DENVER — The medical marijuana business is fast becoming mainstream across the United States and with it is an increasing need to provide security systems and services to cultivation facilities and dispensaries.
Twenty-three states and the District of Columbia have approved the use and production of marijuana for medicinal use, including two states, Colorado and Washington, that also allow recreational use. Legalization has spawned a cottage industry of professional growers, with upward of an estimated 4,000 businesses now producing marijuana, according to Medical Marijuana Business Daily, an industry publication. Another dozen states are expected to legalize marijuana in some form in the coming years.
Security is a crucial piece to the legal marijuana industry, according to Dan Williams, president of Denver-based Canna Security America (CSA), which was launched in 2009. Williams helped state officials in Colorado and Washington write regulations for the industry, which strictly mandates marijuana facilities be equipped with security systems.
“The regulations are extremely detail oriented. They specify exactly where to have cameras, what types of cameras, settings on DVRs, hard drive capacity and more,” says Williams, who previously worked for Envysion, a firm that provided security systems for restaurant chains such as Chipotle Mexican Grill.
Williams compared providing security for dispensaries to a small retail client such as a jewelry store where there are countertops and registers, and expensive products. A typical video surveillance installation includes eight to 10 cameras to view multiple angles and all transactions. Systems increase to much larger for cultivation facilities, which generally range from 10,000-25,000 square feet and require 30 to 80 cameras. Intrusion alarms and door access systems are also considered necessities.
“What we are seeing in our larger facilities now is door access really comes in handy for employee traffic control. These are proximity card systems, biometrics, mostly fingerprints. We just had our first request for a retina scanner. It is all over the map,” Williams says. “When we started a 5,000-square-foot warehouse would have been large for us; now we are installing up to 100,000-squarefoot facilities.”
CSA — which is expanding its offerings to include armored transport for cannabis wholesalers — charges about $30 per month for basic alarm monitoring, plus $15 extra if the client selects a cellular antenna. Additional services can include supervised monitoring, and offsite video monitoring is around $20 a camera per month. “We are very conscientious about people’s budgets right now. We try to keep those costs down in order to get our market share,” says Williams.
New York-based DirectView Security, a subsidiary of DirectView Holdings, is a recent entrant to the legal marijuana industry. The company provides a full portfolio of security services to meet various local and state government mandates. It too is offering additional recurring revenue-generating services beyond traditional alarms.
“Temperature and light monitoring is particularly beneficial to the legal marijuana industry,” says DirectView CEO Roger Ralston. “These features alert an owner immediately if there is a disturbance in the plants’ environment. This helps protect the company’s assets by preventing valuable inventory from becoming damaged.”
Combined sales of legal recreational and medical marijuana in the U.S. is projected to reach more than $8 billion in 2018, according to Marijuana Business Daily. Mandates regulating industry facilities are also projected to rise as legalization efforts continue.
“This total is conservative. The reality of retail sales could be larger,” Chris Walsh, managing editor of CannaBusiness Media, the publisher of Marijuana Business Daily, says. “Nor does it include wholesale cannabis sales, or the billions of dollars in ancillary cannabusiness revenues such as growing equipment, real estate, legal fees, testing labs, paraphernalia, etc.”
Despite the lucrative market, Williams has a word of caution for installing security contractors who are intrigued at the thought of providing services to the cannabis industry. Marijuana entrepreneurs routinely are turned down for bank loans or deposit accounts. Hence, it is mostly a cash business.
“A lot of other alarm companies that are considering going into this business think that it is easy money,” he says. “People in this industry right now are not allowed to have bank accounts, which makes collection for any kind of payment much harder to do. It’s especially difficult when it comes to RMR. Getting paid for the small bills is extremely difficult.”