Nick Scalera

Not since the end of prohibition has there been such an opportunity for an entire new industry to appear out of nowhere. The writing is now on the wall for marijuana legalization in New Jersey, and with it the opportunity for what could be a $1 billion field of business.

The green gold rush already on, as entrepreneurs scramble to prepare themselves to be the first into the new business — and others are preparing to sell the proverbial pickaxes to these cannabis 49ers. Nick Scalera, founder of NJ Cannabis Consulting, is among the latter group. Scalera is a longtime consultant who got his start in the technical field at AT&T before getting his MBA, moving over to the marketing side of the business, and ultimately starting his own consultancy that has worked with Perkin Elmer, Telcordia, Ericsson, and other companies. With his new venture, Scalera is helping would-be cannabis entrepreneurs prepare to launch their businesses.

Scalera will give a presentation on the state’s marijuana business, past, present, and future, on Monday, July 9, at 7 p.m. at the West Windsor Library. For more information, visit njcannabisconsulting.com. In this free talk, Scalera will give background on the recreational marijuana market throughout the country and describe the legalization process as it is currently proceeding.

Scalera founded his cannabis consulting business a year ago and says it is extremely busy. “Cannabis” would probably not be the first thing that comes to mind when looking at Scalera’s background. He has spent his career in the corporate world and admits he has never used marijuana himself. “I’m neither an advocate pro or con legalization,” he says. “I look at this as a business opportunity.”

But how to take advantage of that opportunity when the laws governing recreational marijuana have yet to be written? Scalera says that much of the regulatory framework is predictable based on what other states have done. “One thing we can anticipate is that there will be a license application process and there will be a starting and an ending date,” he says. “People will have to do an awful lot of things between Point A and Point B.”

The recreational marijuana business is sure to come with its own unique obstacles. One of them is banking. Because of the drug’s status as a controlled substance in the eyes of the federal government, banks have shied away from doing business with any enterprise associated with marijuana. Transferring money related to marijuana could be considered money laundering. Therefore even Scalera’s own business could not get a bank account simply because it has the word “Cannabis” in its name.

One possible work-around for this problem is the creation of a state bank, which Governor Phil Murphy has promised to establish. (Existing dispensaries tend to do all their business in cash.)

One way to cash in on the potential marijuana boom is to be in an ancillary business, supplying the dispensaries that will likely be built all over the state. Dispensaries and cultivators will need legal services, display cases, packaging, hydroponic equipment, construction, real estate, and more.

Scalera says he has seen a wide range of people express interest in getting into the business, including many people who have relatives or acquaintances who needed medical marijuana but who found it was hard to get previously. Then there are entrepreneurs who see it as “a once in a lifetime opportunity” to start a business.

“We’re not going to see anything like this again for quite some time, and quite frankly I’d have to think really hard to come up with anything like this that has happened before,” Scalera says. “This is a brand new industry.”

When it comes to the secondary businesses serving dispensaries, Scalera believes that there is more room for existing businesses to expand than for new ones to crop up because already entrenched competitors enjoy a competitive advantage.

Whatever form legalization ends up taking, it will certainly be a heavily regulated industry. Would-be dispensaries should prepare to implement 24-7 video surveillance, reporting, and tracking of inventory “from seed to sale” and to have ironclad security at every step.

Scalera grew up in Staten Island, where his mother was a nurse and his father had a white collar position in Gulf Oil. He majored in math at St. Peter’s College and started his career on the technical side working for Bell Labs. After the company became AT&T he decided to make a career change, got a job on the marketing side of the company, and earned an MBA at Fairleigh Dickinson. After that he worked in various management positions before striking out on his own as a business consultant. He also has taught business courses at several colleges and universities.

Since Scalera started his cannabis consultancy, he has been struck by how fast moving it is. He has given his presentation on the subject five times and has had to change most of its content each time because it became outdated.

He says it’s important for prospective business owners to stay on top of things, too. He says anyone who is serious about it should be reading industry newsletters and magazines and going to trade shows to stay educated.

“They really need to start doing their homework. There are many things they can be doing,” he says.

Canna-Business Checklist

Though the requirements for running a legal recreational marijuana business have yet to be defined, consultant Nick Scalera says there is plenty of preparatory work that could and should be done now based on what he anticipates will be required to obtain a New Jersey license.

Scalera created the following checklist for would-be dispensary owners. (Note that this is for dispensaries versus the other types of anticipated cannabis-licensed businesses such as cultivation, processing, testing, transportation, delivery, etc. Although many of the checklist items would be the same, others would naturally differ in some respects.)

Business structure: form, board of directors, EIC, registration, etc.

Location selection: local politics, zoning, permits, law enforcement, etc.

Real estate: building size, construction requirements, landlord approval, floor plans, environmental controls, security equipment/monitoring, etc.

Equipment: furnishings, display cases, etc.

Cannabis inventory: products by type, strains, sources, costs, packaging/labeling, etc.

Non-cannabis inventory: products, sources, costs, etc.

Financing: including supporting documentation

Accounting: including 280E and payroll.

Staffing: organization structure, job descriptions, hiring, training, salaries, benefits, background checks, compliance with any other state-mandated requirements, etc.

Operations: operating procedures, security, transportation/storage, etc.

Software: POS, inventory control, compliance reporting, etc.

State-mandated compliance: Record-keeping, packaging/labeling, reporting, etc.

Legal services.

Banking services.

Insurance.

Business plan documentation.

Pro Forma Financials.

Marketing plan: competitive analysis, segmentation, promotions, pricing, etc.

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