“Charles Cherqui and I aim to level the playing field to support social equity initiatives and bring change to an industry which has historically whitewashed the past injustices served in its former prohibition.”
The legal cannabis industry has been estimated to be worth billions of dollars, hence it has attracted all and sundry, earning itself the moniker “green rush.” But like with many other industries, monopolies and oligopolies stand a higher chance of succeeding in the industry which has monstrous barriers to entry.
Unlike traditional industries, the cannabis industry was “built on the backs” of legacy operators who deserve every chance to access the industry which they fought so hard to have legalized. Several states have created social equity programs that make it easy for equity applicants to gain entry into the industry. Unfortunately, the goodwill of legislators is hardly sufficient to get past the barriers. For example, the license application process is detailed and too complicated for most equity applicants. This gives MSOs that can afford to pay hefty consultant fees an upper hand, much to the disadvantage of the socioeconomically underprivileged applicants.
To bridge this gap, Cognitive Harmony Technologies is leveraging technology to make it easier for social equity applicants to navigate the cannabis license application process with ease and efficiency. We had an extensive chat with Walter Moore, Co-Founder, and CEO of Cognitive Harmony Technologies, who also happens to be a legacy operator. Hence we count this interview a rare privilege.
He narrates to us his journey into the industry, how he got arrested for growing weed in his backyard, and how such experiences fueled his passion for helping “others like him” aka equity applicants, gain a meaningful footing in the cannabis industry.
Without further ado, meet Walter Moore.
From physics and Mathematics to cannabis, how did your career path lead you to the legal cannabis industry?
I was introduced to the world of cannabis at a young age; I grew up in Washington State and my dad was a grower. I was super interested in what he was doing but he didn’t share too much information about it, as cannabis hadn’t been legalized yet so there was still a stigma surrounding it.
As I got older and entered young adulthood, I got into mountain biking, snowboarding, and other scenes and communities with which cannabis use is ubiquitous. I also started cultivating my own cannabis plants in the house that I was renting. Unfortunately, I was caught by the police, was arrested, and went to jail. But luckily, I was able to plead down my charges to a gross misdemeanor. After making it through this whole ordeal, I knew I needed to set out on a different path. I was still a consumer of cannabis but stopped my illegal grow operation, and ended up going back to college as a music major. I became obsessed with the science behind music and that led me to study mathematics and physics on a deeper level. I eventually received a grant to attend the Loyola University of Chicago, where I majored in theoretical physics and applied math. And that’s where I met my business partner Charles Cherqui.
After spending about a decade of my professional career years in financial markets, doing automated trading and ad tech, I turned to cannabis once more after Illinois legalized adult-adult use. Pleased to see that Illinois, which had become my home, included a social equity mandate as part of their legislation, and I wanted to build something to help support that initiative. With that in mind, Charles and I founded a social equity cannabis incubator, Perception Farms, with the goal of treating social equity capital with the same dignity and respect as traditional financial capital. We incubated about seven groups in Chicago, including people who were previously prosecuted for cannabis and/or came from underserved areas, to assist them with winning cannabis business licenses. But what we found through the process of managing all the endless data and paperwork to apply is that there is a need for software that democratizes access to the industry and makes the whole application process more seamless and approachable. This is what led us to launch CHT and our Accelerator platform.
We first tested the Accelerator platform in Illinois, where we helped develop 27 applications, with each one receiving a perfect score by the state. We then went on to launch in New Jersey, followed by New York, with additional expansion to come.
You know first-hand how cumbersome and frustrating the license application process in the cannabis industry is. Can you shed some light on specific bottlenecks that were difficult to get past?
The application process is one of the most difficult challenges I’ve ever encountered. This process is clearly meant to consolidate power and license wins among multi-state operators that were already operating in the medical area. If there was a service and platform like the CHT Accelerator available when Charles and I were applying for our first license, it would have saved us a great deal of time and money.
In terms of specific bottlenecks, for example, to apply for a cannabis business license in New York, a company will need two years of balance sheets that their business can operate before they even start to apply. That’s a pretty arduous hoop to jump through even before the other priority status type items may be considered. And there are nine license types in New York, which may be confusing, plus there’s also a challenge for legacy operators to navigate illustrating how their companies have moved forward in the gray market. They’ll have to show that they weren’t in violation of anti-money laundering regulations, yet another hurdle to jump over.
Social equity for the cannabis industry is something that you seem to be passionate about. What fuels this passion and what has been the biggest hurdle that you have encountered in this quest so far?
My passion for equity in cannabis comes from being personally impacted by the war on drugs. Getting arrested for growing cannabis reset my life in a lot of ways, and I’ve gone through a number of careers since then, mostly technical in nature. So when they passed the law permitting the adult-use market in Illinois, I read the legislation and saw that it included a social equity message, which was encouraging.
That inspired Charles and I to launch a social equity cannabis incubator and work with equity groups in Illinois to apply for licenses – five dispensary license applications, of which we’ve won one, and one license for craft grow, which we’re in the process of appealing. But in the process of incubating these equity teams, we’ve learned that there’s a huge gap between what the state wants to accomplish in terms of restorative justice and the reality of what it takes to actually apply for a cannabis business license.
The complex, lengthy and time-consuming application process is often the main hurdle. Just gathering the seemingly endless amount of materials and making sure you’re not missing anything can be incredibly difficult. So, Charles and I took our experience of incubating these teams and the resources that we had to gather to create the CHT Accelerator, with the goal of encompassing everything we learned and addressing all the hurdles that we navigated through the license application. The result is a product that streamlines and automates the application process to bridge the gap and build a network outside of large corporations and multi-state operators, which are far from inclusionary. We at CHT aim to be a disruptive force, and the opportunity for disruption is being provided by states that pass laws that create priority status for equity applicants. So, while the legislation doesn’t solve all the issues, laws and regulations prioritizing equity are still extremely important.
You intend to leverage technology to make the cannabis industry more equitable. Can you tell us how you intend to achieve this?
It’s encouraging to see the cannabis legalization movements around the country paired with well-meaning equity and restorative justice initiatives. However, there is still a high barrier to entry presented by the extensive and convoluted cannabis business license application process. Because the application process is so difficult and complex, large corporations and MSOs who have the funds to hire expensive, hundred-thousand-dollar consulting firms are in a much better position to win licenses over smaller operators. Without extra help, applications are consistently rejected due to missing materials and other mistakes. This issue is creating a huge gap between the goodwill of legislators passing social equity laws and equitable cannabis business ownership.
With Cognitive Harmony Technologies, co-founder Charles Cherqui and I aim to level the playing field to support social equity initiatives and bring change to an industry that has historically whitewashed the past injustices served in its former prohibition. The CHT Accelerator streamlines the process to create a competitive application. The software automates redundant processes, minimizing the risk of missing materials and making other common mistakes. Applicants also have access to CHT’s master checklist, automated templates, and live chat features to help guide them through the submission process every step of the way.
Another important component of CHT is that our rates for our services are much more affordable than hundred-thousand-dollar-plus consulting firms typically used by multi-state operators and other large corporations with seemingly unlimited resources and capital at their disposal. We want to be accessible for small businesses, equity applicants, and legacy operators who have been historically overlooked and/or persecuted during the war on drugs. We want your every day, aspiring entrepreneur to be able to break into the industry and make the cannabis sector’s leadership as representative and diverse as the consumers.
Are MSOs unfairly dominating the cannabis industry?
The odds are stacked against small businesses and equity operators without access to capital on the ready. And this imbalance and limited access start with the lack of resources for completing a competitive application. We’re seeing this in New Jersey right now, with MSOs and large companies that have already made inroads in the medical industry opening the first set of dispensaries. We know the state intends for equity applicants to be next, but the competition and set of hurdles to jump continue to be stacked.
What are some of the steps that can be taken to get social equity “right” in the cannabis industry?
Steps need to be taken by regulators to eliminate pay-to-play, which was what happened in Illinois. The system in that state, which did not cap the number of submissions, gave a loophole for companies with money to burn to flood the application pool, applying over 40 times. So of course with that many applications in the system, the big players with money are going to come out on top and win licenses over smaller businesses. Thankfully, I’m encouraged that regulators in NY and NJ are doing a better job in this regard, avoiding these unfair situations.
However, I foresee a highly political zoning situation in NY. Historically, companies that can afford to pay lobbyists and other influential people to get the deals and contracts done, are more successful. I’m not sure what short-term regulatory solution exists for this age-old, persistent issue.
But, what we at CHT try to do is also encourage networking. As applicants go through our checklist and realize what they may need – for instance, a floor plan for their dispensary – we can help link them with our network of architects, realtors, and a range of connections across the supply chain to help people get the resources they need.
In your opinion, will having the legal cannabis industry “on the blockchain” help to iron out most of the regulatory hurdles that are holding the industry back?
Absolutely not. That’s a pipe dream. Blockchain technology has its benefits, but the problems in licensing and social equity won’t be conceivably solved by an immutable ledger. I have seen some ideas about putting applications in their entirety on the blockchain, for attribution purposes, and I’ve seen lab testing results utilize blockchain technology for efficiency and supply chain purposes, but these uses don’t necessarily impact or improve equity.
It was a great pleasure to have this one-on-one with Walter Moore. Readers who wish to keep up with how is simplifying the cannabis license application process are more than welcome to visit their website.