Avis Bulbulyan is the Chief Executive Officer of SIVA Enterprises, a full-service cannabis business development and consulting firm that provides turn-key management, venture opportunities, product and brand development, insurance, and licensing to entrepreneurs across the United States. Respectively, Avis was recently appointed by The Department of Consumer Affairs as one of the members of California state’s new Cannabis Advisory Committee under the Bureau of Cannabis Control.
Avis currently serves as the President of the Los Angeles Cannabis Task Force and the Education Chair for Cannabis Legal Accounting Business Law (CLAB). As one of the industry’s leading cannabis business authorities, Avis is a highly sought after speaker and a valued expert resource for many national news sources and publications. Avis oversees corporate direction, business development and strategy at SIVA Enterprises, facilitating company activity in consulting, alliances and channels, marketing, investments and operations. Avis leads a high-caliber team who collectively provides clients with the highest level of support from ideation and concept, through execution. SIVA Enterprises’ clients are some of the most well-known and highest-grossing companies in the cannabis industry.
Could you tell us your cannabis story and what made you want to go into the industry?
It was a combination of opportunity and medicine. So around that time, when the industry was just taking life … I come from a compliance background. I had a couple of friends who asked me to look through their facility and do a compliance run-through of it, so started doing that. I was exposed to it and saw the opportunity. Saw that it was going to turn into a big business.
Around the same time, I also had a medical issue and was prescribed a synthetic version of it [cannabis/cannabinoids]. Prior to that, I was never a consumer. So I gave it a try and started looking into the industry. The more I looked into it, the more fascinated I became. And then in the end, just went in deep and all the way through.
What’s the biggest lesson you’ve learned as a cannabis entrepreneur?
The biggest lesson I learned as a cannabis entrepreneur would be that “Business is difficult. Business is hard.” Now a lot of people look at the industry and think that, “If you build it, they will come. You’ll be an overnight millionaire.” It’s no different from any other traditional business. In fact, it’s a lot more difficult because of all the different regulatory compliance issues you have to deal with.
You’re in a brand new industry that’s still in its infancy. We’re slowly starting to come out of that. You have to remain flexible, because everyday it’s something new. You might have a really great plan and a week or month later, the rules change, and your entire plan goes into the trash. So, having to be flexible, having to create options and backup plans for every decision you make.
What advice would you give to an up-and-coming cannabis entrepreneur?
Do your homework. Spend time looking at the industry. Everyone thinks it’s a race or a sprint. It’s not. You want to take your time with it – really take your time to understand what you’re getting yourself involved in, because of how fast things move in this industry. A month in this industry feels like a year in any other industry. So everything does move fast.
So when somebody is looking to get into the industry that doesn’t have experience in the industry, especially if they don’t have experience in business, the best advice is, “Really understand it. Have a plan. Have a gameplan with your partners. Because of the state of the industry and the way it evolves and creates itself, people are put into a position where they’re put into “shotgun marriages”. That’s probably one of the biggest downfalls of a lot of companies, where they get get into bed with a partner, and then if it doesn’t work it creates a block for a lot of resentment to be built and to step on each other’s toes. So the company just falls apart. So really do the due diligence on your partners in the industry.
So how does the cannabis industry compare to the other industries you’ve worked in?
A lot more fun! It’s exciting, because a lot of industries are already there [established]. So, it’s very difficult in those industries to make an impact or a difference. You know, in businesses, we talk a lot about “disruptive technology”. Disruptive science. This is one of those industries that disrupts many traditional industries.
When you think about all the different possibilities and options, it disrupts medicine, it disrupts agriculture, the textile industry … With this plant, you can do anything from product formulation and pharmaceutical stuff due to it replacing many traditional pharmaceutical drugs.
On the other side, you’ve got the application of it, from textiles to insulation to medicine to recreation. It replaces a lot of stuff. I mean, think about when you have an event and you have alcohol there – imagine being able to replace that. In comparison to a lot of other industries, you’re able make a difference. Make an impact. We are all at a point in this industry where we’re creating the new rules and regulations you run your business by. It’s very different.
There are few companies that specialize in as many areas as your company does. Does this give you an advantage? What are your unique selling points (USPs)?
Experience. There are a lot of companies out there doing consultancy work. You have a lot of companies doing management work. You have a lot of companies in the business of cultivation. I think what separates our company from others is that we’ve been there from the beginning. We started in this industry back in 2006/07 – that’s when the industry was just taking life and form.
So, it’s really an accumulation of knowledge. You had the California model, then you had the Colorado model. And then Massachusetts came out. They were the first states to do the whole merit-based application process, which was still a non-profit structure. And then we went into Nevada, which was a for-profit structure, and they separated the industry into four categories – four license types. And then we went into Illinois, New York and all these different states. So, being at the front-line of all these states as they’re all going through their process.
Now, when you come into California where the future of the state’s going to come online [?], it becomes a situation where it’s an accumulation of knowledge, where if you were going to sit down and lecture someone on the creation of the industry, how and where it started from, what the processes were …You could lecture them for weeks and months and they won’t necessarily understand it. So it’s really having enough practical, hands-on experience.
You do one thing in one state, then you go to the next state. For instance, Massachusetts published the applications online, so it was public knowledge. So then, when you go to Nevada, almost all the applicants – the smarter applicants – go to Massachusetts, they turn out all those applications, they see the approach that works [?], so now that just forces you into a situation where you’ve got to up your game. You’ve got to be creative, come up with new ways of doing it.
The experience with all the clients, because every client comes with something new to the table. You’ll work with a group that’s made up of doctors so you start learning the medical side of it. As you go through the process and you want to license and start implementing the project, then you start working with planning departments, planning commissions, architects, engineers, contractors, different clients (some clients having a very strong business or finance background) …
So, if you’re the best grower in the world and you want to get into consulting, the question is “How much experience do you really have, outside of what you’ve done?” So I think that’s what really separates us. It allows us to connect with the community, the regulators and so on. Everybody’s afraid of what they don’t know. So, when you sit in front of the regulator in California, they’ll have a million-and-one questions. So, besides being able to educate them and show what options are available to them, you’re able to point to different states and different scenarios, and you can really just provide them with a different level of education you otherwise wouldn’t be able to.
What do you think will happen next year, when California becomes recreationally legal?
Two sides. One, right now California’s the most mature market across the country, as it’s ground zero and everything started in California. Because of the sheer size of California, everyone’s looking at California to see what it does on the regulatory side. So, when you take all that into consideration, you have one of the most mature markets out there. But at the same time, it’s one of the most immature markets as far as licensing and oversight is concerned.
For instance, other states have the benefit of not having an existing industry, so the state is able to come out with rules and regulations and put out the applications [before the industry fully develops]. In California, because at one point or another over the past 10 years, different cities adopted different rules and regulations – some banned them, some allowed them – so California has to give consideration to existing operators (the legacy operators).
So, now next year, it’s going to be a situation where it’s going to be “it’s always darkest before dawn”. I think we’re approaching that point right now. I think next year we’re going to see a really high attrition rate, probably in the 60-70% percentile, if not higher. As people start understanding what “operating” and “oversight” really means, the laboratory testing is going to be a big piece of it.
Right now, we have a situation where supply-and-demand is fairly level. In fact, supply exceeds demand. But then, you also have no control over the products. Many products on the dispensary shelves fail because of the pesticides used. So next year, I think laboratory testing is going to contribute to the high attrition rate as far as operators, manufacturers and cultivators are concerned.
On the dispensary side, it’s just a lot of compliance procedures they’re mostly not even aware of. A lot of operators are running their business as a lifestyle as opposed to a legitimate business. So next year, when you take into consideration the financial requirements, the 280E implications implications and all of that, you’ve really got to be up on your compliance game. So, on the industry side, you will see a lot of failure. You will see a lot of consolidation on the state regulatory side.
There is enough experience with all the other states that have gone through the process. You have 28 states plus D.C. that have some sort of marijuana regulation on the books. You’ve got a really good amount of states who’ve gone through the same process. Every state is very unique. California is just going to be a beast! I do think there’s going to be a lot of confusion and some time will need to be taken to iron out the kinks.
But I think as we get deeper into 2018, probably by fall or the fourth quarter, a lot of the kinks will be ironed out and will become a pretty nice business environment and culture for cannabis. The state has been very pro-active and reaching out and listening to what the industry’s needs are, what keeps the industry operators up at night. Most states don’t do that – they don’t take it into consideration.Most of it is done behind closed doors. If you have a lot of money or political power and capital, you see a lot of state lobbying going on.
That part of it is not much different in California, but the difference in California is that you have different agencies and regulators going up and down the state holding public workshops and really listening. Obviously, the medical regulations that are put out and a whole new set will be introduced next month, but if you look at the public comments, they [the regulators and agencies] really take the industry’s concerns into consideration. So, I do think we’re going to see a phenomenal business climate in California, but it is going to take time to get there.
On the consumption side and as a market, you look at L.A., for instance. L.A.’s market is larger than Colorado’s market, and that’s just one city. So that just puts things into perspective. When you look into California as a market, it’s just going to be massive, and you’ve got a situation where most consumers in California have their recommendations and it’s a lot more socially acceptable than in any other state. And that’s what really drives your markets. California has some of the best qualifying conditions or the most lax requirements.
Next year, once it becomes legal and that light switch is flipped, anyone over the age of 21 is a potential customers. Then when you add the tourism aspect of it, you’re going to see something that hasn’t really been seen not just in the U.S., but globally. So, it’s really exciting times!
Did we converse for longer? Of course we did, but we like to leave something for the show! Catch Avis on Elevate the Conversation tomorrow Wednesday 10/18/2017 at 6 pm PST on Facebook Live or UBN Radio, and you shall learn more about Avis, SIVA Enterprises and his work (as well as working with US Congressman William Delahunt, hopefully!).