Delano Phillips, Head of Business Development at Hana Dispensaries – Interview Series

The cannabis industry has been hyped as a multi-billion dollar. The result has been the birth of the “green rush.” Entrepreneurs have been quick to dive into the market in search of lucrative opportunities. However, the churn rate has been significant; giving a strong indication that the whole idea of “making a quick buck” in the cannabis industry is far-fetched.

With an ever-changing regulatory landscape and banking and marketing restrictions in an oversaturated market, operating a legal cannabis dispensary can be a challenging task. While hope is pivotal to the success of any business endeavor, it is hardly ever a sufficient business strategy. We spoke to Delano Philips, the head of business development and compliance at Hana dispensaries to get a better feel of what it takes to be exceedingly successful at running not one but two legal cannabis dispensaries.

“They expect cannabis companies to pay all kinds of taxes, but we can’t even bank or take out business lines of credit or other traditional amenities that normal tax-paying businesses have the luxury of.”

Delano Philips

As an intro, how did your career path lead you to the legal cannabis industry?

Being from Colorado, I had a group of friends that started a legal cultivation operation back in 2010. As I watched that grow, I set my mind that I wanted to be a part of cannabis in Arizona where I knew that I would live at some point.  I met a broker who had a pulse on the Arizona market and we looked at several potential deals in the state. I also looked at deals in Denver, CO, and applied in Arkansas.  Finally, Hana was presented and I was able to get the deal done to acquire the operation with the help of a private equity fund run by one of my closest friends and ex-college roommate.

How does the recreational market compare to the medical market in Arizona, in terms of regulation and ensuring compliance? Any bottlenecks? 

There is not a big difference between the markets as far as regulation and compliance besides some purchase limits with adult-use cannabis products and higher taxes on cannabis.  Otherwise, they are regulated under virtually the same rules and laws. Testing is a bottleneck, but it has gotten much better as more testing labs have been approved.

What are some of the challenges that a dispensary may encounter when applying for a license to operate and how can one go about this?

The biggest challenge in Arizona is that we are a limited license state, so you really can’t apply for a license in Arizona unless the state opens it up for a specific purpose or to address a lack of availability in a geographic area. The additional 26 licenses coming soon are part of the Smart and Safe legislation which legalized adult-use sales and provided an additional 26 Social Equity licenses.

Other challenges come before a dispensary opens. When applying for a license, many states require a real estate plan for your building. There are many zoning and permitting requirements depending on the city or town of the application. This makes it difficult to find a property that will check all the necessary boxes without needing a variance of some sort, which can in turn create costly legal work.

What do you think of the testing requirement for contaminants in legal product in the state?

It is necessary and a good thing.  Although it is expensive and a tad burdensome, no one wants to consume an unsafe product.

The Safe Banking Act: How necessary is this for the industry and what positive changes will come with this?

It is beyond necessary and beyond past due. Currently, dispensaries are not able to use many banks because of federal regulations. It is dangerous for those who can’t bank to always deal in large amounts of cash. It puts the customers, employees, and the business at risk. They expect cannabis companies to pay all kinds of taxes, but we can’t even bank or take out business lines of credit or other traditional amenities that normal tax-paying businesses have the luxury of. Cannabis is legal in some form in 36 states and CBD/Hemp is legal in all but 2. Banking is long overdue for the cannabis industry.

Any thoughts on the future of cannabis edibles? What direction is the market likely to take? 

Edibles will always be an option, especially for those who do not wish to smoke cannabis. It is a heavily saturated brand category in nearly every market. Likely, many brands will go away and there will be some tried and true that capture much of the edible market. Cannabis will likely continue to expand into different edible/ingestible forms as we have seen with tinctures, drinks, and various foods.

 About Hana Dispensaries

Hana Dispensaries was among the first licensed dispensaries in Arizona that opened in 2015. Currently, the dispensary has two convenient locations and three renowned brands that cater to both medical and recreational consumers.

Hana Dispensaries offer much sought-after cannabis products including premium flower, flower products, edibles, and concentrates at the two locations; Phoenix and Green Valley. All their products are tested by independent, third-party labs and the results are available upon request.

Thank you for the great interview, readers who want to learn more about the products that are offered should visit Hana Dispensaries.