Inside Kentucky's Cannabis Market: The Next Green Rush?

Emily Sisneros: Kentucky's Hot Medical Market and Winning Cannabis Licenses

Bryan Fields: What's up guys, welcome back to another episode of The Dime. I'm Bryan Fields, and with me as always is Kellan Finney. This week we've got a very special guest, Emily Sisneros, CEO of Canna Business Services. Emily, thanks for taking the time. How are you doing today? Emily Sisneros: I'm great. You nailed my last name too, it was perfect. Bryan Fields: Oh, I appreciate that. Kellan, how are you doing? Kellan Finney: I'm doing really, really well. Really excited to talk to Emily, really excited to learn about Kentucky. How are you doing, Bryan? Bryan Fields: Yeah, I'm stoked. Kentucky is one I've seen a lot recently, and that is likely because of Emily that I'm seeing a ton about it, and I am fascinated to learn more about the state. It's important going forward, and one of the unique differences — maybe similarities — to some of the other markets. But before we dive into the fun stuff, Emily, East Coast, West Coast battle — if you had to put yourself on the map, your location, East or West, where would you put yourself? Emily Sisneros: I'm a proud East Coaster through and through. I love it. Bryan Fields: Let the record reflect that. Kellan Finney: I think there was a comment earlier though about how there's a lot of West Coast love from her company too. Emily Sisneros: It's true, I have staff all over the country and my West Coasters love West Coast, they will represent. True, true. Bryan Fields: We could shout that out too, but currently in the room, it's the three of us. So, Emily, before we dive into the fun stuff, can you give a little background about yourself and how you found your way to the cannabis space? Emily Sisneros: Yeah, absolutely. First of all, thank you for having me, it's an honor. I'm actually super nervous — I don't really get nervous, but I'm nervous because I love this podcast and I love you guys. I feel like it's a milestone moment for me. I started in the cannabis industry as a civil litigator in Pittsburgh, Pennsylvania. I started out as an attorney and I was practicing eminent domain and things like that, and really loved it. But it was right when medical cannabis was being introduced to the state of Pennsylvania, and I was doing some work — a law practicum for the City of Pittsburgh when it decriminalized. Then when I was working as an associate attorney at the firm, we started building a cannabis division and I helped build that. We had a client participating in the first round in Pennsylvania, which was the most competitive round to date in the entire country, and it was back in the day when you had to print everything out — literally stacks of paper, like 2,000 pages in boxes, running three different vehicles all driving to the post office to ship before the deadline. It was like the war-story era of cannabis, and that's where I cut my teeth. Our client did win in the first round, and I met consultants in the space at that time — and many other attorneys — who were taking advantage of clients, charging exorbitant amounts of money and doing shoddy work product with no work ethic. I thought, how cool would it be if I could start my own company where my work product and my work ethic could be reflective of what clients actually need, without charging legal fee rates — though there's a time and place for attorneys on a project. But as a consultant, I could charge less and provide more. I left the firm, started my own consultancy, and it's been growing ever since. We've got clients all over the world, and a full team of women — just by chance, we all ended up being women on the team. Men don't seem to last on my team; women, I think, because we're very good multitaskers stereotypically, and we love deadlines, organization, spreadsheets, and client satisfaction. We have staff all over the country and help people in pretty much every regulated market in the states. Bryan Fields: I love it. I want to stay with the early days — you had that first experience, which for some might be off-putting, like 'I never want to do this again,' but instead you thought it was chaotic but kind of awesome, and decided to go for it. So those early steps — after you go off on your own, what's the first client, the first state you attack? Take us through those early days. Emily Sisneros: You know, there was the second round in Pennsylvania, so it was still chaotic — Pennsylvania was getting its feet wet in the industry. Back then, even today, there were a lot of lawsuits. So it was learning how to educate people. There were a lot of conferences coming into town with educators who didn't actually have a regulatory background, which was an advantage for me because I was an attorney and I still have an active law license — I'll never get rid of it, it makes me better in business. But they were guiding people ineffectively, giving them bad RFP responses — like giving them roles from Arizona to apply to a medical cannabis round in Pennsylvania. So I started going up to people in the audience and saying, 'I'm not looking for you to hire me, I just need you to know that what they told you to write down was awful,' or 'please don't do this, do this instead and you'll be good.' I didn't even give my name — I was just this secret person trying to help everybody. I was also working with a tech company trying to get into the RFID space on the manufacturing side, so it was a confluence of crazy different aspects of the industry, which helped me learn a lot. Then when states started popping off medical programs — New Jersey, Missouri — I started providing education there, and spoke at an event at Rutgers, I think in 2018, and closed a bunch of clients, and worked ever since. Bryan Fields: Did that early work focus on the East Coast, and strictly in medical markets? Emily Sisneros: We had some clients on the West Coast in California — there were hemp companies that needed advisement. It was surprising how broad it was. When I started, I thought, okay, people need help with licensing, let me help with licensing. Then people would call asking about building their hemp business, or they had a CBD shop and wanted to know what things meant. So it was compliance issues in California, hemp in Pennsylvania — randomized, which was helpful but completely unexpected. That's when I started hiring staff, because I needed to provide better operations for clients and fulfill the sales I was making — which is a whole other conversation about starting a startup. But you learn a lot at the same time. Kellan Finney: A niche market, but the same principles apply to starting a business. I'm super fascinated with understanding the market — before we get into Kentucky, what makes it special? Take us through the process of prepping yourself to be familiar with the rules and regs, so when someone asks a question you can feel comfortable educating them on the correct path — not like those other people who say 'copy and paste X into Y.' Emily Sisneros: That's a great question. For me, it comes from wanting to give the best service to anyone I can, but also knowing I'm not going to know everything — part of the reason clients hire my team is to help research aspects we may not know upfront. I think it's a misnomer that when you hire an attorney or consultant they'll know the answer right off the bat — that's not ethical business practice without first researching. It's okay to say 'I'll research that further for you,' because that's the best service. For me, I'm a very visual person — I hung a hand-drawn map, taped a bunch of papers together on the wall, and taught myself about every single state: where they were in the process, what bills were being introduced, what votes looked like, what I could anticipate the five-year milestones to be across the country. I inundated myself with information because I knew most people won't do that work, and if you can be the one in any business who does more for your clients than anyone else, you're going to win. My objective was to provide massive value for my clients, so I had to know massive amounts of information. I studied every market I could, down to the nuances of every state — how they defined different things. A lot of states really don't know what they're doing; they're copy-pasting RFPs and don't know how it's going to affect their program. That's a really big thing, and we've since gotten into government contract work, helping states with their social equity programs, rollout or correction of programs already rolled out. So we learn the regs, then make phone calls to legislators, offer assistance and guidance, learn what they're struggling with — that helps on both the state and local level. There's a lot of local politicians and government agencies where the state thrusts a program on them and says 'go do it,' and municipalities don't know what to do — so that turned into its own organic service. Kellan Finney: So you read the bill word for word, get into the politics of how individual counties might implement it, monitor community meetings in specific counties to see how they might roll it out prior to them drafting regulations — how deep does this analysis go before a state goes medical or legal? Emily Sisneros: Yeah, whether medical becomes open, or recreational, or adult use — that's a really important aspect. I like to approach municipal leadership very early on, but most of them are so unprepared they can't talk about it until they're almost in the middle of the program, which is backwards. My ideal for a municipality is to get educated and get their program dialed in early. Sometimes we get into conversations with a mayor who's pro-cannabis but a council who's not, and before they even get their program in place, we help educate them — which is nice for the mayor because he's not the one burned at the stake, we are. We stand there and get hit with questions — like a real story, someone posted a picture of their son who got in a car accident with a bong in the back seat, saying medical cannabis will cause these accidents. We come in and say, well, that was actually a driving-under-the-influence-with-alcohol situation — causation isn't correlation. When it's that early, it's really hard to rebut those questions, so there's not too much you can do on the local level super early. Pennsylvania is a great example — it's been almost 10 years since medical was introduced, and municipalities that got hopeful their economies could get bolstered by medical, but no one located there, are a little jaded but at least introduced, so we can start making phone calls. In a place like Kentucky, they're further along because adult use in Pennsylvania is still a ways away, but in Kentucky they're in the middle of it, getting hit with hours of public comment saying 'we don't want this in our backyard.' We offer to talk to their council and the public to get an introductory conversation started. Bryan Fields: Just a high-level overview for those unfamiliar — a state approves medical cannabis, but local towns can opt out, correct? Emily Sisneros: For the most part, yes. New Jersey is a great example — the state said, 'we are introducing an adult-use cannabis program, and towns have until this time to opt out; if you don't, you are automatically opted in.' A lot of towns scrambled to opt out because they didn't know they'd still have to create a program, zoning, and rules on their own if they opted in. A lot of them took a wait-and-see approach — you're seeing that a lot in Kentucky, and you'll see it across every program. Once a program's been running a couple years, you can approach councils that opted out and show them data about how beneficial it's been — crime hasn't gone crazy, potholes have been fixed because of cannabis tax revenue. Everyone sleeps better, everyone's eating more — it's all pluses. Bryan Fields: It's the end of July 2024 — what's a high-level overview of where Kentucky currently stands? Can you bring everyone up to speed? Emily Sisneros: We're recording this on July 31st, which is literally the halfway point of the application window for Kentucky. There are a couple of high points people should know. It's an incredibly short application window — this is their first round, and a lot of people ask if they should wait for the next round. They may open a next round in 2025 at some point, but we don't know, so if you're interested in Kentucky, jump now and take your shot — the worst that can happen is you're prepped and ready for the next round. That's a win. You have two months — we're already at the halfway point, it ends at the end of August. The second big thing is that there are notice-of-deficiency letters — very common in states — but you only have 10 days to cure. After you submit an application, they start grading them, and there's a due-diligence period where the Office of Medical Cannabis reviews your application and issues deficiencies you need to correct or you're disqualified. Kentucky is giving you 10 days; some states give 14, some 30, some keep it open-ended, and you're stuck in a deficiency loop unless you fix the issues. I think that's Kentucky's way of weeding people out — no pun intended — before they even get into the lottery. The third aspect is everyone's calling it a lottery, and it is, unless there aren't enough applications submitted for a particular license type — then they won't hold a lottery, they'll just pull winning applications based on merit. So your application needs to do more than hit a bare minimum threshold, because you might not actually be competing against an oversubscribed pool — you might just get scored on merits. You'll still go through an investigative audit, but as of last week there were only about 17 applications submitted across all license types — cultivation, processor, and dispensary. Kellan Finney: I'm going to go really deep in the weeds here. Bryan Fields: Classic Kellan. Kellan Finney: How long are these applications, to give people an understanding? And if I apply for a dispensary in Town A, does that mean I can't get it if five other people also apply, or can I get it in Town B if nobody applies there — how does that work? Emily Sisneros: Great questions. To your first question — some applications can be 300-plus pages; this one will probably be around 100-150 pages. We've worked in states where applications run 1,500 to 2,200 pages — monster applications. Thankfully, this isn't like a first medical round in Alabama, Georgia, Pennsylvania, or Florida, where you're looking at Behemoth applications requiring mid-six-figure investment for a good lobbyist, consultant, attorney, and accountant because it's hyper-competitive against multi-state operators. Kentucky chose not to go that route — lotteries are more effective at avoiding lawsuits, so getting more people in the lottery and pulling names is the approach; the actual lottery company is hosting the application lottery, kind of like the Powerball. Expect around 100-150 pages depending on team size — it can double if you've got a large team, or depending on your operating plans. Kentucky also requires more paperwork on the front end before you even get into the lottery than states like Connecticut or Ohio, where you needed a couple pages of business formation documents just to get in the lottery, then supplied more information only if pulled. So it would be a mistake to underestimate this application — you've got one month to submit something that could run 150 to 300-plus pages depending on your team, site plan narratives, financial plans, operating plans, and even just the security plan alone can be 75 pages. On the property side, it's a bit tricky — Kentucky has been issuing new guidance as they see the challenges around opted-out communities. For example, in cultivation you can't apply across different license types, so you can't apply for dispensary, processor, and cultivation all at once. If you choose cultivation, you can apply across tier types — there are four tiers, but only three are available this round, tiers one through three, and you can apply for one tier one, one tier two, and one tier three. Dispensaries are trickier because they're based on the state's split into 11 regions, based on population size. People will push toward heavily populated areas like Louisville, and border counties. There's a limit on how many you can apply for within a county, and you can only apply once per region — so up to 11 applications for dispensary. But you need a property, and once you get one, you have 30-31 days to secure up to 11 properties in different regions, negotiating with owners who'll slap on a 'green tax' knowing they can hold the property during the process — and might be stacking multiple applicants on the same lease. You can use a contingent lease or purchase agreement contingent upon winning, but even after being picked in the lottery you might have to change locations, which requires more paperwork. Kellan Finney: Can you go after multiple license types, or what's the direction Kentucky's taking? Emily Sisneros: They're really tight on it — you can't cross-pollinate. If you're going for cultivation, your only allowance is applying across multiple tier types within cultivation, but you can't also apply for a dispensary or processor. There are producer licenses that would allow cultivation and processing together, but those aren't available in this lottery round — probably 2025. So this round it's cultivation, processing, dispensary, and also safety compliance facilities — labs where you test product, essentially third-party labs. Those aren't limited by lottery since the state wants as many labs as possible; it's the most underestimated license type. Bryan Fields: Just to put this in context, because I don't think people recognize how hard this is — you need a consultant, a lawyer, and then a location, and it's money out, money out, money out. Small mom-and-pop businesses — do you have to give them a sticker-shock conversation early on about needing at least half a million dollars? Emily Sisneros: Yeah, that's spot on. We get calls from dreamers, and we love that — our goal is to help pursue their dreams, but there's a tethering we have to do, rooting them to reality and walking through the roadmap. I think it's important people see it as an investment, because you need a good consultant, attorney, and accountant, but there are a ton of unqualified vendors who'll try to take your money. The approach isn't just 'here's the money you need,' it's 'be careful where you place that investment,' because if you put it into the wrong vendor, you've thrown that money out the window, and you don't have the luxury in this short window to make those mistakes. We try to keep clients' costs as low as possible during the application phase, because they should be spending money on buildout — we help with buildout too, once they get licensed, through the field-monitor on-site audit, SOPs, GC processes; sometimes we're brought on as management teams overseeing the GC, helping with culture and training, and then we let them fly, or do a hybrid approach where we advise along the way. But the bigger investment should come at phase two — buildout, post-licensure, getting open. People often throw money out the window early, then get daunted and jaded and never want to do it again. Bryan Fields: We've had someone come on and say winning the license is the easiest part of the industry. Emily Sisneros: And that's the truth — it's a very tough part of the industry. It's funny, our clients on weekly meetings — we're particular about which clients we bring on because sloppiness hurts our win rate and hurts the client. As they get closer to submitting, there's a beautiful naive excitement, and about halfway through they start to wear out. We tell them at the start we'll give them a two-week vacation once they submit — in the beginning they say they don't need it, they love the process; thirty days in, they say this is the worst thing we've ever done, please, but keep going, get us to the finish line and we'll take that vacation. Then they take it and say we're so grateful for the process. It's like childbirth — not trying to make an equal comparison, but it's the thing you don't want to do again, until you have the baby and you're like, this was the best thing ever. Then the next round opens and they're like, I want another grow, I want another dispensary, let's do it again. Kellan Finney: What are you most excited about for the Kentucky market? We've talked a lot about what makes it unfun — what do you think is one of the most attractive reasons for going after a license there? Emily Sisneros: I'm always a fan of people getting in on the first medical round, because you'll be first in line when they go to adult use. You capture the market for a couple years until expansion into adult use, and typically medical can flip into adult use — so you continue producing tax-free product for medical patients and also expand into adult use, capturing a second market before other adult-use dispensaries come online. You could have made millions by then and could sell if you wanted. That window makes it worth it for people — they can actually reach a dream that's not common in any other industry. My recommendation is always: if you have endurance and fortitude and remain flexible, you will win in this industry. We know pretty much everything that could happen in a state — portal glitches, corrupt files, all of it — and if you can stick with us and remain flexible, you can pivot and still reach your goal and win, especially in this first round. Bryan Fields: I think the aspect of grit is so underappreciated — recognizing how hard this industry is, and that most things you can survive if you can get up every day and push forward. You mentioned adult use — any sense of timeline for Kentucky, do you think it's a quick conversion, or too early to tell? Emily Sisneros: I think it's still a little early based on the sketched-out timeline. We're going to see another round of medical, they still have to open tier-four cultivation, open producer licenses, make the whole thing float, then brag about it, which usually takes about two years of great data about a bustling industry. They still need to expand qualifying medical conditions — that usually happens before adult use, bringing more patient sign-on, which produces a fruitful program that then incentivizes adult use. Maybe three or four years before they'd introduce an adult-use program — I could definitely be wrong. Bryan Fields: What's the current patient count in Kentucky right now? Emily Sisneros: I don't know that answer — they're just introducing it. They might have over 500, but they might not have patients signed on yet because the online portal for business applications and medical practitioners has to happen first before patients can sign on. They're not anticipating people can start buying until January 2025. Kellan Finney: That seems very short to me — doesn't it take a while to grow cannabis? Is that a cart-before-the-horse situation? Emily Sisneros: Great question. You have to get to harvest, make product, and get it to dispensaries that are built out with certificates of occupancy, can open their doors, and have learned what an inspection process looks like — so it probably won't hit that January timeline. I think people build programs optimistic about timelines and it just doesn't work that way. Kellan Finney: Do you have these conversations with prospective clients who say 'I heard we'll be printing money by January,' and you have to say that's not really how this works? Emily Sisneros: Yeah, it is, and I think people base expectations on what's written or what they hear at state-level conversations, but this is the state's first time doing it, so they're guessing to an extent too. The best thing a state can do is give itself buffer time in each milestone, because the best thing you can do is over-deliver. Too often it comes across as underperforming and people start to complain, even though they didn't have a program at all two years ago. I'm more optimistic — 'we're almost there' — but I understand it can create resentment. Bryan Fields: There's so many jokes about the governor fighting the program the whole time — didn't the governor of New York actually come out in a public statement saying he was embarrassed by the program? Emily Sisneros: When you talk about not doing it right, just look at New York and say, let's not do that. He talked about setting up the program the right way, and it's like, nope, didn't do that, didn't do that, oh, it struggled — what a surprise. Kellan Finney: What other markets are you keeping your eyes on — six months, a year, two years out — that people should think about, a hot market that's maybe under-recognized? Emily Sisneros: I think Pennsylvania is going to be a gold mine for people. I don't know how controlled the program will be or how many licenses they'll give out, but my goal would be to help them build that program the right way — not just because I'm from there, but because there's massive bipartisan effort pushing it forward. I'd love to think Florida could have adult use, but they've been pretty outspoken about not wanting it, so I think multi-state operators will have a stronghold in the medical market there for a while even if it flips. I live in the South, and I'd love to see some Southern states get online — my state will probably be the very last to legalize, but we're still working on it. From a landscape perspective, maybe you don't want to start from the beginning — maybe you want to enter and buy distressed assets from operators who are completely burned out. We're already seeing that in New Jersey, about three years into the program — it beats people up, not because the company's bad, but because of the application process and local battles. One of our clients in New Jersey, the first adult-use dispensary to open there, has gotten more energized over time and is now looking at how to expand — so there are ways to partner with existing companies through investment or joining a new venture. Bryan Fields: The distress angle is super interesting, especially given how challenging the process is just to open your doors, and then running the business is a totally different beast. Do you see distress becoming a prime opportunity for an outside operator to roll up down assets? Emily Sisneros: Yeah, I think it is, if you know how to run a business. My husband made a lot of money buying distressed assets because he learned through his own businesses and startups — he even bankrupted a couple of businesses when he was young, learned through those mistakes, ended up on stage with Tony Robbins, crazy stuff. He learned how to run a good business, applied those principles, built successful businesses, and then started buying distressed assets because he could pinpoint what was making companies tank — buying at bottom dollar, keeping the owner involved, helping it grow. If people understand how to run a business well, this is a great opportunity to buy distressed assets; if you don't, you're just throwing more money after a sinking ship. Too often people start a cannabis business as their first business ever and think they're a great business owner, but it might just be a cash-cow business while the market's fresh. When the market shifts, that's what separates good operators — we train clients to operate now as if the market could shift tomorrow: dial in expenses, train employees, get rid of toxic hires, watch customer retention — that's what helps you stand out when the market shifts, because every market eventually shifts. Kellan Finney: Do you think there's a more attractive sector of the industry right now — retail, cultivation — that's underserved, an opportunity for an entrepreneur? Emily Sisneros: Great question, and I love it because we're entrepreneurs and get excited about out-of-the-box thinking. When a state opens up, everyone runs after dispensaries, which is smart if you understand retail. But processor or manufacturing licenses are often overlooked because it's more of a scientific realm — solvent versus solventless processing — a bit more of a learning curve, so competition is lower, and if you get a solid product to market you're serving every dispensary. Cultivation is similar, except people underestimate the investment required, or jump into tier three or four when they're not equipped — better to start with tier one and grow into the next tier when states allow expansion. And then ancillary businesses — providing services or products in the non-plant-touching space, like consulting — add massive value to plant-touching businesses and probably come with easier banking. Plant-touching entities really struggle with banking and insurance. Bryan Fields: My bank freezes my account every year because they think I'm doing something weird, or saw a weed leaf on our website and shut us down — though they weren't wrong. Kellan Finney: What question do you wish more people asked you? Emily Sisneros: I think if people came to us understanding this was an investment, they could ask how to make sure they put that investment in the right places — because the mistake people make is either asking how to spend as little as possible, or thinking that throwing a ton of money at it guarantees a win. Both thought processes are incorrect. If you see it as an investment, you can ask intelligent questions to bring the right people into your project — the right consultant, attorney, accountant — before you hire them, so you don't get duped. Bryan Fields: Prediction time, Emily — how do you see the South evolving in the cannabis industry? Emily Sisneros: I think Alabama and Georgia are the canary in the coal mine — other Southern states are watching to see how their programs work. It's predominantly red states, but across the board, red or blue, people want cannabis, especially medical. I think the South will slowly trickle each state into medical programs, and then a brave one will introduce adult use, and that state will make the most money because everyone in surrounding Southern states will go there. Over the next five years, we'll see more Southern states introduce medical programs, show off great patient statistics, and then more people will advocate for adult use — it comes from advocacy. Kellan Finney: I'm going to take a different approach — I think Florida goes recreational, and in the next 18 months you'll see Georgia, Alabama, and other Southern states see this massive influx of capital getting funneled to Florida, prompting regulatory changes to try to catch up, just from the sheer volume of money and population going into Florida. Bryan Fields: I'm frustrated because that was my answer too, but for podcast rules I can't repeat it. I'm with you — I think Florida's going to do staggering numbers, and it'll be easy for neighboring states to look internally and ask why they aren't doing this. I don't know if Georgia and Alabama will go adult use, but they might expand medical. The one caveat we haven't discussed is the hemp industry, which continues to complicate things for lawmakers trying to understand what's going on — as we've seen in Texas, it's a massive market, and I wonder if that needs to be resolved before some of these other markets can move forward. Emily Sisneros: I could see Florida stalling — I think the MSOs lobby too much to keep it in their pocket, so I don't think they'll be first. I could see Alabama shifting to adult use before Florida, though the governor there has come out pretty vocally against it recently, which gives me pause. We also haven't talked about the interplay with rescheduling or descheduling — that brings a pharmaceutical push that will influence state-level decision-making on adult use, and that changes the whole game. Bryan Fields: It's going to be a lot of fun, on so many levels — all these variables to consider. Good luck, come join the industry, they're taking applications in Kentucky. Bryan Fields: Emily, for listeners who want to get in touch, need help with licensing or business, where can they find you? Emily Sisneros: They can find me on our website, www.cannabusinessservices.com. They can find us on pretty much any social media platform — I'm on LinkedIn as Emily Sisneros, that's where we post a lot of our content, but we cross-post and put a lot of our webinars on YouTube, full-length videos and things like that. Bryan Fields: Awesome, we'll link it in the show notes. Thanks for taking the time, this was a lot of fun. Emily Sisneros: Thank you so much.