Wisdom From The Women Leading The Cannabis Industry, With Paula Savchenko

Don’t stay stagnant. As many in the industry will attest to, staying current on ever-evolving changes to not only legislation, but also regulations from a state agency to even the ordinances set forth by the locality in which you operate are crucial to ensuring your success. Your job does not end at the time you receive a license. Even more so, that is when the real “fun” starts as you not only have to focus on opening your operations, but also ensure it is and remains compliant with the law. As a result, it is essential to have a team around you that is there for you to lean on.

As a part of my series about strong women leaders in the cannabis industry, I had the pleasure of interviewing Paula Savchenko, Esq., Founding Partner of Cannacore Group and PS Law Group.

Savchenko is an attorney and consultant working primarily in the cannabis and psychedelics industries, working with clients on multi-state expansion initiatives. More specifically, most of her and her team’s work involves competitive licensing and regulatory compliance in the cannabis and psychedelic industries. Savchenko’s success in attaining competitive licenses for her clients comes from having a good understanding of what regulators are looking for, as well as a strong network of contacts in the cannabis industry. Since entering the cannabis industry in 2015, she has worked on competitive applications for marijuana businesses in Alabama, California, Colorado, Florida, Illinois, Massachusetts, Missouri, New York, New Jersey, Texas and West Virginia. Since 2015, Savchenko has accumulated an overall success rate of 85% in attaining cannabis business licenses. Savchenko also speaks and writes regularly on the legal aspects of the cannabis and psychedelics industries. For more information, visit https://www.cannacoregrp.com/.

Thank you so much for doing this with us! Can you tell us the “backstory” about what brought you to the cannabis industry?

I was working at an administrative law firm where I was specializing in tax defense and regulatory compliance for several highly regulated industries including liquor, fuel and tobacco. While attending law school, I took an elective class called Bioethics Seminar that to my surprise focused on the cannabis business licensing process in Florida. I became really interested in the industry and I thought this would be a great addition to our practice. I spoke with my boss about my interest in bringing this into our practice and he was very supportive. From there, I kept up to date with this fast-paced industry and started attending cannabis networking events. Through these events, I met several key players early on which led me to build the cannabis practice group at the prior firm. A few years later I decided to start my own consulting and law firm primarily focused on the cannabis and psychedelic industries.

Can you share the most interesting story that happened to you since you began leading your company? Can you tell us what lesson you learned from that?

In Alabama, we worked with a client to apply for a medical cannabis cultivation license during the state’s first application period since approving medical cannabis in the state. In June 2023, the Commission issued the applicants’ scores and our client received first place in their category. Due to litigation and lobbying pressure, the Commission then rescinded the license issuance and had them scored again by another independent third-party scorer, who is commonly used in other states’ cannabis programs. In August 2023, our client again received first place — 90.64% and was issued the license. From there, the Commission again had pressure from disgruntled parties that did not receive the license and filed numerous lawsuits against them. The Commission then decided to allow applicants to supplement their applications with “optional” presentations. The client opted out of providing an “optional” presentation due to the strength of their application. However, further drastic changes were made when the Commission entered into a tentative settlement agreement with parties to the lawsuit, ridding the scores altogether. The Commission only informed those applicants who had opted-in to do a presentation regarding the tentative terms of the settlement agreement, including that the scores would no longer be utilized. The Commission did not give our client an opportunity to present after the Commission disregarded the scores in the grading.

Then, on the same day of the cultivation applicants’ presentations, the Commission ratified the settlement agreement eliminating the scores. The Commission did not have the time to review anything other than the presentations as they only had one day prior to the issuance of the licenses to review all independent license categories’ applications and application summaries, as well as pass/fail items, presentations, and/or written briefs, if any. After receiving first place twice, our client unfortunately did not receive the license.

Although we did advise the client to get a lobbyist, the client decided not to hire one. What we learned is the importance of lobbying, and as a result, we have decided that moving forward we will require our clients to have a local lobbyist in all states we work in that has a competitive license process. In addition, we learned the importance of being a part of the settlement conversations, even if you get first place. From the onset of this program, no one could have foreseen not one, not two, but three scoring/licensing rounds conducted nor the eradication of scores altogether. In summary, we learned the importance of strategically planning out each and every step to ensure that an agency is not afforded one opportunity to rescind its intent to award our clients a license.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?

When I first started, I had an idea — very unrealistic now to think, that I would only work by myself and not have any employees. Within the first year of starting the firm, I quickly realized that was not an option, and unfortunately for me, I had terrible timing as a client wanted me to manage all aspects of their applications, five in fact. I quickly had to say goodbye to a work-life balance, cancel my vacation, and pretty much remove myself from society to meet the applications’ deadline. Fortunately, one month later I met my first employee Carole Brown who was just the right fit. We have now grown into a team of six and I truly value working with our team as we are able to rely on each other and provide better services for our clients.

Do you have a funny story about how someone you knew reacted when they first heard you were getting into the cannabis industry?

My Mom’s reaction was pretty funny. She literally said, “Can’t you pick something else there are so many other areas of law. What am I going to tell your grandparents?” and my response was “Yes, of course I can but this area is new and exciting and has many great opportunities that others don’t.” She is now very supportive. I think it just took some time for her to realize all of the positives of working in this industry.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?

Yes, definitely. I consider my former boss, Jerry Donnini, as my mentor. He has always been very supportive and his outlook — “anything is possible” was contagious and created a ripple effect that really inspired me to follow my dreams. He also believed in me and advocated for me to the other partners so that we could build a cannabis practice in our firm. Jerry is very entrepreneurial and experiencing that firsthand helped me to have the courage to think outside of the box. As a leader, he always seemed to have a perfect balance of guiding me where needed while also giving me space to learn on my own. To this day, we still talk and meet regularly as this relationship is extremely important to the foundation of my career. I am forever grateful for his friendship and support, and I certainly would not be where I am today without him.

Are you working on any new or exciting projects now? How do you think that will help people?

We are working on several new and exciting projects. One I am really passionate about is identifying and applying for grants on the federal and state levels for groups in the cannabis and psychedelic industries. This will help the industries in two main ways: First, these grants are usually research-focused, so the focal point of the work will help to bring new ideas to market such as methods to expand patient education and access; Secondly, as it is typically very expensive to get involved in these industries, my hope is that this will help those that are passionate about adding value to the industries to be able to get involved.

In addition, we are working on setting up additional and stronger partnerships with social equity groups, including veterans, minorities, financially disadvantaged and women-owned businesses. We are working to create a cannabis social equity partnership program where we partner social equity individuals with others who are applying for licenses, and everyone can benefit.

Ok. Thank you for all that. Let’s now jump to the main core of our interview. Despite great progress that has been made we still have a lot more work to do to achieve gender parity in this industry. According to this report in Entrepreneur, less than 25 percent of cannabis businesses are run by women. In your opinion or experience, what 3 things can be done by a)individuals b)companies and/or c) society to support greater gender parity moving forward?

1. It’s extremely important for women to support other women, and through promoting organizations that center around women in cannabis, such spaces are immensely important for creating foundational relationships at each level of the industry as well as providing a network that is women-based.
2. It’s time to change the conversation and standards we apply to men/women. We are all equal however we all have different strengths and it’s important to acknowledge and appreciate those differences. I see a lot of women trying to be harsh and have a male persona in hopes of being treated equally. I don’t think this is getting us closer to where we want to be. Women need to be appreciated and respected for their feminine strengths in intuition, emotional intelligence, and more. While men need to be appreciated for their masculine strength in quick decision-making, courage and more. It’s time for us to accept and appreciate each other for our differences and find ways for everyone to benefit.
3. Programs that recognize and reward women’s leadership really do help close the gap. Several states are having license processes where certified women-owned businesses are eligible for priority processing and more for cannabis licenses. This can give a significant boost to female operators, especially when a limited number of licenses are available.

You are a “Cannabis Insider”. If you had to advise someone about 5 nonintuitive things one should know to succeed in the cannabis industry, what would you say? Can you please give a story or an example for each.

1. Banking, financing, and insurance obstacles unique to cannabis businesses. To demonstrate, my partner has had his personal and business accounts shut down simply because he works in the cannabis industry. This created a significant issue and he had to quickly find another bank. Fortunately, he can work with a small-sized bank; however, small banks don’t offer simple services that larger banks do such as the inability to make online wire transfers. Moreover, banking at cannabis-friendly banks comes with a higher price at times. SAFER Banking and other federal proposed legislation are currently closer than ever to passing, which would alleviate many of these issues in operating in this industry.
2. Tax hurdles including § 280E of the IRC. Under IRC § 280E, cannabis businesses cannot deduct ordinary and necessary business expenses such as rent or employee compensation due to cannabis’ classification as a Schedule I drug under the CSA. In effect, this creates a significant tax liability that is double that of businesses that can take these deductions. Fortunately, we are seeing many states take the initiative and pass legislation that exempt, or “decouple,” businesses from § 280E as they noticed even established operators were struggling to make their operations profitable. However, it is not the majority. Unless there is a change at the federal level, cannabis operators will continue to have to deal with these tax hurdles.
3. Consistency is key. There are many people who enter the industry without the knowledge or expertise behind them, and further don’t want to be novices again and take the time to learn. It is critical one works with individuals or groups they can depend upon who are not in the industry because it’s the latest fad. As discussed below, one needs a support system that will ensure their operations stay not only successful but compliant as the industry changes each minute of each day.
4. Money cannot be the motivation. There is a common misconception that one can become a millionaire with ease in this industry, but such misconception is so far from the truth. To be successful, you must have a passion for the industry. Whether it be developing a new strain of cannabis through innovative methodologies or wanting to provide a dispensary in a rural area of your state to increase patient access, operating any business will have a magnitude of issues, but as we have discussed cannabis businesses have some unique ones. In those days when it feels like there is no chance of moving forward, the passion for your aspect of the industry is what will set you apart from others and ensure longevity in your operations.
5. Don’t stay stagnant. As many in the industry will attest to, staying current on ever-evolving changes to not only legislation, but also regulations from a state agency to even the ordinances set forth by the locality in which you operate are crucial to ensuring your success. Your job does not end at the time you receive a license. Even more so, that is when the real “fun” starts as you not only have to focus on opening your operations, but also ensure it is and remains compliant with the law. As a result, it is essential to have a team around you that is there for you to lean on.

Can you share 3 things that most excite you about the cannabis industry?

1. I enjoy that there is always something new in pretty much all aspects of the industry whether it’s a novel cannabinoid or proposed legislation towards a rescheduling event, it always keeps you on your toes.
2. I appreciate the people I have met in the industry. There are so many different types of people in this industry, but I typically find that those who have been in it for some time are such good people. They are open-minded with a desire to help others and are always ready to bring innovative ideas to the table.
3. The exponential growth the industry has. I’m excited to see where this industry is in another 10 years — we’re just getting started!

Can you share 3 things that most concern you about the industry? If you had the ability to implement 3 ways to reform or improve the industry, what would you suggest?

1. Regulators misunderstanding the industry is a pitfall we see in states’ programs. Although it is challenging due to deadlines set forth in the law and/or the push to get the program up and running as quickly as possible, I would improve this issue by requiring regulators to spend a certain amount of time learning about each facet of the industry from industry professionals who can better help them shape the regulations to fit the practical aspects of the industry. I also think going to an established legal state operation, having a tour and meeting with the regulators would be helpful. An interesting approach Minnesota is taking is conducting public surveys on each topic of its regulations to get more public input on matters that greatly affect them and their operations.
2. The financial banking issues. It is very difficult to identify banks that are willing to support cannabis businesses, and if you do find one, it can come with very high fees at times, which further adds to the unique, but difficult financial hurdles cannabis businesses face. At the base level, I would pass legislation to reschedule or deschedule cannabis as many large banks are licensed federally and avoid working with cannabis businesses as a result of its classification on the CSA. For state banks that are regulated under state law, I would pass further legislation at the state level that incentivizes banks to want to enter into partnerships with companies in the industry, and further remove some of the financial burdens that are unique to cannabis operations.
3. The balancing act of advocacy in the industry. With every regulated industry, there is a bad to the good. There is truth to why society has evolved its opinion on cannabis so greatly over the recent years, which is partially a result of the unfathomable effects the War on Drugs and the opiate crisis has done to our country, but also the relief it has brought to so many patients across the country from reducing seizures to alleviating cancer treatments. However, there is an understandable concern we should have as a society when a substance enters our daily regulated markets. At times, it can feel like one must be careful of criticizing any aspect of the industry because of how difficult it was to get where we are today. Due to the creation and expansion of this industry, cannabis itself has evolved exponentially through new cultivation methods, advancements in technology that have impacted the manufacturing of cannabis products, innovation and discovery of new novel cannabinoids, to even, the accessories used to ingest cannabis. As stated above, the baseline is to reschedule or deschedule cannabis so research can be more accessible to institutions, so we can all have a better understanding of the benefits, and at times, the detriments, of cannabis products in our markets and on our bodies. Further, creating more public forums and/or task force groups through legislation, so there is more mandatory open communication with the concerns from both sides, including education, community outreach, and the like from various players in the industry.

What are your thoughts about federal legalization of cannabis? If you could speak to your Senator, what would be your most persuasive argument regarding why they should or should not pursue federal legalization?

Federal rescheduling and/or descheduling is essential to ensure not only the longevity of the cannabis industry as a whole, but also to guarantee smaller businesses have a chance to enter the market. As marijuana and/or cannabis is still classified as a Schedule I drug, cannabis businesses face numerous battles from the onset of their operations anywhere from limited access to funding and banking to heavy tax penalties as they are subject to 280E. Moreover, through modifying cannabis’ Schedule I status, patient accessibility could increase tenfold as medical insurance companies could finally offset the prices of certain medical cannabis products to ensure affordable medicine in each of the states’ programs. Just like every other regulated industry, the cannabis industry deserves to have access to overall financial and community support as it has the potential and — as we have seen in states that have legalized some form of cannabis — the ability to provide significant economic benefits to the local communities through job development, charitable contributions, and in states that have legalized adult-use, crucial tax revenue that has been put back into the state to increase funding in education, public safety, and more.

Today, cigarettes are legal, but they are heavily regulated, highly taxed, and they are somewhat socially marginalized. Would you like cannabis to have a similar status to cigarettes or different? Can you explain?

Cannabis has both recreational use and medicinal use and as a result, I believe it’s important for cannabis to be treated differently from cigarettes. To ensure sufficient access to medical cannabis, such products should remain exempt from taxes. Further, maintaining regulations to ensure proper testing and cultivating specific strains that are low THC and/or specific to certain ailments is key to providing safe and quality medicine to patients who have had to fight for decades to have it legal in their state. In addition, for states that have legalized the adult-use of cannabis, it is essential for the market to ensure cannabis products are not taxed incredibly high. For example, in states such as California that have an incredibly high tax on cannabis, they have seen that many customers have turned back to the black market once these taxes were enforced. As a result, residents of their state may be acquiring unsafe products as such products have not been properly cultivated, processed, and/or tested.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

I have many favorite quotes; however, I would say the one that resonates the most for me is: “What you think you become. What you feel you attract. What you imagine you create.” — Buddha. I truly believe in the power of manifestation and this quote really embodies that. It’s important to be mindful of your thoughts and your surroundings. This quote explains how our thoughts and feelings shape our life and we are becoming what we are thinking most of the time.

You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. :-)

A movement I would like to inspire is simple — for everyone to treat all living beings the way they want to be treated. Although I understand this is easier said than done, I believe this would solve many problems if everyone could live with more love and compassion for others. It’s important for us all to do our part because when you give kindness and light to those around you then you empower and inspire them to do the same.

Thank you so much for the time you spent with this. We wish you only continued success!