Upsize Minnesota January/February 2024

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— Bob Walloch, co-owner of CannaJoyMN

ALSO: CATCHING UP WITH SUMMIT FOUNDER MARK STUTRUD ADULT-USE CANNABIS AND ITS IMPLICATIONS ON WORKPLACE POLICY SMASHING THROUGH THE SLOG: START 2024 WITH BETTER ENERGY

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CONTENTS january • February 2024 • Vol. 23 No. 1 • www.upsizemag.com

PAGE 14

Cover story

Minnesota became the 23rd state in the U.S. to legalize adult-use cannabis in 2023. While the Office of Cannabis Management is still working on details around licensing businesses and regulating the industry, many businesses have already started operating in legalized medical marijuana and hemp prediction. A few of those owners offer insights on their businesses, their hopes going forward

BY ANDREW TELLIJOHN Cover photograph by Tom Dunn

PAGE 4

BUSINESS BUILDERS

Entrepreneurs should talk, help each other out, Minnesota Women Business Owners Hall of Fame inductee Dee Thibodeau, CEO of Charter Solutions, tells Uspize Founding Editor Beth Ewen.

PAGE 6

Founder’s Forum:

PAGE 4

Staff list:

Who’s who at Upsize magazine and how to reach us.

Upsize Minnesota (USPS 024-029) is published bi-monthly by Broad Axe Media, 2908 W 71 1/2 St., Richfield, MN 55423. Periodicals postage paid at St. Paul, MN and additional mailing offices.

Postmaster: Send address changes to Upsize Minnesota, PO Box 23238, Richfield, MN 55423-0238

FINANCE Tips for managing cash flow in real time, a challenging task for small businesses

by Cathy Sedacca, Impact Management LLC

PAGE 8

LAW

Unanswered questions from the adult-use cannabis bill will require business owners to change policies, perhaps litigate

by Gerry Fornwald, Winthrop & Weinstine

PAGE 10

MANAGEMENT Break into the new year with some strategies for increasing and improving your energy

by Jamie Taets, Keystone Group International

PAGE 12

SOCIAL MEDIA Five social media insights that may surprise you

by Alison Buckneberg, Words at Work

COLUMNS

PAGE 18

FEATURE Professional service firms involved with cannabisbased companies that are or hope to establish businesses in this new industry share advice on how to go about entering what will be a high capital, highly regulated industry PAGE 22

CATCHING UP

There were nine craft breweries across the U.S. when Mark Stutrud decided to start Summit Brewing Co. As he prepares to relinquish his CEO role, Stutrud reflects on growing the company and craft brewing

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‘Help one another’ urges Charter Solutions CEO and Hall of Famer

A

nyone who meets Dee Thibodeau gets an instant jolt of confidence and can-do spirit, qualities that bounce off her during a dizzying string of daily meetings that she considers routine. “I am a very social person, so I am out for breakfast, lunch and dinner. And what you do is you build your relationships.”

The fast-talking, big-laughing CEO of Charter Solutions was inducted into the Minnesota Women Business Owners Hall of Fame in November. Her world view began to form much earlier.

“I always thought I could do anything I wanted to do. That started probably when I learned to walk,” Thibodeau told the National Association of Women Business Owners crowd when accepting her award along with four others.

“I am an entrepreneur and I started four or five businesses before this,” she said later in an interview. “I started this with a partner, and when I interviewed women, they were very interested in having a company that’s only a million dollars or a million five. I didn’t want that.

I wanted to build a company that was $20 million-plus. A lot of women are kind of afraid to take the plunge and go out there.”

It is scary to think big. “You have to have the guts to go ahead and do it. I think so many are afraid that they won’t make it and that fear keeps them from going forward,” she said.

But do it anyway. “One person is not a company. You really need thoughtful and thought-provoking people.”

Thibodeau started Charter Solutions 26 years ago, with one business partner and co-CEO, Bill Leonard, who retired five

UPSIZE JANUARY • FEBRUARY 2024

years ago. “He wanted to play pickleball,” she says, but that’s not for her. “I never want to retire. Eventually the company probably will be sold because I have minority owners,” consisting of her management team. “But then I probably will start another one.”

At first Charter Solutions was a consulting company and provided staff augmentation to clients, then began getting into data analytics and related project management about a decade ago.

“That was a turning point. We decided to go into analytics and the cloud,” with an emphasis on healthcare.

Artificial intelligence is a growing arena. “If you’re going to do any AI, you must have your data” in order first.

Charter Solutions has 85 employees; she declines to disclose revenue.

It hasn’t always gone smoothly; 2008 was a “really, really tough year,” she recalls, amid the financial crisis.

“This last year has been one of the toughest years I’ve ever been through, because there are so many people that are laying off people,” and deciding to trim their outside consultant costs. “It’s when the economy is rocky.”

What does she advise? “You put your head down and you work like crazy,” she says, then adds her signature command— share what you’ve learned.

“I can’t meet with absolutely everybody. But if there is any friend I know who wants me to meet with someone, I do. I think it’s important for us to do that,” she says. “Help one another. Go to breakfast, lunch and dinner and help them. Connect them to two or three people. If everybody did that, we would all be successful.”

Sounds like a worthy new year’s goal to me.

—Beth Ewen founding editor bewen@upsizemag.com

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2024 Jan Feb Upsize Ad with Kim.indd 1

12/14/2023 11:49:51 AM

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finance banking

BUSINESS BUILDERS

Don’t Manage letyour cash flow cash stunt flow in your abilty a few simple to grow steps by Cathy Sedacca

by Craig Veurink

TIPS TIPS 1. Set a realistic goal for when you 1.

2.

2.

3.

3.

4.

4.

5.

5.

6

want to break even. This will help Top-line you to focus revenue your growth efforts and is key, but provide it’s important a numerical to remember benchmarkto collect for projecting your cash. yourMismanaging cash flow in the accounts near future receivable can slow growth Put cash and flow harm before yourprofits. business.

It Setting might seem credit counterintuitive, limits for customers but starts if you aren’t with collecting organizing information your cash from flow, them, you’ll run including into problems financialthat statements a profitable and quarter bankmight and trade not be references able to fix to make sure they have the Secure ability credit to pay ahead for what of time. youMost are financing. small business owners should Pay secure theas same much attention credit astopossible. detail and Thisquality is the best withway billing to be andprepared collections for the unexpected as you do with service delivery Considerand using sales a payroll in orderservice. to minimize Having the issues professionals down thetake line.care Have of collecting a staff payroll persontaxes whose saves primary them an duty enormous is collections. amount of When time, helps streamline their cashare flow accounts receivable duties Schedulewith your payments.

Don’t bundled other responsibilities, it’s go delinquent typical for the butaccounts do divide your receivable payments duties into categories to be tabled. such as The “must more pay,”efficiently “important you tocan pay” and convert “flexiblesales payment to cash, terms.” theThis better can your help keep business sufficient can grow. cash on hand.

Small businesses are usually founded by entrepreneurs who have a unique vision and a passion that drives them to work late hours, take chances and believe in what they’re doing. But, just as Thomas Edison once said that genius is 1 percent inspiration and 99 percent perspiration, successfully running a small business requires rolling We up your all know sleeves cash and putting is king. in signifiBut when cant time it comes on more to business mundane, failure, day-tocash flow day matters. mismanagement is largely cited as theYou number can beone driven, reason impassioned why. and have While a great there idea cantobefilla avariety niche of or isserve sues customers that create in new cash ways, flow but problems if you for any don’t business, attend to one theofdetails the primary of the issues business, you can sales createtofor yourself heap is converting cash.

Or, inaother words, of problems. collecting from customers on a timely Here,basis. we’ll look at one of the most important Businessof leaders these are business sometimes details: distracted managing cash by the flow. excitement Especially and forallure early knowing how—much of topstartups, line revenue growth SALES! cash issetcoming and going out,and They goals, in measure results and accurately forecasting sales celebrate wins. But they’ve takenand their expenses, keyCash. to maintaining your eye off theisball. company’s health.

Sales don’t mean anything if the No matter wherein. you are in your cash doesn’t come business, keep these top ofon For businesses thatthings are selling terms, mind: there are a number of commonly overlooked and undervalued steps that occurwhen after the salewill thatbreak directly 1. Know you impact cash flow. even Without proper followowner through Every small business keeps at and oversite, the conversion of sales the front of their mind the question:

UPSIZE JANUARY NOVEMBER • FEBRUARY • DECEMBER 2024 2022

“When do I start to turn a profit?”

Rather than wonder, set a realistic goal for when you want to break even. This will help you to focus your efforts and provide a numerical benchmark for projecting your cash flow in the near future.

2. Put cash-flow management to cash will become sluggish and the before profits business will the possibility of non This might risk seem counterintuitive, payment leading to bad debt. since profits are how you survive.

Three of the most common mistakes However, if you aren’t organizing your that directly impact cash flow: cash flow, you’ll run into problems that a profitable quarter might not be 1. to Nofix. credit Selling on able Keeppolicy things — organized and terms means thatcan youbeare providwell managed so you ready for ing the financing for your customwhatever success comes your way. er in order for them to purchase your service or ahead product.of time 3. Secure credit A credit policy provides paramToo often, small business owners to setneed appropriate limits in wait eters until they it to secure credit. to accommodate your cusThis order can cause a lot of unnecessary tomers’ needs while preventing stress, or worse.

Talk to experienced delinquency oryour non-payment. business owners in area and Setting limits startshow with industry aheadcredit of time to know information each muchcollecting revenue you’ll need upfrom front.

Takecustomer a realisticwhich look atmay theinclude situation financial bank and and plan.

You statements, might have sufficient trade references and credit cash reserves or a rich uncle whoreis such as Experian or Dun & only ports a call away, but most small busiBradstreet.

A credit policy is only ness owners should secure as much as theThis information used creditasasgood possible. is the best way to set up the facility. to be prepared for the unexpected.

www.upsizemag.com

2.

3.

Proper credit management ensures that your customer has the ability to pay for the products and services you are financing.

Absence of process — There are many steps that need to take place in order for a sale to convert to cash. Those steps are often not given the attention they deserve.

There should be processes in place to ensure that invoices have the correct purchase order number, price and billing address.

There should also be a process for follow up on all invoices that become past due, detailing the first step, scripts, how and where notes should be recorded and when an issue should be escalated and to whom.

There should be the same attention to detail and quality with billing and collection processes as there are with manufacturing, service delivery and sales process. Having processes in place minimizes issues down the line and improves the health of your accounts receivable.

No accountability — Often there is no one person who owns sole responsibility for keeping up with past due invoices. Many businesses operate under the assumption that their sales will automatically convert to cash.

When that doesn’t happen they are slow and clumsy to react.

Whether a collection issue or billing issue it is often expected to be handled either by committee or by the salesperson with the relationship. Worst case scenario, the business owner is making a call. In most cases this is not the best practice. The same parties engaged in the conversations regarding sales are not necessarily

the ones best suited for the conversations that you have when collecting your monies.

When the accounts receivable duties are bundled with other responsibilities, it’s typical for the accounts receivable duties to be tabled. Often times they are slighted for “more important” tasks. There should be a staff member whose primary duty is collecting your receivables. Any departure from that primary duty should be AR related. For example, creating necessary credits or conversion of customers’ payment method.

By assigning responsibility to someone, that person can be trained on a process and held accountable. Having said processes in place also creates measurables in both performance and capacity to ensure that the proper time and effort is being dedicated to collecting your monies.

Cash flow management requires proper follow through of critical processes that occur after the sale. Keeping track of cash flow is critical to the health of any business. Being intentional about billing and collections is the first step. The more efficiently you can convert sales into cash, the better your business can grow.

“ Cash flow management requires proper follow through of critical processes that occur after the sale. Keeping track of cash flow is critical to the health of any business.”

Cathy Sedacca Impact Management LLC

Contact: Cathy Sedacca is co-owner of Impact Management LLC.: 612.802.1784; cathy@impactmgtllc.com; in/catherinesedacca

www.upsizemag.com

JANUARY • FEBRUARY 2024 UPSIZE

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law banking

BUSINESS BUILDERS

Cannabis Manage your legalization cash flow lights hazyin a few simple workplace steps implications

by Craig Veurink Gerry Fornwald

TIPS TIPS 1. There are a lot of unanswered

questions related to the legislation 1. legalizing Set a realistic adult-use goal for cannabis. when you Some questions want to break are likely even.toThis be answered will help due you to lawsuits focus your between efforts small and businesses provide a numerical and their benchmark employees.

2. Employers for projecting cannot your require cash flow in the cannabis near future testing for most 2. positions, Put cash flow but “safety beforesensitive” profits. It roles, mightas seem defined counterintuitive, by the statute, but are an if you exception. aren’t organizing your cash 3. Since flow, you’ll cannabis run into is noproblems longer that technically a profitable aquarter drug according might nottobethe bill, ableemployers to fix will have to rephrase 3. employee Secure credit handbook ahead language of time. Most to include small business it specifically owners alongside should drugs secureand as much alcohol credit as substances as possible. not Thisallowed is the best at work. way to be prepared 4. Employers for the unexpected can still conduct drug 4. tests Consider if they using havea reasonable payroll service. suspicion Having thethat professionals an employee take hascare violated theirpayroll writtentaxes rulessaves about of collecting cannabis use on premises orof intime, the them an enormous amount event helps of streamline a work-related their cash accident. flow 5. Rather Schedule than your drug payments. testing, Don’t employers go delinquent maybut start dodisciplining divide your employees payments into based categories on behavior such as consistent “must pay,”with “important cannabistouse, pay”such and “flexible payment terms.”

This can as increased lethargy or inability to help keep sufficient cash on hand. engage with customers.

8 6

On May 30th, 2023, Minnesota Gov. Tim Walz signed a bill that legalized the recreational use of cannabis. The bill, in large part, came into effect on August 1, leaving many organizations scrambling to figure out exactly how this migration of cannabis into public life will work.

The workplace in particular is faced with a number of new and difficult questions stemming from this new legislation and every industry will have to grapple with Small the reclassification businessesof are what usually once was founded an illegal by entrepreneurs drug. who have a unique Morevision than 190,000 and a passion employers thatacross drives the them state, to work the majority late hours, of which take chances are small businesses, and believewill in what now have they’re to think doing.about But, establishing guidelines cannabis use just as Thomas Edisonfor once said that during work hours, reimagine drug testgenius is 1 percent inspiration and 99 ing policies and addresssuccessfully safety concerns. percent perspiration, runAmong the many questions ning a small business requiresbubbling rolling up: Will employees permitted to work up your sleeves andbeputting in signifiwhile partaking?

Can team members cant time on more mundane, day-tonow be subjected to drug tests for emday matters. ployment will cannabisand be You canretention? be driven,Or impassioned omitted from current employment drug have a great idea to fill a niche or serve tests?

Is it legal for workers toifoperate customers in new ways, but you heavy-duty machinery and equipment don’t attend to the details of the busiwhile under thecreate influence? ness, you can for yourself a heap ofIn problems. some cases, these questions are cut and Here, dried, we’ll but look for others, at oneambiguity of the most will only important be resolved of these as employers business details: experiment managing with their cash flow. response Especially to legalization. for early startups, knowing how much cashtautologies is coming in and going out, Bill and accurately sales helpand The text of theforecasting bill isn’t exactly expenses, is key to maintaining your ing matters. While future regulations company’s health. and legislative tweaks will undoubtedly No matter are inofyour clarify matters,where manyyou portions the bill business, keep these things of legalizing adult-use are vaguetop enough mind: that the bounds of what is legal and illegal will inevitably need to be defined 1. Know when you will break by future courts. even In other words, future lawsuits Every small employers business owner keeps between and their em-at the front oflead theirtomind question: ployees will morethe clarity regard-

UPSIZE JANUARY NOVEMBER • FEBRUARY • DECEMBER 2024 2022

ing what is in bounds and what is out of bonds in the employment context in the coming years.

Though there are many, one important example of this ambiguity is the definition of “safety-sensitive positions.”

Employers can no longer require cannabis testing for most jobs. But one of the exceptions is for jobs that are “safety sensitive.” To quote the latest text of the bill: “When start to turn a position. profit?”

Subd. do 13. ISafety-sensitive Rather than wonder, set a means realistic goal “Safety-sensitive position” a job, for when any you supervisory want to break even. This including or managewill help you toinfocus efforts and ment position, whichyour an impairment providebya drug, numerical benchmark foruscaused alcohol, or cannabis projecting your cash in the near age would threaten theflow health or safety future. of any person.

In other words, a safety-sensitive 2. Put cash-flow management position is a position in which safety is a before profits consideration?

This kind of tautological This might counterintuitive, language is theseem Legislature’s (perhaps since profitsway are how you survive. unintended) of kicking the can to However, the courts.if you aren’t organizing your cash flow, you’ll run into problems What this ambiguity forecasts for thatworkplace a profitable quarterweather. might not be the is stormy Over ablenext to fix. organized the fewKeep years,things we can expect toand see well managed so you can be ready employers attempting to expand thefor whateverofsuccess comes your way. number positions that qualify as safety sensitive. So, alongside the obvious 3. Secure credit ahead of time examples of bus drivers or constructionoften, small business siteToo supervisors, we might seeowners employers waittountil they need it tocandidates secure credit. try wedge in less-likely This as cananybody cause awho lot of unnecessary such lifts heavy objects stress, or worse.

Talk to experienced at work or anybody who simply oversees business groups of owners people. in your area and industry ahead time to of know how This is just oneofexample the many much revenue you’ll need up front. ambiguities this bill contains. Against Takebackdrop a realistic at the situation this of look legalization and uncerand plan.

You might have sufficient tainty, what sort of changes will we see cash or from a richboth uncle who is in thereserves workplace employers onlyemployees? a call away, but most small busiand ness owners should secure as much credit as possible.

Handbook editsThis is the best way toEmployers be prepared forneed the to unexpected. will lean heav-

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ily on their internal policies, which of course will still hold sway. If employers are cagey about cannabis use at the office, all they really need to do is add an extra clause to their internal employee handbook. Most already contain something about the prohibition of drugs and alcohol on company property. Since cannabis isn’t technically a drug anymore according to the new bill, retaining their same-old approach to cannabis use and possession in the workplace will be as simple as rephrasing their clause to “drugs, alcohol and cannabis.”

With this slight edit, employers will be able to prevent possession, use, gifting and exchange of cannabis at work.

Without it, cannabis restrictions may look a lot more like tobacco. While the Minnesota Clean Indoor Air Act prevents smoking indoors, nothing would prevent aspiring users from partaking in the parking lot.

A more difficult question A more difficult question lies in drug testing. The bill makes clear that pre-employment screening, as well as random testing, is no longer lawful for cannabis unless a prospective employee fits within a particular category, such as a safety-sensitive job.

But employers can still conduct drug tests if they have reasonable suspicion that an employee has violated their written rules about cannabis use on premises. Drug tests are also lawful in the event of a work-related accident, which is probably the most likely trigger for them to occur. However, unlike alcohol, for example, cannabis remains in the body’s system for weeks. Therefore, Minnesota courts should be prepared for an additional ground for dispute—does a positive test actually mean an employee was actually under the influence at work?

Behavior-based discipline Small employers looking to disci-

pline employees for cannabis use will likely need to take a more creative approach. What we might see is a spike in behavior-related disciplinary action.

Organizations may begin to train their human resources departments to establish baseline cognitive abilities of their employees, and to note deviations from those baselines.

For example, rather than sending an employee for drug testing, we may see employers begin to discipline based on exhibited behavior that is consistent with cannabis use, such as increased lethargy or diminished capacity to engage with customers. This way, employers can bypass the messiness associated with disciplining employees for cannabis use per se and instead attack it from angles of behavior and objective performance.

Medical cards protect employees As for employees, the simplest way to insulate themselves against infractions will be to obtain a medical license. Barring safety-sensitive considerations, this will be the strongest defense against any disciplinary action from employers.

Employees that need to use cannabis will find medical cards a strong shield against cannabis-based employment discrimination.

Navigating the transition period The next few years of recreational cannabis use in Minnesota will prove critical, both as the details of HF100 get hashed out in the public eye and as the infrastructure around the cannabis industry gets built out. How it all gets rolled out remains an open question.

But, within this transitional period, both small employers and employees will need to think carefully about how they approach cannabis.

“ While future regulations and legislative tweaks will undoubtedly clarify matters, many portions of the bill are vague enough that the bounds of what is legal and illegal will inevitably need to be defined by future courts.”

Gerry Fornwald Winthrop & Weinstine

Contact: Gerry Fornwald is an attorney with Winthrop & Weinstine: 612.604.6400; www.winthrop.com; in/gerry-fornwald-ba86b77

www.upsizemag.com

JANUARY • FEBRUARY 2024 UPSIZE

9

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management banking

BUSINESS BUILDERS

Smashing Manage your the cashslog flow in a Jamie fewTaets simple by steps

by Craig Veurink

TIPS 1.

Instead of focusing on

TIPS resolutions, create a habit or

two. Drinking more water, getting 1. movement Set a realistic or goal reading for when daily are youall positive want to break changes even. you This canwill make helpin just you to a few focus weeks. your efforts and 2. Science provide ashows numerical thatbenchmark it takes 21 days for projecting to createyour a habit. cash flow Create in the a calendar near future and, after three weeks, 2. celebrate Put cash flow knowing before that profits. you now It have mightsomething seem counterintuitive, built into your but daily if youroutine aren’t organizing that will create your cash energy. flow, you’ll run into problems that 3. Schedule a profitableself-reflection quarter might time. not be That’s able towhere fix growth comes from.

3. When Securewe credit reflect ahead on of thetime. pastMost and smallexamine businessour owners successes shouldand failures secure as wemuch create credit newasideas possible. for the Thisfuture. is the best way to be prepared 4. In fororder the unexpected for you to change, you 4. need Consider to change using athe payroll people service. and places are investing take yourcare Havingyou the professionals energy.

This payroll doesn’ttaxes meansaves stop of collecting hanging out with friends or family. them an enormous amount of time, But helps once streamline a year do their ancash energy flow 5. audit Schedule and your organize payments. some time Don’t around go delinquent what fuels but do you. divide your 5. Don’t payments waste intothat categories self reflection. such as “must pay,” “important to pay” and Two tricks to accomplishing your “flexible payment terms.”

This can goals are writing them down and help keep sufficient cash on hand. telling someone else.

10 6

As 2024 begins, it’s time to reflect, refresh and plan for the upcoming year. While many of us can feel the renewed energy around the holidays, Small businesses we often startare theusually new year with founded lower by energy. entrepreneurs For many whoofhave us, a January unique vision feels like and a passion slog, a slow that burn drives of them ourtoenergy, work late as we hours, facetake the chances upcoming andfew believe months in what of winter. they’re doing. But, just The as reason Thomas New Edison Year’s once resolutions said that were genius created is 1 percent was toinspiration give you goals and that 99 would percentenergize perspiration, you tosuccessfully start the year runstrong ning a small and confident business that requires this year rolling will up your be different, sleeves and better, putting in some in signifiway.

The cantproblem time on more is thatmundane, resolutions day-todon’t usually day matters. work for most of us, at least beyond thebe second week of January.

You can driven, impassioned and As we start a new year, hereorare a have a great idea to fill a niche serve few tips to shift your focus to better customers in new ways, but if you managing your owndetails energy don’t attend to the oflevels. the business, you can create for yourself a heap 1. no-resolution solution of The problems.

As you startlook the new year, Here, we’ll at one of instead the most of focusing on a resolution important of these businessconsisting details: of something will last for just managing cashthat flow.

Especially for a few earlyweeks, startups, instead knowing create how a habit much or two. cash Things is coming likeindrinking and going 80 out, ounces of and water accurately a day, getting forecasting somesales typeand of expenses, is key to maintaining your movement everyday or spending 30 company’s health. minutes reading daily.

No matter where and you mark are inoff your Create a calendar each business, keep these things top of day you complete your task. Science shows mind: that it takes 21 days to create a habit so if you can stick to it for 1. Know you that periodwhen of time, youwill can break celebrate even that you now have something knowing Every owner keeps built intosmall yourbusiness daily routine that will at the front of theirmanage mind the question: help you better your energy.

UPSIZE JANUARY NOVEMBER • FEBRUARY • DECEMBER 2024 2022

2. Schedule self-reflection As you end the year, do yourself a favor and build in reflection time.

It could be an hour or two over the “When do start turn a profit?” holidays orIat the to beginning of the Rather thanitwonder, set acalendar realistic goal year.

Block out on your and for when youofwant to abreak even.

This grab a piece paper, journal or your will help you focuson your efforts and computer andtoreflect what you’ve provide a numerical benchmark for learned. projecting your cash flow in the near future.

Self-reflection is where our growth comes from. When we reflect on the 2. Put management past andcash-flow examine our successes and before profits failures, we create new perspectives This might counterintuitive, and ideas for seem the future.

Here are a sincequestions profits aretohow few get you you survive. started durHowever, if you aren’t organizing your ing your scheduled reflection time. cash flow, you’ll run into problems that quarter not be • a profitable What’s one thing might I learned able toabout fix. Keep things myself thisorganized year thatand I well managed you can working be ready on? for want toso continue whatever success comes youraccomway.

• What was my biggest plishment in the past year?

3.•Secure aheadchallenge of time Whatcredit is the biggest Too Ioften, businessin owners wantsmall to overcome the wait until they need it to secure credit. upcoming year?

This cause a lotaction of unnecessary • can What is one that I can stress, take or worse.

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It’s no wonder many of us feel stuck in the same place year over year. In order for you to change, you need to change the people and places you are investing your energy in. Now, this doesn’t mean you stop hanging out with your family or close friends. It means that once a year you do an energy audit – what gives you the most energy and what does not?

Maybe coaching that soccer team energized you, but sitting on that non-profit board did not. Or being a part of that committee at work was super energizing, but being part of the PTA at your kids’ school was not.

Take real inventory of what gives you energy and what doesn’t and then politely excuse yourself from the things that do not. Every time you say yes to something that doesn’t energize you means you say no to managing your own energy levels.

4. Create your own energy action plan Now that you’ve done the self-reflection and you have an idea about what gives you energy and what sucks energy from you, create your simple action plan. There are two tricks to accomplishing your goals — write them down and tell someone else.

Don’t let all of that reflection and energy you have built up fizzle out and go to waste; put it into action.

You don’t have to know how to accomplish it, just start. Here are a couple of questions that can help you create your energy action plan.

• •

• •

to stop doing that negatively impacts my energy?

Who am I going to share my plan with so they can hold me accountable?

What additional support or accountability do I need in order to ensure I can be successful with my personal energy action plan?

You read this article because something about the topic resonated with you. You are tired, you want things to be better, to feel better.

You want the new year to be a fresh start with new energy. So, the question is, what are you willing to do to truly make this year the best one ever?

Only about 10 percent of people that read this will actually take the advice and do something with it.

The rest of us will make excuses — great idea, but I don’t have time for this right now, maybe I’ll think about doing this next week when things are less crazy, or I’m fine, I’ll just keep pushing through and hope that something magically changes.

Wherever you are, just know that you are 100 percent in control of your own energy and where you choose to give and receive your energy from. Let’s all take back that control and make the new year the best one yet. It’s time we become the Chief Energy Officers of our own lives!

“ Every time you say yes to something that doesn’t energize you means you say no to managing your own energy levels.”

Jamie Taets

Keystone Group International

What are two areas where I want to increase my energy in the new year?

What is one thing that I want

Contact: Jaime Taets is CEO of Keystone Group International: 952.666.2531; jamie@keystonegroupintl.com; www.keystonegroupintl.com; in/jaimetaets

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JANUARY • FEBRUARY 2024 UPSIZE

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social banking media

BUSINESS BUILDERS

Manage your Five social cash flow in media insights a few simple that may steps surprise, help

by Craig Veurink you in 2024

by Alison Buckneberg

TIPS 1.

Set a realistic goal for when you want to break even. This will help you to focus your efforts and provide a numerical benchmark TIPS for projecting your cash flow in the near future 2.

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UPSIZE JANUARY NOVEMBER • FEBRUARY • DECEMBER 2024 2022

“When do I start to turn a profit?”

Rather than wonder, set a realistic goal for when you want to break even. This ing will in help information, you to focuswatching your efforts short and videos provideand a numerical never bothering benchmark to like for or comment projecting — your they cash then flow are intaking the near action future. by sharing social posts or going straight to a company’s website to learn 2. Put more cash-flow or buy. So, management it’s important to before add “eyeballs” profits or post views back into This themight mix as seem a cornerstone counterintuitive, of your reporting since profits and aremonitoring. how you survive.

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employees) are taking action on the things you want them to you’ve got the right content and right mix.

Pick a platform (or two) With social platforms diversifying and making big changes (we’re lookin’ at you Threads, X — formerly known as Twitter — Blue Sky, TikTok and YouTube Shorts) it’s easy to see why marketing leaders — and their CEOs — are confused. A question often asked by these groups is “should we be on [INSERT SOCIAL PLATFORM HERE]?”

To answer this, do some research on which social platforms contain the lion’s share of your target audience. Are you noticing lots of conversations in Facebook Groups?

Maybe seeing many brand mentions on TikTok? Are decision makers on LinkedIn looking for answers to questions your business can solve?

Do you have enough content today to be consistent in posting? Then double down on that platform. Rule of thumb: prioritize one or two platforms for 2024 and forget the rest.

Your brand can’t be everywhere to everyone. You’ll burn out or sink too much budget trying.

Throw algorithm-pleasing efforts out the window In the past you may have heard social media strategists encourage you to please the algorithm. They offered advice such as be careful about what time you post, watch the headline, write only a specific number of characters, add in more visual content, etc. Keeping up with every little change is enough to make you dizzy. In 2024, focus on creating content you know your readers or audience wants to consume and post consistently. Don’t waste precious time trying to please something you

have very little control over.

Take a “tubthumping” approach to your content Spend hours creating a post that fell completely flat — only to have the post you spent 15 minutes creating see major success? Not every idea is going to resonate with your audience. Instead, blast the chorus from Chumbawamba’s “Tubthumping” and repeat: “I get knocked down, but I get up again, you’re never going to keep me down” and just keep creating.

Social media managers must be resilient and creative. Sometimes the idea you’re certain is going to work doesn’t. Or the idea you know definitely won’t work for some reason does. It has happened to many social media managers. Or the thing that used to work stops working.

You need to continuously learn, re-learn, and un-learn. Never let a failed post keep you down.

Social media is a powerful platform — it has the potential to make or break your business. But you shouldn’t be scared of it, nor should you overthink the metrics, audiences or content.

No matter your strategy for 2024, be consistent and intentional in your posts to create authentic brand experiences.

“ Prioritize one or two platforms for 2024 and forget the rest. Your brand can’t be everywhere to everyone. You’ll burn out or sink too much budget trying.”

Alison Buckneberg Words At Work

Contact: Alison Buckneberg is agency lead — PR + social for Words At Work: ali.buckneberg@wordsatwork.com; www.wordsatwork.com; in/alisonbuckneberg

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JANUARY • FEBRUARY 2024 UPSIZE

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CONQUERING CANNABIS Budding hemp companies growing with different outlooks on adult use

B

ob and Erin Walloch had never owned their own businesses before.

But as the pandemic wound down, they were already discussing different career directions when Bob had a heart attack.

“Coming out of that we wanted to really focus on being together and working together,” he says. “The pandemic forced our family together and it went really well. And we wanted to keep hanging out. Your time here is short.”

Prior to opening the store, Erin had run multiple nonprofit volunteer groups, but also has a background in education. Bob had been working in corporate finance, primarily in actuarial science and health delivery services. He’d also been home growing seeds.

They thought about getting a farm. They looked at doing beverages or edibles, but recognized they’d need significant space, which would come with a significant investment. They thought about what they would enjoy and where there were gaps in the market.

“In general, I think we want to touch on all of those areas,” Bob adds. “We’ve settled on retail as our first place to get going.”

Adds Erin: “The seed component really came into play. His love of home grow is what really lent itself to that.”

So, CannaJoyMN was born. The company sells Minnesotasourced hemp products. They’re in high demand and, Bob says, local businesses in this space have typically worked pretty hard to stay compliant within state regulations.

“There is a rich market right now for every kind of edible and drink that you can imagine,” Bob says. “Minnesota has really taken off.”

It also provides seeds, education and community for growing cannabis.

“So much of actual seed purchasing is online and it can be very overwhelming and cumbersome,” Erin says. “We thought, ‘Minnesotans aren’t going to love that process and we wanted to be able to help with the education side, be able to be a space for the community to come learn, grow together.’”

The store also displays some of Erin’s art for sale. It has a bar table set up in the back for socializing. She does “wake-and-

bake” yoga groups for fans who can stick around after sessions to learn about product.

“It falls into that education piece and just helping people find their joy and their passion,” she adds.

They opened less than half a year ago and reached profitability in their third month.

“We’ve had a quick start,” he says.

They focus significant time and energy on making sure the products they sell are compliant with rules and standards. Bob does testing and can label seeds as compliant.

“So, when people come into the store, they are getting tested seeds and it’s a live product,” he says.

Hemp-based businesses growing CannaJoyMN is growing quickly, already assessing the likely need for additional employees. There are five right now, including both Wallochs, one full-timer and a couple part-timers.

“We’re kind of looking into this year and seeing where all of our opportunities are and how we’re going to match staff,” Bob Walloch says. “We’re probably going to go to seven or eight sometime soon, in the next six months.”

Growth is also in store at Nothing But Hemp LLC. The stores that share that name are being rebranded as Nothing But Canna. Steven Brown, owner and CEO, has a flagship store in St. Paul and additional locations in White Bear Lake and Forest Lake.

Additionally, he has four more stores under an affiliate program, which he described as similar to franchising. The company also owns Rasta Canna Bar, a cannabis bar in Florida, and Zero Proof, a retail store with more than 400 non-alcoholic beverages.

“Business has been fantastic over this last year and the year before,” Brown says. “We now own multiple businesses in the hemp cannabinoid space.”

He also owns Beverage Equity Group, aka Bev Buds, which works with companies that want to produce beverages of their own. And, finally, his Midwest Botanical Coalition is an edible manufacturing company that produces close to 1 million gummies monthly and the nano-THC that goes into

by Andrew Tellijohn photographs by Tom Dunn 14

UPSIZE JANUARY • FEBRUARY 2024

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Health challenges and desire for a career change led Bob and Erin Walloch to start CannaJoyMN.

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15

COVER STORY beverages and edibles.

Brown, a retired military veteran, has actively lobbied on these issues and, five years ago, he founded the Minnesota Hemp Association. More recently, he has visited recently with legislators about what he likes and doesn’t about what Minnesota is doing.

“There are a number of things that went great, but there are a number of things that really hurt the hemp-derived industry here in Minnesota and put us at a disadvantage on competing outside the state because of how strict the law is,” he says, maintaining that the Minnesota Department of Health’s stance that selling tinctures is illegal, a stance his legal counsel disagrees with.

He also believes Minnesota’s ban on combustible hemp like vapes and flour are incorrect because they are federally legal and “states can’t make adjustments like that,” he says.

Brown has attention deficit disorder and found in high school that cannabis helped him concentrate better. He stopped using while serving in the military, but started again after retirement.

His father died from opioids when he was young.

“I believe cannabis is a better alternative than pharmaceuticals,” he says. “It’s naturally grown. We’ve been using it for centuries … I think people should have the choice to self-medicate and I think cannabis is a safe option to do that with. That’s my passion behind it.”

He loves the industry but laments the cost of doing business. His legal costs alone run well into six figures annually.

Entrepreneurs looking to open dispensaries, he says, will need $2 million in liquid cash. With federal law still banning these products, it’s hard to get bank loans.

He’d like to see the adult-use market opened up further rather than restricted to 16 licenses. In Oregon, for example, paying a fee and having a clean record likely is enough to earn a license.

“I’m against only the billionaires being able to get into the business,” he says. “There’s a lot that goes into running a successful business and the government should not choose who can get a license and who cannot.”

He likes the hemp business where you can apply for a license for each store, meaning “anyone can get into it,” he says.

“Hemp is for small business. Marijuana is for big business — and it shouldn’t be.”

Sticking to mental and physical health Minneapolis-based retailer CBD Health & Wellness opened in November 2019. The store had to close for the pandemic briefly shortly after opening, but survived and is doing well focusing on products that make people feel better.

“We’re not like a head shop,” says owner Andrea Carpenter.

“We’re not like a smoke shop. My goal has always been in a health and wellness frame of mind.”

Carpenter and her partner, Michael Itman, started the busi16

UPSIZE JANUARY • FEBRUARY 2024

ness, each after tiring of previous jobs. They looked for several months for a business to buy but weren’t feeling passionate about anything they found available.

“I didn’t want to move into another industry that I didn’t really care about,” she says.

She knew nothing about cannabis at the time but had started using a CBD topical cream for some pain management and found it worked well. That sparked her curiosity.

“That kept nagging at me,” she says, and shortly thereafter, CBD Health & Wellness was born.

They considered doing e-commerce but chose to open a brick-and-mortar location so they could actually educate people on the products they sell.

In the time since, Carpenter and Itman have also opened HW Group, a separate business manufacturing THC products — beverages and edibles — she says are more sophisticated and better tasting than most of the early generation beverages.

“The reason we started it was really because of customer feedback in our store,” she says. “We watched, we got all the beverages that were on the market to sell in our store, the first movers, first available. They were quite disappointing with flavors. My customer feedback was, ‘This is great, but it tastes horrible. We like the effect, but we don’t like the flavor.’”

They are selling their products through a distributor. The company had some setbacks in 2023 as they learned that the first iteration of the product was not shelf stable. A second shot with a new formulator produced a stable product “and it’s in the market and doing very well,” she says.

Carpenter indicates she’s got reservations about expanding into adult-use cannabis. Opening up beverages and edibles to liquor stores has created increasing competition for her store, in part, she says, because those stores cut prices and “everybody is racing to the bottom to see who can sell it for less,” which makes it tougher for her business, as does the state’s full-scale ban on vapes.

“That doesn’t work very well for the little guy,” she says, adding that her customers aren’t looking for a dispensary anyway and she’ll stay with the low THC market through which she’s doing well. “I believe that is the bigger market.”

E-commerce site diverting products to local retail stores While Carpenter ultimately passed on the e-commerce market, Dave Adair has embraced it.

Adair was an advertising creative director and writer in the Twin Cities. He first started his own e-commerce with Støberi. com, a direct-to-consumer website selling men’s wedding bands and accessories.

When COVID caused some e-commerce sites to get hot, he quit his job to make a full-time run at Stoberi, which had been selling a dugout and pipe set that became a popular gift for groomsmen.

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COVER STORY About a year into that, he spun off that and some other products into a cannabis-based e-commerce site called Ukiyohi.

“The brand was never really about specifically trying to grow a cannabis brand that started and ended in that category,” Adair says. “My hope was always to develop something that could sort of transcend the category.”

So, down the line, he sees Ukiyohi ultimately selling some core products in that space, but also art, home goods and other products, such as candles created to diffuse the scent of smoke and cannabis.

“We did a lot of focus grouping and development and prototyping with that,” he says, adding that the hope is to use the e-commerce site to set up a wholesale business by getting into retail venues like Patina, MartinPatrick3 and other boutique retailers.

“These retailers aren’t quite ready to embrace the other products but the theory that we could maybe start by getting our brand into some different unexpected retail environments seems to have potential now,” he says.

Adair describes himself as a casual user of cannabis products and a non-expert on the nuances of the retail industry. But he’s looking at this as a long-term project through which he can satisfy personal passions in Japanese minimalism, Danish art and design, hip hop and other areas. He also wants to illustrate through the site that there are a lot of people interested in cannabis outside of those who fit any stereotypes. He is a 40-something father of two living in the suburbs.

“This was a brand that was really designed to be for adults that don’t necessarily identify with cannabis culture,” Adair says. “It may be part of what they do occasionally or on the weekends. I am sort of looking ahead, looking at the growing legal adult-use cannabis industry across the country, including now in Minnesota.”

“I’m having a ton of fun just exploring that and seeing how it CONTACT: DAVE ADAIR owns Ukiyohi: 833.648.2579; hi@ukiyohi.com; www.ukiyohi.com STEVEN BROWN owns Nothing But Hemp: steven.b@nothingbuthemp.net; www.nothingbuthemp.net; in/socialthis BOB and ERIN WALLOCH own CannaJoyMN: 952.239.4268; erin@cannajoymn.com; bob@cannajoymn.com; www.cannajoymn.com; In/erin-walloch-09a40045 ANDREA CARPENTER is co-owner of CBD Health and Wellness: 612.822.2417; info@hwlounge.com; www.hwlounge.com; in/andrearcarpenter www.upsizemag.com

JANUARY • FEBRUARY 2024 UPSIZE

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HIT THE BOOKS

Cannabis legalization smoking up professional services firms eager to advise entrepreneurs

By Andrew Tellijohn

C

annabis-based products have been increasingly available in Minnesota over the last six years. The opportunities in that space became even more prominent last year when the state legislature voted to become the 23rd state to legalize adult recreational use of marijuana for Minnesotans over 21.

There are still a lot of questions related to what the industry will look like. The bill created the Office of Cannabis Management to license cannabis and hemp businesses and oversee the market and draft regulations related to 16 available licenses in the space are expected out later this year.

But with just 16 licenses and what is expected to be a highly regulated market developing, it’s even more vital that entrepreneurs passionate about their products make sure they are on top of the business side of their ventures.

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UPSIZE JANUARY • FEBRUARY 2024

The first thing Jeff O’Brien, a partner with Chestnut Cambronne, does when potential business owners contact him about getting into the adult-use market is explain the law and its restrictions.

“Part of it is just educating them,” he says. “There are 16 different licenses, 10 are adult use, there’s four medical licenses and there’s two for low-potency hemp.”

That means that unlike, say, a liquor store license, which will generally be approved for anyone who meets qualifications, cannabis licenses in Minnesota will be significantly limited.

“It seems to be an inevitability that there is going to be a surplus of applicants for the licenses,” O’Brien says, adding that the next step is explaining how they can put themselves in the best position to be selected. That includes considering a “social equity” addition to any application, he says. Twenty percent of the scoring system is based on

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that, which means applicants will do better if they include someone who has been unfairly prosecuted for cannabis offenses in the past.

“One of the first questions we ask clients is, ‘Would you qualify? Would anybody in your ownership group qualify,’” he says. “Because theoretically that is going to put you in a more likely position to obtain one of those licenses.”

Getting started now In the meantime, professional service firms either built around cannabis or involved in the market indicate much of the preparation will be similar to that for any other type of business, save for the additional regulations that will come with being a cannabis business.

“Cannabis small businesses have to do all the things that you have to do as a normal small business or startup plus the overlay of cannabis regulation,” says Jen Randolph Reise, head of business and cannabis law at North Star Law. “I suggest people start with the fundamentals.”

Figure out what products and services you want to provide. Get a sense for the market. You know, she says, that there is a market, but there also are a lot of competitors starting up. Are you a low-cost provider? More expensive, but focused on higher quality? Retail or manufacturing only?

“As they think about where they fit into the market, they need to do so aware of the 16 different license categories,” Reise says, who adds that the Minnesota law creates opportunities for small businesses because it bans vertical integration for the larger licenses — you have to choose for those licenses if you are going to grow, manufacture or sell.

“They want to have a lot of people have a little piece of the industry,” she says.

Meet someone, build a team So, as the state works through licensing and regulation details, don’t just sit around waiting. You should start learning about the existing marketplace and what is to come by meeting like-minded people by attending some networking events. Options include Minnesota Cannabis Growers Cooperative and Industry Council (run by Blunt Strategies) or the Minnesota Women’s Cannabusiness Network, says Laura Monn Ginsburg, partner and principal at Blunt Strategies.

Her firm ran the “MN is Ready” campaign pushing for legalization and helped write the bill. She also cautions against getting too swept up immediately in the exciting part of this like what is the brand, the color scheme, the look of the store — those are all important, but “the biggest mistake is overlooking the practicalities and understanding what is going on with the market,” she says.

With the hemp-derived THC market well underway and the adult-use market getting ready to heat up in the months

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ahead, it’s never too early to start putting your team together. And, while small business advisers often preach having an experienced team, it’s even more important in the cannabis sector, with a number of still moving parts.

“There are a lot of similarities between the hemp-derived THC market we currently have in Minnesota and the adult use cannabis market,” says Jason Tarasek, an attorney with Vicente LLP, a national cannabis law firm. “There are enough distinctions that it wouldn’t hurt to include people on your team who have actually been through the battle in legal adult markets.”

Raising capital and tax issues Vicente helps with corporate formation, corporate structure, scoping potential properties and raising capital. Since federal regulations still classify cannabis as a Schedule I substance, normal banking relationships aren’t possible so, in most cases, at least before cannabis is legalized federally, a lot of that financing will come from friends, family and private equity, Tarasek says.

“This is a capital-intensive project and adult-use cannabis businesses don’t have access to traditional banking channels like other businesses do,” he says. “Most banks will not issue loans to cannabis businesses because it’s too risky.

They can’t seize the collateral.”

“There are ways to raise money outside traditional banking channels, but it’s difficult to do on your own,” he adds.

Cannabis’ federal status also means issues with Section 280E of the federal tax code, which prohibits cannabisbased businesses from writing off business expenses on their taxes beyond the cost of the sale of the product.

“They don’t get to deduct their store employees, their store costs, they don’t get to deduct their G and A expenses and, a big component here, they don’t get to deduct their interest expense,” says Cory Parnell, CEO of the accounting firm BGM. “That is the number one problem within this industry … which leads to a lot of companies going into this undercapitalized.”

Spend cautiously Professional service experts caution that business owners should take a slow approach to getting involved in real estate transactions or building leases, at least while there is still uncertainty around licensing.

Local governments can’t opt out of legalized cannabis, but they can, through land zoning, determine where such businesses can be located. Business owners also don’t want to sign a lease and then be stuck with years of payments — challenging, he adds, because landlords are equally reticent to sign leases with a bunch of contingencies.

It’s a delicate balance, industry observers say. Be ready to act quickly, but save your money wherever possible.

“Build your team, get your business plan together, un-

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“Cannabis small businesses have to do all the things you have to do as a normal small business or start up plus the overlay of cannabis regulation.”

JEN RANDOLPH REISE, NORTH STAR LAW

CONTACT: DAMON ALM is assistant vice president treasurer management at Bridgewater Bank: 952.746.3902; damon.alm@bwbank.com; www.bwbmn.com; in/damon-alm-292937139 JACOB IRVING is vice president of consulting services for Bridge West Consulting: jacob@bridgewestconsulting. com; www.bridgewestconsulting.com; in/Jacob-irving-719a5118a LAURA MONN GINSBURG Is partner and principal at Blunt Strategies: 612.440.0077; laura@bluntstrategies. com; www.bluntstrategies.com; in/lauramonnginsburg JEFF O’BRIEN Is a partner with Chestnut Cambronne: 612.336.1298; jobrien@chestnutcambronne.com; www.chestnutcambronne.com; in/jeffreycobrien CORY PARNELL is principal and CEO at BGM: 651.287.6327; cparnell@bgm360.com; www.bgm360. com; in/coryparnell KIMBERLY PERRINE is an insurance agent with the Perrine Agency: www.perrineagency.com; in/kimberlys PETER PREVOT is chief operating officer at Bridge West Consulting: peter@bridgewestonsulting.com; www.bridgewestonsulting.com; in/peterprevot JEN RANDOLPH REISE is head of business and cannabis law at North Star Law: 651.330.9678; jen@northstarlaw. com; www.northstarlaw.com; in/jenreise JASON TARASEK is an attorney with Vicente LLP: 612.961.8112; j.tarasek@vicenteLLP.com; www.vicentellp.com; in/Jason-tarasek-2634195 20

UPSIZE JANUARY • FEBRUARY 2024

derstand your financials and be ready to move,” says Jacob Irving, vice president of consulting services for Bridge West Consulting. “Don’t go rent a piece of property right now because we don’t know which properties are going to be zoned to do that.”

Or at least have a backup plan, O’Brien says. “What is the plan B,” O’Brien says. “If you go out and set up an entity and don’t get a lease space and you don’t get a license, what are you going to do? Are you going to try to go for low potency hemp [where licensing is less restricted]? I try to make it clear to folks there isn’t a guarantee you’re going to get a license so you have to have a fallback option.”

Banking exceptions While many banks have, at least for now, avoided taking on clients in the cannabis space, there are a couple of local exceptions. One is Bridgewater Bank, which has chosen to learn the business and work with companies in this space.

Damon Alm, assistant vice president treasurer management at Bridgewater, says the industry’s participants are largely small businesses who are in line with the entrepreneurs the bank was initially formed to work with.

“We knew this was something that was coming to Minnesota,” Alm says. “When the Farm Bill went through the first time in 2018, we really started talking to our board and exploring the space.”

It isn’t as straightforward a process as opening a restaurant or a traditional retail store, Alm acknowledges. Due diligence will take a little longer. The screening will be intense.

“We don’t want to cut any corners,” he says. “We want to make sure their business is compliant. We want to make sure that we’re doing business with customers that are in this for the right reasons.”

Don’t forget insurance While banking and legal issues typically are more top-ofmind, several professional service providers remind small business owners that when it comes to cannabis, insurance

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also is vital.

Kimberly Perrine, an agent with the Perrine Agency, focuses on small businesses and fell into cannabis for personal reasons.

“I know that insurance is complicated on a good day,” she says. “You can look at three stores, three coffee shops on the same street and they’re all going to have different needs and they’re all going to have different policies.”

Throw in cannabis and the knowledge that most entrepreneurs in this space aren’t your typical business owners and it’s more so, she says.

“It’s not even on their radar,” she says. “They’re doing it because of their passion.”

But cannabis-based business owners need to consider everything from their label to their storefront to potential theft to accidents when it comes to insurance. Say, for example, you create a product to a retailer who sells it to a consumer. If something goes wrong, you’ll be brought into any legal action. They also need special coverage for their vehicles if out doing deliveries.

Such products are typically excluded from standard policies, Perrine adds. So, much like having a banker, an accountant and a lawyer, she suggests adding an insurance

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agent to your team.

“It’s a necessary evil,” she says. “Everybody gets a piece of the pie when it comes to lawsuits and insurance claims.”

Due diligence While Blunt Strategies’ Monn Ginsburg agrees with getting a team together early, she also cautions that there are a lot of service firms getting into the business that were less involved in navigating the bill. So, caution is advised.

Research their backgrounds, see how involved they have been with cannabis not just now but over the years. Check records and media archives.

“It is going to be useful to find somebody who specializes in cannabis law, cannabis accounting, cannabis business processes,” she says. “You should always do your homework because there are a lot popping up.”

JANUARY • FEBRUARY 2024 UPSIZE

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catching up

by Andrew Tellijohn

Stutrud stepping down Craft beer pioneer eager for new role with Summit Brewing

W

hen Mark Stutrud decided in the early 1980s to pass up a master’s degree in social work to open a microbrewery, the initial feedback wasn’t good.

His father thought he was crazy.

And the head of the Brewers Association of America, to which Stutrud was applying for membership, wrote a letter back discouraging him from moving forward.

“Please know that I am not encouraging you to do so, because it is a long and hard road that you are planning to go down,” wrote William O’Shea, executive secretary at the time.

That now-framed letter decorates a wall in the entryway to Summit’s

Summit Brewing CEO Mark Stutrud will step down from his CEO role in March to start focusing on working with distributors and wholesalers.

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catching up corporate headquarters in St. Paul.

Stutrud holds no ill will — O’Shea was actually looking out for him, he realizes, as there were just nine microbreweries in the U.S. at the time.

“It was certainly more polite than what my father told me when I told him I was going to start a brewery,” Stutrud quips. “My dad had heard a lot of different ideas from me and he just kind of shook his head and he said, ‘This is the craziest ass idea I’ve ever heard.’”

It’s easy to laugh about those early doubters now. Stutrud founded Summit Brewing in 1986 in a building along University Avenue in St. Paul, producing around 1,500 barrels of beer a year with a capacity of about 3,000. When he started researching the concept a few years earlier, there were only nine craft breweries in the U.S. About five years later, the company started showing some profit.

After outgrowing its initial location, Summit acquired land in the Crosby Lake Business Park near West Seventh St. and Interstate 35E along the Mississippi River, for $1 from the Port Authority of St. Paul.

The company broke ground in 1996 at the location, moving into its new digs in 1998. It has, in the quarter century-plus since, invested north of $50 million in expanded brewing facilities, building out a tap room, adding canning capabilities and continuing to add to its full menu of award-winning beers.

Fantastic growth Capacity is now around 240,000 barrels annually. Actual production peaked at around 135,000 barrels but has dropped a bit in recent years down to 80,000 as the entire industry has dipped while wine and spirits have become more popular.

Stutrud also points to a pull-back in 2017. Summit, at the time, was distributing in 17 states but was struggling to make money in states like Ohio that were further away www.upsizemag.com

from headquarters.

“Our sales trends were great,” he says of that market. “We were losing money because of having feet on the street, having an expense account, doing promotions. The issue is that when you’re in small-scale brewing, the further you get away from the brewery, that identification with the product becomes more distant.”

The saturation of the craft beer market locally and nationally and consolidation in the distributor pool — down from 6,500 to 2,500 in about a dozen years, he says — has also created challenges.

The entire beer industry has been in decline in recent years and Summit has felt that. So, in 2017, the company pulled out of several markets to focus on Minnesota and its neighboring states in each direction.

“Ninety percent of our sales continue to be in Minnesota and, remarkably, just shy of 70 percent are in the metro area,” he says.

So, has it been successful?

Stutrud is preparing to move into a different role and he spent some time reflecting on his initial goals

and where the company stands now. Has it been successful? Not a completely straightforward answer.

Sure, Summit rebirthed an appreciation for craft beer in the market — the Brewers Association indicated in 2022 there were more than 9,500 craft breweries in the U.S. — and has introduced several award-winning beers.

And, through a focus on quality and social responsibility to the consumer that he admits sometimes takes the fun out of visiting other breweries, Summit has built a loyal following. But the company hasn’t achieved the market share Stutrud dreamed was possible.

“Has Summit been successful in terms of developing, fostering a new industry? Absolutely,” he says.

“Do we excel at what we do when it comes to the style and quality and integrity of our products? Absolutely. Have we truly focused on human capital and fostering an absolutely positive work culture and workplace? Absolutely. For every year that we’ve been in existence, have we been financially successful? Not necessarily. When you think about JANUARY • FEBRUARY 2024 UPSIZE

23

Summit Brewing CO.

Description: Brewery and taproom Headquarters: St. Paul Founded: 1986 Founder and CEO: Mark Stutrud (retiring in March 2024) Employees: 56 Website: www.summitbrewing.com

defining success, there are many layers.”

That’s one of the lessons he’s learned over the years. Success comes in many forms. It looks different to different people and the bar moves over time through company and personal growth.

“Success is something to keep in context because there are many layers and different experiences of being successful,” he says.

The vision While it hasn’t gotten quite as big as he’d hoped, Summit’s still come a long way since Stutrud launched the brand nearly 30 years ago.

Leading up to its opening, he spent a couple years finding mentors, using his work vacation to do apprenticeships with experienced brewmasters and eventually graduating from the Siebel Institute of Technology, a vocational school in Chicago focused on brewing.

“If I’m going to make something, I sure as shit should get educated on how to do it right, whether I’m going to make a car, a shoe or tortillas,” he says. “That’s what a craft is all about.”

His goal was to reestablish a true beer culture in this country beyond the “great American Lager” on which the big brewers focus.

Though he prefers craftier beers, he will never bad mouth the big players, both because they helped him out with product testing and learning the

Summit Brewing Co. helped jump start craft brewing statewide and nationally since opening in 1986.

craft in his early days and because they’ve left a lot of market open for the Summits of the world.

“I’ve never criticized the big brewers for what they do,” he says.

“They’ve got that down to a science.

And, I would say, make more of that, because you’ve created an opportunity for little breweries to get back into very traditional styles.”

He’s got an unquenchable focus on product quality and integrity that he admits sometimes takes the fun out of visiting other breweries. He tries to stick to the basics and “not get too heady in terms of theory and … making sure that you’re observing and not perceiving,” Stutrud says.

Contact: Mark Stutrud is founder and CEO of Summit Brewing Co.: 651.265.7800; info@summitbrewing.com; www.summitbrewing.com 24

UPSIZE JANUARY • FEBRUARY 2024

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catching up Bright future ahead As he prepares to step down as CEO Stutrud is bullish on Summit’s future and he’ll be a part of it.

Chief Strategy Officer Brandon Bland will replace him as CEO, but Stutrud will remain involved, working closely with distributors and retailers.

“I’ll be spending the majority of my time with the sales team on the street, connecting with our customers in a meaningful way,” he says, adding that he’ll also keep tabs on the state Capitol, reporting back on issues of importance.

Meanwhile, Summit has plenty of options for future growth. The company is making significant inroads in non-alcoholic beer, a segment expected to grow annually by more than 5 percent a year for the next decade, according to Global Market Insights.

“ When you think about defininig success, there are many layers.”

Mark Stutrud

Summit Brewing Co.

“We’re going to be adding to that family next year, another style,” Stutrud says.

Summit is also researching THCinfused beverages, though, in keeping with the standards the company has set for itself, he says it won’t go there until there are more quality standards in place.

“We’re taking a deep dive on what needs to be approached to produce a shelf-stable product that is consistent and we’re exploring the technical and the science sides of THC beverage production,” he says. “We’re producing a food product. Beer is a food product. People ingest this and, when you’re making something that people put in their bodies, that’s a huge responsibility.”

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