A look inside one of North Bay's few cannabis microbusinesses

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No one would be surprised to find prepared cannabis in a dispensary. What most would be surprised by are thousands of cannabis plants growing in plain sight.

That is exactly what visitors to Flora Terra, a cannabis dispensary, cultivator and distributor in Santa Rosa’s Coffey Park, are treated to.

Just off the main sales floor, through a large picture window, stand plants that customers could soon imbibe.

Flora Terra, which had its grand opening late last month, holds what is known as a microbusiness license from the state of California.

A microbusiness license allows a licensee to cultivate cannabis on an area up to 10,000 square feet and to act as a licensed distributor, manufacturer (subject to some limitations) and retailer, according to the California Bureau of Cannabis Control. In order to hold a microbusiness license, a license holder has to engage in at least three of those four activities and each business type has to be a separate premises. Flora Terra has thick red stripes painted on the floor where one business area ends and the other begins and employees who work in the dispensary cannot access the grow areas, for example.

Experts and license holder alike said while the licenses are not new, they allow businesses more creativity and flexibility with how they structure and run their operations and create more room for innovation.

While not uncommon statewide, microbusinesses are a rarity in the North Bay, with none in Napa and Marin counties where cannabis activity is limited by local rules. Only five microbusiness license holders are registered in Sonoma County.

Those North Bay cannabis businesses that do take advantage of the licenses can enjoy perks including selling a house brand at a lower price.

“We plan to sell 25% in-house” said David Wingard, Flora Terra’s founder and CEO. He said his grow operation allows Flora Terra to produce and sell its own brand in-house at better margins.

Erin Gore is the founder and CEO of Garden Society, a cannabis company registered in Cloverdale that also has a microbusiness license that allows it to manufacture and distribute cannabis. But rather than a storefront, Gore has a delivery operation. Gore said her license cost $20,000 since the California Bureau of Cannabis Control is the sole agency she had to go through of the three state level cannabis agencies that regulate legal weed statewide.

Otherwise, she said, she would have needed to get three separate licenses for each of her business functions, which would have cost more time and money.

“It’s so good for small business to be able to get their stacked permits in a way that allows you to run your business,” Gore said, adding it gives a competitive edge to smaller operations.

Gore noted that not all jurisdictions in California allow for microbusinesses and said she hopes they will proliferate across the state. She said now that she is set up, her company has expanded and launched a statewide delivery service last week.

Joe Rogoway, a cannabis law lawyer based in Santa Rosa, said the benefits of dealing with one regulator are significant.

“If a business separately holds licenses for all of those same activities they would have three different regulators they would have to contend with,” Rogoway said. Instead, having the one license allows businesses like Flora Terra and Garden Society to innovate how they create, distribute and market their products more flexibly.

“In a lot of ways the story is about innovating the retail experience and providing what is called a ‘show grow’ to be able to have the consumers look and see what happens with the plant,” Rogoway said.

Rogoway said that kind of experience will be important for cannabis retailers especially as they, like many other industries, compete with online businesses.

“Retail as a category is challenged by e-commerce… and cannabis is susceptible to that as well,” Rogoway said. “Innovation at the retail level, those are the kinds of things that are going to be critical for retailers to survive,” he noted, adding on-site consumption of cannabis could also be an emerging industry that could edge out e-commerce.

A microbusiness license does present some limitations however.

“The main drawback is the limitation of size on canopy for cultivation,” Rogoway said. “If somebody wants to be able to cultivate more than 10,000 square feet of canopy at that site, there’s a barrier,” he added, although he noted that for many microbusinesses that many plants is probably sufficient.

While the microbusiness license may present some limitations, that is only an issue once a business is up and running.

Gore of Garden Society said the license has been a great way to get her business on its feet and that with continued expansion, “it might eventually make more sense to get all three individual licenses.”

Staff Writer Chase DiFeliciantonio covers technology, banking, law, accounting, and the cannabis industry. Reach him at chase.d@busjrnl.com or 707-521-4257.

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