Amanda Ostrowitz Of CannaRegs Talks Cannabis Regulations & Banking

Amanda sat down with us to talk compliance, regulation, and banking in the industry

Amanda Ostrowitz, the co-founder and CEO of CannaRegs is a regulation and banking savant who entered the marijuana industry to help solve the information gap for ganjapreneurs. Amanda sat down with us to talk compliance, regulation, and banking in the cannabis industry.


Marijuana Retail Report: Tell us a little bit about your background and why you decided to found CannaRegs.

Amanda Ostrowitz: Absolutely. So, I’m an attorney by trade and prior to starting CannaRegs my specialty was in banking regulatory law. My last job was actually at the Federal Reserve Bank before I started CannaRegs and while there the issues of banking in cannabis came up regularly. When I went to do some research into it I found some really big information problems. I quickly realized I couldn’t solve the banking problem on my own. When I kept digging I went go down to the city level and  I saw in Denver alone there were seven different agencies dealing with the regulation of cannabis and then I’d go to the next city and the laws were entirely different. I couldn’t fathom how this information was so different and how much it changed from location to location and that there was no one place for all the information. When I realized I couldn’t solve the banking problem but I could solve the information problem that’s how CannaRegs was born.

Marijuana Retail Report: Speaking a little bit about the banking problem do you see cryptocurrencies as being the future for some of these canna-businesses?

Amanda Ostrowitz: You know I’m personally not a big advocate of cryptocurrency but part of it is just because I was a former regulator and I understand the importance of regulation. I also understand that the way things are regulated at the federal level here in the states is prohibitive in many ways to the cannabis industry so I understand the emergence of these. I know that the way banks are regulated here is not perfect but there’s good intent behind it and it’s to protect the whole of the economy and many other purposes so it’s a hard dynamic and balance to strike as to the place for cryptocurrency. I do, however, see some companies utilizing portions of it. The kind of a pseudo mix between the conventional banking methods and these block chains technologies are having some serious valuable applications. But, I personally am not interested in it and I find crypto to be very challenging because its so unregulated and it tends to be a really good currency for money laundering and terrorism. Granted all those selling cannabis are technically money launderers but there are a lot more severe crimes that also can be covered with it. So it’s a tough conundrum.

Marijuana Retail Report: California is currently discussing opening its own regulatory banks specifically for the cannabis industry. Do you see that as a more viable option?

Amanda Ostrowitz: Absolutely. I think not per se a state bank, but a private bank that a state holds an equity interest as the most probable solution. A state-owned bank is just very expensive to start and takes time to get off the ground. They don’t have enough time for it and the expense honestly wouldn’t make sense. The best solution is a kind of middle ground state-owned privately held bank where the state has an interest in so it’s a private public kind of combo, using the state’s system of wealth, which already pre-exists and I think that’s kind of what they’ve been building us towards.

Marijuana Retail Report: The compliance industry right now is a crazy web. You mentioned earlier before how it can change from state to state and city to city. How do you manage to leap that hurdle to make sure you’re always on the forefront for your clients in terms of compliance regulations?

Amanda Ostrowitz: Well that’s because that’s entirely what we do literally all day. We track the law and this is all we do. We have a dedicated legal research team of licensed attorneys who are doing a lot of tracking and we’ve built lots of processes and methodologies around that as well as the technologies to help us do it. So, we track every single city level meeting from the first time they talk about the subject to when they’re passing an ordinance. Every last scrap of it is being maintained and updated on a daily basis with a dedicated team. How the people use the information is up to them.

Marijuana Retail Report: If you were going to recommend a state for a cannabusiness to start up, which state would you recommend and why?

Amanda Ostrowitz: I would have to ask them at least 20 questions before I could give any sort of an answer. People are like, “What’s the best state to open a business in?” Well what kind of business do you want? What kind of overhead do you have? What kind of risks do you like? All those different thing, what kind of products are you trying to produce? There’s just so many factors that go into it. That’s the part about CannaRegs I just have to give them all the information and let them make those decisions. I’m lucky because that’s not my job. If I had to say what state is the craziest and most confusing right now in terms of regulations I would say California, but it’s also the most important state. There’s 539 local jurisdictions. They each like to do things their own way. They’re very heavily focused on local control. Their state always regulates things in a much more complex way. In example what most states have in one agency, is working in three main agencies in California and there are another 17 plus agencies in the statutory required to be involved in this process. But more over the biggest issue as to why California is the most complex, is because California was the first to legal medical way back when in ’96, and what they said at the time was, “Okay fine, it’s medically legal but local governments you go ahead and figure it out.” They never created a state regulatory structure. Instead, it was all based on local government decisions. Then once they realized that adult use was likely to pass they said, “Uh-oh we better get on the ball and create a state regulatory structure for medical.” So now they’re working through the creation of medical and rec at the state level but each level jurisdiction has been regulating it or not regulating it on their own for the last 20 years. So, most other states when they legal cannabis the state makes its programs, then the local jurisdictions can create more restricted laws. Think about Colorado, Colorado makes it laws and then Denver creates the zoning areas for it. Then the state law says they can stay open until midnight, but Denver restricts it to 10:00 pm. The baseline came from the state in most of the places and then the locals get more restrictive. In California the locals came first. So it really adds a lot of tiers of complexity to it.

Marijuana Retail Report: What would you say is the most lax state right now or the easiest state to jump into in terms of regulation and compliance?

Amanda Ostrowitz: I mean, I’ll be honest I don’t deal with the really easy ones because there’s not as much need for us. But I wouldn’t say that anybody’s lax, but I will say there’s more certainty in some places, for instance, Colorado’s pretty stable at this point. While of course we’re making changes and refining things, there’s some level of certainty and you can estimate what you’re going to need to save each year for funds. I would need to know more information about Alaska and a few others before I could make a judgment call. In Connecticut there’s only 13 dispensaries and four cultivations, so for those individuals it’s not as had to stay in compliance because you had to be a registered pharmacist in order to open a dispensary. The people that are used to existing in a highly regulated environment and things like inventory tracking and video surveillance are not new to them. So what’s easy can also be pretty relative.

Marijuana Retail Report: Do you see social use as being the next thing for cannabis in legalized states or cities? Las Vegas absolutely needs it and Denver had been looking at it, but what do you see as far as social use goes?

Amanda Ostrowitz: I mean Colorado at the state level is not interested. I think Denver had intended for one thing and through the regulatory process, it’s resulted in something quite different with lobbyist having really gotten in the way. I don’t think it’s necessarily going to be the model, but I think it is set a lot of interesting potential. I know that they’re looking into it in West Hollywood and I know that they allow for it in a certain capacity in San Fransisco so I think this will definitely become something. But, I think it’s going to be a few years out. I think a place like Nevada could definitely be a leader in this just because of the nature of Nevada as a tourist-driven state and it’s generally liberal with drinking, gambling, cannabis, et cetera. So they might be the ones that set the pace. I think the leaders are going to come out of Nevada and California on that.

Marijuana Retail Report: Touching a little bit on Nevada, they just got through the distribution nightmare with the liquor industry. Do you see that as becoming a problem moving forward with how the laws are written initially for legalization in up and coming states?

Amanda Ostrowitz: Absolutely, without a question. You know the problem with the law in Denver, you know there’s several different layers of it, but I was actually with their lobbyist, which pushed the state to prohibit anyone who has a liquor license from obtaining one of the social consumption licenses because they didn’t want people to consume less alcohol because they had the ability to bring their cannabis with them. It’s definitely going to be challenging and the teamsters are always going to be an issue without a question. If it’s impacting the bottom line you better believe it will be a problem for them.

Marijuana Retail Report: Do you see international or interstate trade being feasible in the future as regulation starts to loosen?

Amanda Ostrowitz: In the U.S. no time soon. In the U.S. they would have to federally legalize it before that was an option because that’s the only way you get around it in your state congress. However, there are countries looking at exporting. It is actually quite interesting. Israel and Canada especially. There’s obviously international peace treaties that are at issue, but I think we will see it in other countries before we see it in the Unites States.

Marijuana Retail Report: Do you expect to see more investment from other countries in states that have legalized such as what we have seen with cultivation in Florida?

Amanda Ostrowitz: Absolutely. We’re definitely seeing an increase in the amounts of outside investment without a question. Some places you would expect and others that you wouldn’t. It’s still an interesting situation. Plant touching is more challenging and a lot of why we saw a lot of that from Canada coming in is because these companies were able to raise an exorbitant amount of money through the public offerings. More money than they could use in Canada to buy other licensed seeds. Like they would buy all the LP’s they could but then there’s nothing left to buy so they turned to the U.S. However, the Toronto Stock Exchange has kind of put a pause on that. So somebody’s listed them as TSX and not able to be investing in cannabis related business in the U.S. right now. The TSE has not strictly prohibited it yet. So, it is challenging. Israel is definitely investing in infrastructure over here. They’re really leading the way in all the real research and science because they’re government has fully endorsed it. There’s going to be a lot of countries that surpass us on the real science and research in the coming years unless there’s a federal change.

Marijuana Retail Report: What would be the number one thing that you see that trips up most canna-entrepreneurs in terms of compliance and regulation?

Amanda Ostrowitz: A lot of people don’t realize that it’s a cost of doing business. A lot of people see it as an expense center and don’t realize without compliance there is no future period. Like it’s not a choice, it’s not an option. It is a cost that needs to be factored in and people sometimes fail to put those expenses into their business plans and understand fully what it means and more importantly, what it’s going to take to remain compliant. Unfortunately, people spend their life savings on a business and not understand that a simple violation can cost them everything.

Marijuana Retail Report: If you could give one tip to a budding cannabis entrepreneur to do when starting their business, what would it be?

Amanda Ostrowitz: Budget. My other major tip to any cannabis entrepreneur is not as much compliance centered as rather than to quit your day job as an accountant and jump into the industry, find something to tether on an existing skillset. If you want to go from being a tax accountant into cannabis, pivot initially into doing tax work in the cannabis industry and kind of really pivot on your existing skillsets and get to know the industry and then gain a lot experience before you take the full dive in so you can learn who the players are. A lot of people get really excited and then they get into bed with the wrong people. Starting off with the wrong people can cost you everything. So it’s pretty important and people forget to understand that you own a business, one rogue employee can cost them the whole thing. It’s this whole concept the captain goes down with the ship and people really have to understand it’s not just about their actions but they have to really manage their team and everything under their operation because any one bad apple can cause the whole thing to fall apart.

Marijuana Retail Report: Amanda thank you so much for your time today.

Amanda Ostrowitz: Of course, thank you.

Stay up-to-date!

Get all the news and info straight into your inbox that you need to help grow your business.

Click to comment

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

To Top