Business name: High Q LLC
Location: Silt, Colo.
Number of stores: 1
Date first store opened: November 2014
Owner: Renée S. Grossman
Manager’s name: Reid Ewart
Number of employees: 6
Approximate square footage of store: 1,000 sq. feet
Average number of customers/day: About 80
Most important lesson learned so far: “Investing in your employees is critical to your success.” — Renée S. Grossman, owner. She added that this includes “really taking the time to hire the right people; setting up clear processes, procedures, and communications for them; creating a work environment that they are proud of and really enjoy; paying them so they don’t have too much financial stress; and rewarding them for a job well done and taking care of them.”
Renée S. Grossman’s background includes 25 years of experience working in regulated industries.
So when she transitioned to Colorado’s recreational cannabis market, she was prepared to navigate the raft of regulations that govern adult use in the state.
“Dealing in a regulated industry for me is very easy,” said Grossman, a Wall Street alumna who’s now owner of High Q LLC. The recreational cannabis shop in Silt, Colo., offers a range of products including flower, concentrates, topicals, edibles, merchandise and accessories.
In her view, adhering to the rules governing legal cannabis isn’t difficult. “If you take the time to read things and really understand them, the regulations are not that hard,” said Grossman, whose background includes working in the finance, telecommunications and coal sectors. “They’re cumbersome, but they’re not difficult.”
Instead, the cannabis industry poses new challenges that Grossman is working to overcome.
Although it’s been more than two years since the first adult-use stores opened their doors in Colorado, perceptions about cannabis have been slow to change in Grossman’s neck of the woods.
“I’m in western Colorado, so it’s very different from the Front Range,” she said, referring to the eastern side of the state. “It’s very conservative here, and people don’t like a lot of change.
“Marijuana has not been embraced as quickly as it has on the Front Range.”
She’s working to eliminate the negative perceptions about cannabis. That includes educating local town councilors who have little experience with the industry and still harbor beliefs that it will have a negative effect on their community.
Still, the negative stereotypes have made business expansion difficult. “The zoning in this industry is extremely challenging,” Grossman said. “Dealing with local municipalities has been an educational experience.”
Grossman has encountered other challenges unique to the cannabis industry, including the lack of access to traditional banking. Fortunately, her robust professional background has prepared her to mitigate that problem.
“I have a very extensive accounting and finance background,” she said. “When you’re dealing in a cash business, cash management is critical. We have excellent cash management.”
But the most significant challenge that her business faces is Section 280E of the Internal Revenue Code, which prohibits legal cannabis operations for deducting many standard business expenses.
Under normal circumstances, Grossman would be able to deduct her employees’ salaries from her business’s taxable income. With Section 280E in play, however, she’s not allowed that deduction, so she pays taxes on her employees’ income stream. At the same time, her employees pay income taxes on that same income. “So it’s a double taxation,” she said. “And that’s just wrong.”
Grossman said that as a result of Section 280E, she had $200,000 of non-deductible expenses last year. “That’s $80,000 of income taxes that, if I was in any other industry, I would not have to pay,” she said.
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