The Expanding Classroom

Answer by James Fisher:

Let's assume that you are asking how profitable is a retail outlet in Colorado that is selling recreational marijuana. The short answer is that, at present, the profitability of such operations is not enormously attractive. One reasonably competent dispensary in Colorado reports gross margins of about 32%. (A gross margin would just be the selling price for a bag — typically 1 ounce or an "eighth" — less the cost of the item sold.) This eighth might range in price from $30 to $60 dollars (probably closer to $30). Compare this with, say, Starbucks, which gets a gross margin of almost 60% on that skinny vanilla latte you just ordered.

Let's peel back the economics a little further.

Here are a few factors limiting the retailer's profitability:

Start-up costs: retail space (how many square feet), fixtures (how to merchandise, how to limit "shrinkage") are all substantial questions to ask and answer. Typically location is a crucial determinate of retail success (how close do you live to your favored grocery store?), and the better your location  the more you will likely pay per square foot. I have a former student who just built out a space in Boulder (software, not pot), where location was less crucial, yet that lease was very pricey. It's a seller's market there for commercial real estate — residential, for that matter.

On-going operating expenses: Here, too, the economics are daunting. Some retailers may want to integrate backward and grow their own. Cultivating marijuana requires more than seeds and a grow-light. Mold, mildew and pests can easily destroy a crop and top-notch grow managers are, as you might imagine, in short supply. A good retail sales clerk — the so-called "budtender" — is a key hire as well. To all this we must add extraordinary regulation and compliance costs. In Denver, state and local marijuana taxes sum to a confiscatory 29%. I have read that under Section 280E of the Internal Revenue Code growers and retailers alike are very limited in what business expenses the can deduct. Couple this with close regulatory or tax scrutiny and you have a very challenging operating environment. Says one operator: "Everyone is going to be audited."

Competition: You can buy more at a medical dispensary and typically at a lower price point. Shorter lines and greater convenience if you opt for the old-school, black-market pot dealer with his dime bag tucked away in his army surplus coat. One customer asks rhetorically: "Who wants to wait 30 minutes in line to score a bag?"

So here's my back-of-the-envelop pro-forma for a Colorado dispensary:
$1,000,000     [100% – Sales revenue]
  –  680,000     [68% – Cost of goods sold]
     320,000      [32% – Gross Profit]
  – 200,000     [20% – Operating Expenses]
   $120,000     [12%  – Earnings before taxes as well as any interest or depreciation expenses]

This, of course, does not include start-up costs, which are not insignificant. This economic picture may improve, but right now the retail business does not appear to be highly profitable.

How profitable is the average marijuana dispensary?


Answer by James Fisher:

Professional ethics are important for several reasons.

First, most professionals have an informational advantage over those they serve. This power asymmetry can be exploited to the advantage of the professional and thus there needs to be a corresponding sense of professional responsibility that obligates the professional to act in the client's best long term interest and, additionally, to take appropriate safeguards and to make necessary disclosures and to secure consent to protect the client and assure the professional's behavior is on the up-and-up. Professional ethics will provide the useful function of identifying these moral hazards and providing the appropriate avoidance or work-around strategies.

Second, most professional are, at some point, young and inexperienced professionals. Thus professional ethics represents a kind of collective, time-tested wisdom that is passed on to new professionals: watch out for this or do that. Also with changing laws, technologies and mores, professional standards will work to keep the profession abreast of new ethical challenges and emerging responsibilities and best practices.

Thirdly, professional ethics act as a somewhat effective countervailing power to organizational influence or the power of authority (say, from a supervisor or boss). Thus accountants have standard for reporting earnings and should not be swayed by a boss you says, in effect, "make the number work" so that we hit our earnings estimate.

Finally, insofar as professional ethics often get promulgated by professional organizations, they may play a role in enforcement and disciplinary action with respect to those who violate such standards.

Why are professional ethics important?

How should I live?

Answer by James Fisher:

Philosopher Patrick Grim observes a distinction between enviable lives and admirable lives. Both are good lives, but good in different ways.

Enviable lives are those "that we can imagine feeling from the inside and we envy that feeling." By way of example he offers this sentiment: "Wouldn't it have been great to be Teddy Roosevelt; to feel the bravado, the energy, the curiosity and the ambition of pursuing that life? That looks like a bully life."

By contrast admirable lives are those "lives the living of which we admire…lives often full of suffering, incumbent on trying to further that greater cause…We wish our lives could have the impact and the consequence of those." He offers Abraham Lincoln as an example of an admirable life.

How should I live? Do I pursue the enviable life or the admirable one? Aristotle framed the matter this way: "Let us consider whether happiness is among the things that are praised or rather among the things that are prized."

Maybe we split the difference? But how? Balance work with life, self-sacrifice with self-cultivation? Wherein lies that balance? Is it really achievable? Does one work to find it or stumble upon it? Different question, I suppose.

I'm going to speculate that the enviable life is more a matter of design, intention and discipline together with good fortune or as Aristotle might have it, "good birth, good children and beauty." The admirable life, on the other hand, seems slightly beyond human agency and more of a summoned life, which is to say an answer to a call of duty or cause or circumstances or possibly a humanitarian or religious impulse and in that greater than self.

It is this latter inclination expressed in Charles Peguy's verdict that “life holds only one tragedy, ultimately: not to have been a saint.”

How should I live?

Answer by James Fisher:

Here's my perspective as a B-school professor.

Most undergraduate business school students have the general perception that a business degree is a more, shall we say, marketable degree. Given the high cost of a college education one can hardly blame these students (or their parents) for making this calculation and deciding accordingly.

But these students–and there are many, many of them–vary in their passion and interest in the business profession and the larger landscape of economic activity. This intrinsic motivation is a crucial ingredient to maximize your investment in a business undergraduate degree. You will learn more and your curiosity and sense of purpose is more likely to be attractive to potential employers.

I had one undergraduate who was boiling with ambition and just loved the relational challenge of doing business and the big ideas connected with strategy and entrepreneurship. He wanted to do an MBA, but his own success interfered with that plan. Now in his mid-thirties, he is a CEO of a medium-sized business.

Turning to MBAs, I see two camps there as well. Those who want to re-invigorate or re-direct their careers and then those who have had some measure of success in a particular business or discipline and now find that they need some general management skills. This latter group often consists of scientists and engineers that are now running product lines or business divisions or managing a staff. Both groups have their reasons and they are entirely legitimate.

But for both undergraduate and graduate programs, if the degree is not sought for some intrinsic value–if it is perceived strictly as a means to an end–then the so-called payoff is frequently less than imagined.

Is it better to study business in undergrad or as an MBA?

Answer by James Fisher:

I feel like I've got work to do. Much more than I first imagined when I started teaching over thirty year ago.

Here's my take:

This "problem" with screens or devices is really a subset of a bigger problem, which is one of student engagement. The education system is partly to blame, but so, too, is human weakness.

If we're honest, I think we would agree that the education system — at least here in the US — likes its students compliant, obedient and, generally speaking, passive. Is it any surprise, then, that students, though physically present, often check-out mentally while in the class? To put it otherwise, they are easily distracted. If it weren't screens, it would be (and often is) something else.

Then there is human weakness. Learning takes motivation, application and hard work. This is not the default position of many young people. Professors, such as myself, need to find accommodative strategies. Effective teaching is not entirely the art of taking knowledge and expertise and then melding it with effective communication techniques. It also requires the teacher to crack the nut of human motivation. Enter the professor as impresario.

My own solution, like that of many others advanced here, is at best a partial one. One that often fails in the face of student indifference and my own failure to inspire. By it does work, sometimes.

I use an active learning approach which has been popularized in business schools (and other disciplines) as the case study method. It depends on class discussion, good questions and persistent effort.

Thus, if I spot a student immersed in his or her device, I simply call on the individual. But I also call on the day-dreamer and the barely awake student. I call on the shy, silent student and the international student with halting fluency in English. If you avoid eye-contact, you get called on. If make eye-contact, ditto.

Get the picture? Not necessarily a pretty one. But thinking is a messy, circuitous business.

How does a professor feel when he/she sees students using cell phone/laptop during class and getting distracted?

Answer by James Fisher:

No, at least no longer. I've been teaching for over thirty years and intelligent students are, for the most part, a great pleasure to teach. They can be the leavening agent, activating or enlivening or elevating the classroom experience for all — professor included.

For example, it is infinitely easier to grade an essay or paper written by a student who has a firm grasp of the issues and can push forward a point-of-view or new insight. Such writing invites comment, encouragement and even speculation. A smart question can provoke a stream of follow-on conversation, as can a provocative or unexpected answer.

I teach in a business school and am a case-study guy. It is not at all unusual to have a student who knows the company, the industry or the particular function (e.g., the advertising business) very well — maybe better than me. Again, it's usually to the class's gain (and mine) to have this strong voice of experience in the room. I'll use every opportunity to pull the student's latent knowledge from him or her with all manner of questions and queries.

The best classes are conversational. Intelligent students make good, sometimes great partners in dialogue.

But I'll end on this dour note. Sometimes highly intelligent student are incurious — more's the pity.

Are professors intimidated by intelligent students?

Answer by James Fisher:

Nathan Ketsdever, in his excellent "Top 10" answers to this question, offers "Great Questions" at #9. Let me expand on this one suggestion.

Louis B. "By" Barnes, a legendary case teacher from the Harvard Business School, was famous for saying that teaching is "the discipline of listening extra carefully before making interventions in the discussion." Here is a list of question types he developed:

  • Open Ended Questions: What's going on? What do you make of this?
  • Diagnostic Questions: How do you interpret this events? Can you explain them? What do they mean?
  • Information Questions: Where, When, Who, What are the relevant facts and opinions?
  • Challenge Questions: Why do you conclude that? Where is there any evidence for what you say? Does anyone disagree with that point?
  • Extension Questions: Tell me more about that. What else can you add? Keep going… Can you take us further down that path?
  • Combination Questions: How you relate the point you make to the point he/she just made?
  • Priority Questions: What issues do you consider most important? Why is this more important than that?
  • Action Questions: What should be done? What would you do? How would you do it?
  • Prediction Questions: What do you think is going to happen? Where is this all going to end up? Will he/she do that or not?
  • Generalizing and Summarizing Questions: What general conclusions can you draw from this discussion? Can you summarize the discussion so far?

Jim Eison is a professor of education at the University of South Florida who also has a inventory of useful questions. Here are a few he shared we me, citing Richard Paul as further source for these Socratic-like questions:

  • Questions of clarification: Can you explain that further? Could you give me an example?
  • Questions that probe assumptions: Is that always the case? Why do you say that?
  • Accuracy: Is that really true?
  • Precision: Could you be more specific?
  • Relevance: How does that relate to the problem?
  • Depth: What factors make this such a difficult problem?
  • Breadth: Is there another to look at this question?
  • Logic: How does that follow?

One other tip: wait. As wait time after a questions is extended, you are likely to have more and better discussions. Of course, never answer your own questions.

Is there any way to improve your skills at discussing?