intense. For people that aren’t familiar do you want to just talk about that a little bit?

Michael: Sure. Not only do you have to submit five years of audited financials for each one of the members and each state is a little bit different. In some states it’s five to twenty-five percent. Ones that have that amount of equity need to provide that information but for the most part it’s mostly everyone like in a market like Pennsylvania everyone has to submit their financials and so forth and that’s basically for the government to understand that the money isn’t coming from ill sources and so forth. But besides that they’re looking for a very stringent business plan of exactly how you plan to execute upon awarded the license. So not only do you need to submit construction diagrams, schematics designs, and project plans but you also need to show exactly how and what documents will govern each process from record keeping to the standard operating procedures to how security will be handled. The state’s looking for groups that have a very good handle on that and also an expansive executive team that can really take the plan from start to fruition.

Matthew: Now you tend to have a more international focus than a lot of consultants in this space. Can you take us around the world and tell us where you see the most opportunity and what markets are starting to open up?

Michael: Sure definitely. So currently the United State and Canada so North America have had the biggest pushes in growth but we’re starting to see a lot more countries around the world start to come online from Germany, Columbia, Puerto Rico if you count that. It’s a U.S. territory but Guam is coming online soon which is another U.S. territory, Uruguay, Australia, Jamaica. I mean the list goes on and we’re only going to see that legalization needle move forward. In recent full legalization is usually a second step behind medical and before that is usually some type of decriminalization. So it follows a pretty straight process from decriminalization to medical to adult use but some countries are going right to adult use or recreational right off the bat.

Matthew: Okay and is there a different flavor to what the governments care about and needs are from country to country where you’re like well I’m used to dealing with the United States and Canada and then I step into a different country and they have just a whole different perspective about what their concerned about and how they’re approaching it?

Michael: Absolutely. The markets differ greatly. Even between the United States and Canada they’re very different and then even from state to state they tend to differ. The Canadian market a lot of people may not know this but its 100 percent Ecommerce. So all cannabis is mail order in Canada today. Now there are compassionate clubs that are popping up all over Canada but some of them are; most all of them are illegal but they’re tolerated in different markets. In a country like Australia it’s much like the United States. It’s starting to; territory by territory it’s starting to come online so the northern and southern territories are online right now and it’s legal for medical purposes in Victorian’s new South Wales. Columbia just came out with a decree that was signed by Santos which allowed for manufacturing and exportation model. Legalization in Uruguay and Jamaica also and then in Spain you can actually consume cannabis in private areas but you can’t really acquire it legally.

So it’s such a stark difference from country to country and really what it takes is a consulting firm or people that are pro legalization to really educate the government as to the pros and cons. We actually did a project for the German Ministry in which it was heavily involved in kind of shaping the way the rules and regulations ran and it wasn’t necessarily like we told them exactly what to do. What we did is we gave them cause and effect. If you did this it would result in this and helping them understand what their decisions have on the impact of the industry in their country is very useful for them.

So what we do is we use our experience of what we’ve seen in other states and countries and then give them why a certain thing is good or bad. For instance in Germany they wanted to implement an nanogram limit so when you’re driving they can see if you were impaired or not based on an nanogram limit. Well we provided them with the Department of Transportation information from the United States showing them how that model is flawed.

Matthew: Okay interesting. How is it flawed?

Michael: The nanogram limit is kind of a Breathalyzer that’s used by a police officer once they’ve pulled you over. Unfortunately you can’t necessarily tell; it’s not a direct correlation from how impaired you are to what the nanogram meter is reading so it’s not conclusive evidence that because you have cannabis in your system that you’re impaired from it and tolerance is so gravely that someone may have had a sucker in their mouth for ten minutes and got in the car and drove. Well that would have been detrimental if a nanogram limit was implemented.

Matthew: Okay and are other countries anxious to avoid certain mistakes that we’ve made here in the U.S.? For example I look at New York and it’s a no flower market. Illinois there’s this fingerprint and background check. It’s kind of like they treat you like a criminal upfront and there’s these little spins that each state has taken that’s not ideal. Is there one thing that different countries say well let’s avoid this or what should we avoid Michael?

Michael: Sure. So Jamaica is a great example of that because as you may know Jamaican’s have been making a living off of cultivating cannabis for many, many years; decades and if you look at that from an agricultural perspective the last thing that you want legalization to do in any form whether it’s medical or adult use you don’t want disrupt the current culture of a country. So when we were doing some things with the German government or the Jamaican government you don’t want to take a privilege out of the hands of a community. So a lot of the suggestions that were made were to make sure that the individuals that were growing cannabis now that we’re making a living off of it were taken care of. So what we didn’t want to do is take that privilege out of the Jamaican’s hands and put it into private enterprise which would have not only crippled the country but it would’ve led to turmoil within the country.

Matthew: Yeah great points. You got to go; don’t swim against the stream of the culture or you’ll lose pretty much.

Michael: Yeah and if you think about it; I mean they’re just growing crops on their land and selling it as a trade and just because the United States says somethings illegal doesn’t necessarily result in them having to give away a way of their life.

Matthew: Yeah. Now you mentioned a little bit about your help that you provide with licensing but let’s dig into that a little bit more. The process is so in-depth. There’s so many parts to it and you’re not just competing with other people. You have to kind of go out there and not satisfy the requirements but exceed them, look at the tone of the requirements. Can you talk a little bit about that like how the lenses you use when you’re approaching helping a client win a license?

Michael: Sure. So the first thing that my entire team does is we read the bill as soon as it’s published and that’s just the first step. We found it effective to read it out loud together which makes everyone know and understand them and we can talk about them as different aspects of the rules are different from other states and then when the rules and regulations are published we do the same thing. We read them out loud and then chunk different areas into different protocols and procedures but that’s just a part of the SOP and GMP creation but one of the biggest aspects of any submission is the actual executive team that is going to be submitting. Your CEO, CFO, NCO are such important positions so you’re definitely going to want people that are prominent individuals in the state and also have the pedigree behind them to show the state that they have experience with heavily regulated industries such as the pharmaceutical industry, the food industry, and so forth.

From there there’s other key positions like security director, cultivation lead, extraction lead, somebody on the retail end so it’s pivotal to have seven or eight individuals that are very, very well rounded on the team so that the state can see that. So what we’re seeing more and more is less of a focus on the actual documents and more focus on the team that’s actually going to be managing the company.

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Matthew: Do companies or individuals that come to you looking to get into the space ever have unrealistic expectations in terms of what it takes to be successful?

Michael: I think that the unrealistic expectations usually lie within how much equity they’ll end up with and a great point of that would be when you first start the projects whether it’s a single individual or a couple individuals they’re splitting 100 percent equity. Either the individual has 100 percent of it or both of them have 50/50. The first thing that we do is start to set expectations in a realistic manner because if you need to raise ten million dollars for this project then a lot of the equity is going to go to the investors. So once we start to break them of having all of this equity it makes it a lot easier for us to do our job because equity can be traded for services, equity can be traded for funds, and that’s one of the biggest aspects of the submission process in general. Many states require two million dollars in escrow, 500 thousand dollars on cash for cultivation, and anywhere from 500 to 1.5 million for dispensing and 250 thousand in cash but the capital part is huge.

Matthew: Do you see Canada or other countries allowing meaningful imports of cannabis and how do you think that might change the dynamics of certain countries?

Michael: I think importation is huge. A dominant player right now in the Canadian market is Canopy Growth. They’ve set up a few big deals. One of their subsidiaries Tweed has set up some deals to send products to Med Can in Germany and that’s the first time that a major G7 country will allow the importation of medical marijuana from a country like cannabis and you can only get cannabis in German pharmacies but it’s a step in the right direction. Another giant player in the Canadian market is Tilray in British Columbia. They received permission in June to export cannabis to Croatia. Tilray is actually owned by Privateer in Seattle and they’re seeing that the exportation of cannabis may help the struggling Canadian market currently just because it’s just had such a slow maturation over the last couple of years. So by sending products to Croatia they may in the future be sending products to Australia as well.

Matthew: You have a famous cultivator on staff Ed Rosenthal. Listeners may have come across his videos on You Tube or know of him but can you give us a little background on what he does at Quantum 9 day to day.

Michael: Sure. Ed is one of my dear friends. He’s not only an instrumental figure in the cannabis movement but he’s been absolutely awesome on the Quantum 9 front. So Ed heads up a lot of the cultivation approaches. So best practices, what types of technologies and approaches, and he just really puts the entire cultivation aspect on a more scientific level. So our projects that involve Ed he plays many different facets but mostly around cultivation. So he’ll bring different types of greenhouse technologies, different types of automation to the table, and kind of helps reduce human error with the use of automation.

Matthew: When you’re looking at a facility design or dispensary design, cultivation design are there any best practices you can give us in what to do and what not to do to be successful?

Michael: Sure. So in your manufacturing which is cultivation and extraction there’s three really key things that you want to prepare yourself for. One is the environment, the second is the staff, and the third is the security. So from an environmental standpoint making sure that your rooms’ temperature and humidity’s are monitored with sensors that are redundant would be the first thing. The second thing would be automation and less human error. So whenever something can be done by a machine opposed to human hands there’s not only less error but there’s less opportunity for contamination. The third thing I would say is that the industry is starting to shift more towards greenhouse technologies which reduce overhead from an indoor facility by almost 30 percent. On the second level from a staffing perspective cleanliness is starting to see a huge impact within these facilities.

Our facilities we now designed where cultivators would actually have to go through a locker room first, change out of their street clothes, go through a shower, and then gown in their work clothes. What we’ve found is this actually gravely reduces the opportunity for pest and pathogens from outside of the facility to actually make it into the cultivation rooms and then the security is just based on state and federal requirements. As far as dispensaries go limited access is one of the most important aspects of the facility. Identifying where your most targeted and hot zones are from where your product is stored to where your cash is stored and really not being able to see things like cannabis from the public areas.

So what you want to do in a dispensary is just remove the ability to access the cannabis easily. So for instance not having a ton of product out on a corner and so forth and making sure that the only way you can get around to a counter would be through like a locked door and so forth.

Matthew: Okay great points. You mentioned you’re a Michigan native and you’re very close to that state. You don’t hear too much about it but the California, Colorado, Washington, and a lot of other states over shadow Michigan and at times it seems like it’s two steps forward, two steps back and it seems like it’s going to really get some traction and then it back peddles and then it goes forward again. Where are we in Michigan? Give us a little brief there and what the challenges and opportunities are there?

Michael: Sure. So a lot of people don’t know this but Michigan has the second highest patient population outside of California. California has a million. Michigan has 182 thousand based on a recent pro/con statistic. The dispensary model is still illegal statewide but different counties are allowing it. My family actually opened a dispensary in Lansing, Michigan called Greenwave. There are 87 other dispensaries in the city currently. They actually opened that when there was 67 of them. So the Michigan market is very dense but there being 87 dispensaries in a single city there’s a market to support that. So when people start to look at these different markets you can look back at Michigan and say wow there’s a huge market there but also there’s a thriving community there as well. So when you think of market saturation there’s always going to be a need and if a business is fulfilling that need they will be successful.

Matthew: Right. Go to where the patients are and just try to find a way to be a little bit better or different.

Michael: Mm-hmm (affirmative).

Matthew: Let’s switch over to investing for a second. You meet and know a lot of cannabis investors and you’re an investor yourself. One question I get every day from listeners is how do I raise money for my cannabis startup or dispensary? How do I find these investors? How do I get them to take my project seriously? Do you have any suggestions there you would offer listeners?

Michael: Absolutely. We provide cannabis investor services to help align investors with projects and projects with investors so it goes both ways. If you’re looking for funding the best advice that I can give is to create a very good plan. That would start with an executive summary. That would then mature to a business plan or perspective. Knowing your numbers and putting together a performa and then getting into an investor presentation where you can hand documents out to individuals and really helping an investor understand what their return on investment is, when they’re going to get their money back, and to what multiplier they’re going to make on their money is really what investors are interested in. All the other stuff is important but not as important as those factors. We’ve had the opportunity to work with many different investment arms as well so MGIC would be somewhere that I would definitely invest.

Get out there. Go to these conferences. Understand how the investment community works and then understand where all the pitfalls are too. So if you’re looking to fund a project there’s a couple things that you have to ask yourself. Number one what is your risk appetite? How aggressive do you want to be with your investment? There’s definitely aspects of investment where you can get very risky such as an operator of a cultivation, manufacturing, or dispensing facility and you tend to see very high returns on that money although it’s incredibly volatile or you can look into less volatile piece of the industry would be; which would be like an ancillary business like a technology company or a security company or an investment company.

But what you want to look at is what the requirements are by the state or country and sometimes a state will have residency requirements that may bar you from being directly involved. Now there’s many different ways of doing that but you definitely want to look to see what some of the restrictions are and as far as investment dollars go when you’re looking at these bigger projects from 100 to 250 thousand dollars would be probably the minimum of where companies are looking for investments from. When you’re getting into the 10 to 30 thousand dollar range it just isn’t as attractive for a project to take those funds in because more than likely they’re raising anywhere from two to ten million dollars. If they were taking in 30 thousand dollars as an investment they would have so many investors in that project it would just be a nightmare to manage and then you start running into SEC filing issues.

Matthew: Good points. Let’s pivot to some personal development questions. I like to ask guests to give listeners a sense of who they are. Is there a book that has had a big impact on your life that you would suggest to listeners?

Michael: Are you talking about cannabis or non cannabis?

Matthew: You know either one. One that’s just had a big impact on you that has maybe changed your way of thinking or helped your life go on a different path.

Michael: Okay. I’ll give you two. I’ll give you one from the industry and I’ll give you one from outside the industry.

Matthew: Great, perfect.

Michael: When I first started in 2009 I was a sponge for everything cannabis. I probably bought four or five cannabis books, read them cover to cover but it wasn’t until I read Ed’s book the “Marijuana Growers Handbook” where I really started to get a sense of everything from start to finish. It was the most conclusive book out there and I would definitely recommend it to your listeners. Outside of the industry I’d have to say Christopher Moore’s book “Lamb” is one of the funniest books I’ve ever read in my life. So funny that in Chicago a lot of people do public transit and so forth. I used to take the train to work every day and I would read this book with headphones on and I would laugh so loud that I could see people in the car watching me and it was quite embarrassing but definitely for a more fictional book it would be Lamb. It’s a story of Jesus during that time in the bible where nothing is recorded about him. So basically in his late teens and his early 20’s and it’s told by his rastafarian friend Biff. So it’s incredibly funny.

Matthew: That is an unusual premise I got to say.

Michael: Mm-hmm (affirmative).

Matthew: How about is there a tool web based or otherwise that you consider indispensable to your day to day productivity that you would recommend?

Michael: Okay yeah I can give you two.

Matthew: Oh neat.

Michael: The first is Grammarly; www.grammarly.com. It has changed the way I’ve done business and what it is it’s a grammatical score checker of your writing. So you can put a paragraph in there and it will spit you back out a score but it will also tell you exactly how to change your writing so that you don’t use passive voice. There’s no split infinities in there, dangling modifiers. I mean there’s phrases that I didn’t even know existed in grammar and you can change the style of writing from business to creative but essentially what it does is it allows you to add all your grammatical errors and basically rid yourself of them. Why this is important is for a couple reasons. Number one when you’re writing thousands of pages of documents to a government proof reading is absolutely important and is a way in which the government can judge you based on your level of experience and your level of execution.

So having grammatical errors from my aspect of it; getting vendors that send me emails all the time. If I see a grammatical error within an email or document I actually think less of the individual that produced that piece of writing. So now it’s required that all emails that go out from Quantum 9 and all types of writing, blog posts and all of them go through Grammerly first.

Matthew: Wow that’s an awesome tool.

Michael: Mm-hmm (affirmative). The second I would say would be the Google stack like Google Drive and Google Docs; especially Google Docs. For us we have collaborations all around the world and we are many times working on the same document. So let’s say that I had a cultivation document that I had four authors all working on the same time. Now there’s a tremendous lag time when one individual is working on it and then sends it to another individual and then they work on it and then send it to another individual or worse is that one person’s working on it and the other person’s working on it as well and they’re overlapping what they’re writing and then they both send it to me and then I have to decipher what was changed, what is better, and then how to integrate both people’s writing. It became a nightmare. So what we did is we started using Google Docs and you can edit in real time. You can actually see someone else’s cursor writing words while you’re three lines down writing other things. So without that it would be a disaster. It’s the only way that we could effectively get all of our contributors to collaborate on a document at the same time. It does require you to have Google Chrome and the most updated version of it but pass some of the technological issues that you may derive from just getting it set up for the first time it pays incredible dividends in the months to come when you’re working on a document together.

Matthew: Great point. I mean I use Google Drive as well and particularly Google Spreadsheets and I’m working with multiple people on there and it’s just a game changer because you can see their name even like he’s altering this cell and it’s changing all your assumptions on the fly. You can see a revision history and I’ve had people say well can’t we just put this in Dropbox and share an Excel file and it’s just like you can but it’s still not as good because it’s not synchronized. It’s a synchronized. One person is putting it then you’re seeing update. We’re not all on the same sheet of music.

Michael: Mm-hmm (affirmative).

Matthew: So that’s a great suggestion and I hope we can actually bury the Microsoft Office Suite soon.

Michael: Yeah we’re getting there right?

Matthew: Yeah. Well Michael in closing how can listeners follow you and your team and learn more about Quantum 9?

Michael: Sure. You can go to our website. It’s www.quantum9.net. Q-u-a-n-t-u-m the digit 9.net or www.quantum9.net.

Matthew: Michael thanks so much for coming on CannaInsider today we really appreciate it.

Michael: Thank you so much Matt for the opportunity.

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Michael Mayes is the founder of Quantum9 a firm that specializes in helping clients win cannabis cultivation licenses around the world. They have an impressive track record of success in winning licenses.

Listen in as Michael talks about how to craft a winning cannabis license application and just as importantly what to avoid when submitting an application.

Learn more at: http://quantum9.net/

Key Takeaways:
[2:02] – What is Quantum 9
[2:40] – Evolution of starting a cannabis consulting firm
[4:57] – The paperwork required to get a cannabis license
[6:18] – International cannabis markets
[10:08] – What is a nanograms limit
[11:26] – Lessons other countries have learned from the US and Canada
[13:31] – Michael gives and example of winning a license
[16:04] – Unrealistic expectations in the cannabis space
[17:29] – Canada and other countries maybe allowing imports of cannabis
[18:47] – Ed Rosenthal’s role at Quantum 9
[19:55] – Best practices in design
[24:07] – Michael’s suggestions for finding investors
[27:18] – Michael’s book and web tool recommendations
[33:14] – Contact details for Quantum 9

Important Update:
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  • Quantum 9, Inc.

    Thank you so much for having us on the show, great questions and very thoughtful. I think the sound was great.