A Seattle Couple Looks to Grow Their Recreational Marijuana Business -- WSJ
December 17 2018 - 3:02AM
Dow Jones News
By Lisa Ward
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (December 17, 2018).
Jerina Pillert 36, and her husband, Logan Bowers, 37, are
pursuing unusual career paths. The couple owns a recreational
marijuana business, which she manages. He, meanwhile, is running
for Seattle City Council.
Inspired by a relative who legally sells medical marijuana in
Arizona, Ms. Pillert and Mr. Bowers applied in 2013 for a license
to sell cannabis recreationally in Seattle. Hashtag Cannabis opened
in April 2015. The couple now has two retail outlets, and wants to
open a third soon, either with money from the business or from
taking on a new business partner.
They want to buy a home and start a family sometime in the next
few years. If they stay in Seattle, they anticipate paying about
$800,000 for a home.
The couple's primary source of income is the business: a salary
of $120,000 a year. They expect that the company will earn about
$250,000 in profit this year, which they plan to reinvest in the
business or save for future endeavors. Ms. Pillert runs the daily
operations. Mr. Bowers, an ex- Amazon.com Inc. employee, is
focusing on his campaign. If he wins in the November 2019 election,
his salary likely will be more than $120,000 a year.
Assets include a brokerage account with about $400,000, about
$30,000 in Mr. Bowers's 401(k), and $4,800 in a savings account.
Their only debt is a student loan of about $26,000, for which they
pay almost $370 monthly.
The biggest monthly expense is their $2,400 rent. That includes
utilities except electricity, which costs $100. They pay $210 for
phone, internet and streaming; $500 for groceries; $600 for
restaurants, coffee and bars; $300 for health insurance; $150 for
car insurance; and about $40 to charge their electric car.
They don't have rental or life insurance. They try to save about
$800 monthly.
Advice from a Pro: Eric Bailey, founder and CEO of Bailey Wealth
Advisors in Silver Spring, Md., suggests the couple first build up
their savings account to at least three months of personal expenses
in case of an emergency. Similarly, he recommends setting aside
three months of operational expenses for the business. The cannabis
trade is an inherently risky venture, he notes, since federal law
still considers cannabis an illegal substance.
Next, to afford an $800,000 home, Mr. Bailey says they need to
avoid using funds in the brokerage account -- which gives them a
head start on retirement and provides a buffer should anything
happen to their business -- and increase their income. If Mr.
Bowers is elected, his salary can go mostly to saving for a down
payment. The couple also should talk to an accountant to see
whether their business is structured in the most tax-efficient way.
Increasing their salary (the amount they pay themselves from the
business) also would make it easier to save for a down payment and
help them qualify for a larger home loan, though that could also
make it more difficult to fund the business expansion.
Mr. Bailey suggests creating a 401(k) plan for their business --
with an employer match -- and funding their accounts to the maximum
of $18,500 a year. Another way to beef up their retirement savings
is an employee profit-sharing plan, where some of the profits are
invested in a separate tax-deferred account.
"Through their 401(k) and profit-sharing, they might be able to
shelter more than $100,000 worth of income from taxes," says Mr.
Bailey.
Finally, he recommends more insurance. They should have an
umbrella policy, which would shield their assets should someone try
to sue them. They also should buy rental, life and disability
insurance that would replace their income should one of them no
longer be able to work.
Ms. Ward is a writer in Mendham, N.J. She can be reached at
reports@wsj.com.
(END) Dow Jones Newswires
December 17, 2018 02:47 ET (07:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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