Cory Lake is among countless Minnesotans preparing their picks and shovels for the economic gold rush that is expected to come with marijuana legalization.
The Minnetonka insurance agent wants to offer his services to growers, manufacturers and dispensaries who need coverage once they're up and running. He and other professional services workers — like cannabis accountants, lawyers and consultants — are eager to capitalize on Minnesota's new marijuana market.
States that legalized recreational marijuana have experienced a major job boom from the creation of an industry extending far beyond new "budtenders" and grow technicians. Ancillary jobs that support the cannabis market, but don't deal directly with seed-to-sale operations, will be critical to the growth of Minnesota's industry in the coming years.
"Because of the nature of the industry, there are a lot of businesses owned by people who love the plant but don't have the experience of running a buttoned-up operation," said Mark Waller, a Minnesota-based certified public accountant who has worked with cannabis firms in other states. "That is going to be extremely important because every state has its own set of rules."
Lake has sold insurance to hemp businesses for seven years, establishing himself as a well-known cannabis insurance specialist. He hopes that reputation will distinguish him from competitors lining up to serve Minnesota's budding marijuana industry.
"I've spent a lot of time, a lot of energy trying to become an expert in this particular space," Lake said. "It could be a big boom for my business, personally."
A report published last year by Leafly, a leading cannabis news website, found that America's legal cannabis industry supports about 428,000 direct and indirect jobs.
"Job creation continues to be driven by new and emerging cannabis markets," the report said, "where young companies are hiring for a wide range of positions."
Navigating the law
Minnesota's recreational marijuana market is still in its inception; dispensaries are not expected to open — outside tribal reservations — until early 2025. But Minnesotans eager to enter the industry are already scouting real estate and seeking guidance from established professionals such as Lake, who said he has fielded multiple calls per day from new and existing clients since the state legalized marijuana in May.
Lake said he's long been one of the few insurance agents in Minnesota who work with cannabis businesses, but he expects that to change quickly. Marijuana businesses tend to pay "exceptionally bigger" insurance premiums than hemp businesses, which "makes the whole space a lot more appetizing," Lake said.
"What we will see is a mass of people moving into this space, insurance specifically," he said.
Cannabis businesses will also need help navigating Minnesota's complex recreational marijuana law, which spans more than 300 pages. That's where experts such as Leili Fatehi and Jason Tarasek come in.
Fatehi is a partner and principal at Blunt Strategies, a Minnesota strategic consulting firm for the cannabis industry since 2019. She knows the state's new marijuana law from top to bottom, having worked closely with the lawmakers who carried it through the Legislature.
She tells clients who want to start a cannabis business to build their brands now, well before the state begins accepting license applications. Before applying, Fatehi said, applicants should have their business plans finalized.
"These businesses have to be prepared to actually produce, manufacture and sell these products to consumers on the early end," she said.
Tarasek, a longtime attorney who began practicing cannabis law in 2018, said he plans to help people seek marijuana business licenses. In the meantime, he counsels cannabis-industry clients on how to create corporate entities, raise capital and find the right location for their potential business.
Tarasek took a gamble by venturing into cannabis law when the industry was much smaller and without knowing if Minnesota would legalize recreational use. It paid off: He was recently hired by Vicente LLP, one of the nation's top cannabis law firms, to manage its new Minnesota office.
"I got rid of all my construction [law] work, which was substantial," Tarasek said. "I'm kind of placing a bet on myself and the potential market here."
Federal challenges
Many of the supporting jobs won't be full-time employees of cannabis companies; they'll be hired as needed.
Cannabis accountants are crucial for companies navigating Section 280E, a provision in the federal tax code that says businesses "trafficking" in federally illegal substances like marijuana can't deduct normal business expenses.
This creates a potentially huge tax bill and can make it difficult for cannabis companies to turn a profit.
"It's extremely important for a cannabis business to be as buttoned-up as possible because it is very low-hanging fruit for the IRS to potentially audit," Waller said.
His accounting firm, Morem & Waller, has partnered with human relations and compliance companies to help cannabis entrepreneurs cut through the tangle of industry-specific rules.
These supportive industries are attractive for many people interested in marijuana because they don't require cannabis licenses or subject a business to the federal tax disadvantage that comes with working directly with the drug.
Gavin Moberg is an account executive for Order.co, a company that provides bookkeeping software and financing to cannabis companies nationwide.
The financing piece is a key selling point, Moberg said, because most big banks won't work with marijuana businesses because of the drug's federal illegality. That forces those companies to look elsewhere for investors or front the money on their own.
"It's a huge advantage to our partners," Moberg, who lives in Crosslake, said of the company's financing. "They'll be able to access capital easily to build out new facilities or to purchase new equipment."
Back-office services might not be the most exciting expense, but they can help dispensaries and grow operations thrive.
"When starting a new cannabis business, people are very excited about branding, marketing, sales and what your dispensary is going to look like," said Aly Piscatelli, owner of national cannabis compliance firm Budding Operations. "But compliance is the only thing keeping them in business."
Meanwhile, architects, electricians and security firms will support the physical needs of new marijuana operations.
What can Minnesota expect?
While the Leafly report does not break out how many jobs are strictly "plant-touching" vs. supportive of the industry — or include jobs in the hemp industry — it does offer a state-by-state look that provides indicators about Minnesota's future.
Five years after legalizing recreational marijuana, Michigan has 31,000 cannabis-related jobs. Since the Wolverine State has almost double Minnesota's population, that could mean at least 16,000 jobs in and around the marijuana industry here by the end of the decade.
Colorado, the nation's first state to legalize adult-use cannabis more than a decade ago, counts 38,000 jobs in a population similar to Minnesota. Many national cannabis outfits and support services are based in Colorado, however, inflating job numbers.
Minnesota's cannabis market is projected to generate up to $1.5 billion in annual sales.
"The butterfly effect of this is going to be tremendous," Tarasek said. "All of my clients need banking relationships, insurance relationships and accounting relationships. ... Those industries are each developing their own cannabis niches right now."
