Real winners in pot bonanza? Security companies

As marijuana companies get closer to opening their doors, a cluster of industries is seeing a surge in business. But it isn’t growers, producers, or retailers.

Instead, it’s the support services helping new pot companies navigate complex regulations. Many of whom never touch the actual products.

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For one information technology firm in Anchorage, services for aspiring cannabis businesses now constitute the vast majority of its work.

“Try to envision a wall here, with a solid metal door right here,” gestures Jane Stinson near the entrance of an empty room she plans on turning into a pot shop.

There’s some office furniture in a corner, and a sink leftover from when this 2,000 square-foot single-story Spenard building was a tattoo parlor. But besides that, the only hints of what the space might become are lines of blue tape on the floor. A provisional layout.

“This is where we will have all of our marijuana products,” Stinson said, pointing to a tape rectangle in the center of the room, which will serve as the “restricted area.”
“Imagine beautiful cabinets right here,” she said, her hands gliding over imaginary displays. “And you will come in here to see maybe four or five bud tenders.”

“What’s a bud tender?” I asked.

“A bud tender is an individual who knows everything about marijuana, and (has) a lot of good information,” Stinson replied.

I press if it’s a bit like a sommelier in a fancy wine shop.

“Exactly,” Stinson answered, guiding me toward another room beyond the main shop floor.

For a room a little smaller than a basketball court, the actual restricted area for holding cannabis products is quite small. The whole business is being planned and designed around the regulations adopted by the state’s Alcohol and Marijuana Control Office.

The regulations determine everything from the size of signage to how many people are allowed in any one room at a time (five per employee in the restricted area). Stintson and her partners are at a business phase where they’re focused on taking essentially an empty room, and figuring out how to fit a highly regulated and un-tested business model in between its walls.

Stinson’s son and business partner Evan Levinton walks me past a secondary chamber that’ll serve as a back office, and all the way to a small backroom, a little bigger than a root cellar. It’s here that they’ll install two giant safes: one for cannabis products after they’re carted off the shop floor each night. And another for large piles of money, because in keeping with current financial restrictions Enlighten will be a cash-only business.

The overall security philosophy is sort of like an interlocking Russian doll, Levinton explained, made of small secure rooms locked within larger secure rooms, with dense metal vaults at the core.

“Basically the point of that is the response time: by the time (thieves) try to get to something in here the police will come and they won’t be able to get in,” Levinton said, his foot not far from a large piece of metal chain on the floor.

Enlighten Alaska checking over progress with their security consultant, Thomas Craig, who works for Cardosa IT Solutions handling on-site security that is particular to technology systems and strategies.

Craig is clean cut, mild-mannered, and not exactly what comes to mind when you imagine the intersecting worlds of security and drug sales. His shirt is from Nordstrom’s.

He is extremely professional, from his demeanor to even the hard-plastic briefcase he carries that has a special external compartment just for business cards.

That Craig appears to know well what he’s doing is in part because his company has handled a lot of surveillance equipment over the years. And the surveillance piece of the security requirements for a cannabis business to reach compliance is huge. The state rules are strict about retail shop like this monitoring every entrance, exit, point of sale, and restricted area around the clock, even when a store might be closed and locked up.

“The real big kicker for most of the costs is storing that data,” Craig said.

Enlighten is setting up 16 to 20 high resolution cameras, and in keeping with the regulations, everything they record has to be saved for 40 days. And because no Alaska companies have the infrastructure for inexpensive cloud data storage, all that footage has to be archived on-site. They’re planning on about 36 terabytes worth of capacity (that’s the equivalent of around 9,000 feature length films, or 612,000 songs).

Like Craig’s other clients entering the cannabis business, Enlighten is going above and beyond the regulations that are on the books, figuring out what system they need to meet compliance, and then opting for the best version of that system available. Because the burgeoning consensus is it is simply too large a financial and fiscal liability if something breaks down.

“If you do have a hard-drive failure,” Craig explained, “you’re going to be out of compliance, and you’re going to have to shut down your business for the time being. That’s a problem.”

When I asked Craig if these types of security measures are similar to what’s required of a liquor store, he said it was the wrong comparison. More apt, he offered, is a pharmacy. But the state’s cannabis regulations, he said, seem much more detailed.

Security is what’s known as a “pick and shovel” industry. Because when there’s a gold rush, it’s the tertiary businesses selling the essential tools like picks and shovels that tend to steadily profit.

“I would say about 80 percent of our business right now, at this juncture, is with the marijuana industry,” Craig estimatd.

He doesn’t expect that rush to last, though. Right now, it’s the pioneer pot businesses working their way through the requirements. Though hundreds of residents started the permit application process, it has been relatively few with the capital and savvy to get to the point of having real-estate locked down and beginning security consultations.

Craig sees the current rush as more of a big pulse that will trickle off, but leave a permanent client-base.

While Cardosa IT will stay involved on the technology and equipment side, they don’t provide other big safety components like guards, locks, or transportation.

The other twist, is that because cannabis is still illegal under federal laws, bigger security firms handling federal contracts or based out of state can’t do business with company’s like Enlighten. Craig, who grew up in Wasilla, thinks that’s a benefit for the state’s economy because it keeps money from flowing out.

“The way the regulations are set up it is allowing Alaskans to do business in this arena,” Craig said. “It’s not going to be a huge industry up here, but it is important to have that infrastructure within Alaska.”

The consultations, the hardware, the security programs: they aren’t inexpensive. Stinson estimates she and her partners put about $50,000 getting their permit application prepared to submit. In the two months since, they’ve poured in another $25,000, much of it towards figuring out security systems that haven’t been installed yet. But Stinson says they are willing to pay more now, because they see it as a long-term business strategy.