Like every other business, the beginning of your journey in the cannabis industry can be fun, exciting, but a little overwhelming. But following a few simple tips to take the first few steps can help you create a strong foundation and establish a successful business.
A cannabis business’s legal requirements should always be a priority to make sure you are building a successful venture. Here is a seven-step guide to starting a legal cannabis business.
Start With A Good Idea:
Depending on your areas of interest and capabilities, you can choose a unique and innovative idea in the cannabis industry.
There are wide possibilities to explore through businesses that deal directly with the plant, such as cultivation, logistics, processing, and selling cannabis. While these segments offer a large scope for expansion and profitability, they also involve complex regulatory requirements and large capital for establishment. For example, High Supplies are a leader in the Cannabis industry in 2020 who deal directly with cannabis.
Alternatively, you can explore areas such as software, design, blogging, legal advisory, product review, packaging, and relatively easy distribution and are quite profitable. The regulatory requirements are rather easy to meet in this case.
Shortlist a few ideas for your business and conduct a thorough market and field research to understand the opportunities and challenges that lie ahead before you finalize your business idea.
Identify The Right Location:
Location is yet another important factor to consider while starting a marijuana business. Choosing an ideal location for good foot traffic is required for businesses, such as dispensaries or product outlets. The property needs to be spacious and needs to be compatible with all state authorities’ regulatory norms.
In case your work is mostly associated with manufacturing or cultivation, the required permits for the area, buildings, need to be in place. Perform market analysis of the user base in the location and existing competition to locate the best places to establish your business.
Secondly, choosing a location with favorable cannabis laws can be beneficial to establish a successful venture easily. The zoning laws may be favorable, and manufacturing permits may also be easy to acquire. The basic licensing costs, legal expenditures, and rent will also be optimized to support your business’s start in this case:
Understand Legal and Regulatory Requirements:
The recent legalization of marijuana in several states has been a powerful step towards commercializing this incredible plant. But the terms of legalization, especially the regulatory norms for different cannabis businesses, varies under different jurisdictions. The absence of federal regulatory compliance indicates that you need to keep the local laws in mind while deciding on starting a cannabis business.
Explore the regulatory policies for the cannabis business of your choice in your local area. Cannabis laws are volatile at this point, and hence make sure you are up to date on the latest policies. For new business owners, taking the path of least resistance in the cannabis industry could help establish a successful business. Hence look for segments that have minimal regulatory requirements.
Develop A Strong Business Plan:
A comprehensive analysis of everything that you need for building a business reflects in a strong business plan that outlines the necessary steps, resources, and ideas.The business plan needs to offer crucial insights about the company, including objectives, differentiation, areas of application, potential market opportunity, resource requirements like funding, workforce, and raw materials. It needs to build a story about how these factors will aid in developing a successful cannabis business, such as managing the financial needs and operations requirements over time.
A detailed business plan gives an idea of moving further and is also a crucial document for raising funds. A cannabis business plan is quite similar to any other business, except it is best to induce some flexibility in the plan to accommodate the evolving laws in the segment to run a successful business.
Gear Up For Funding:
Money is one of the most important factors in establishing your business. There is a need for sufficient funds to start and run a cannabis business from licensing costs to operational expenses. But funding could be one of the biggest hurdles for budding entrepreneurs in this industry. The reason behind this is that unlike other businesses, financial institutions, such as banks, do not offer loans for new establishments in the cannabis segment.
The rapid growth in the industry has encouraged a lot of interest from venture capitalists and other investors looking to explore opportunities in the area.You could take advantage of this interest to provide an impressive business plan to raise the necessary funds.
Make sure to create a realistic financial projection covering all the costs, including overheads and large contingencies, to secure funds from interested parties. Make sure you have enough funds to survive you till your business turns profitable.
Acquire Permits And Licenses:
Marijuana businesses are not legalized at the federal level. Hence most of the licenses and registrations required for your company need to be acquired from state bodies.
After figuring out a business plan and funding, the first step is to prepare for the various legal registration required to start an entity. Start by registering your company name and the type of business entity, as the latter affects your tax liabilities.
Next, every state has different rules for starting a cannabis business, and hence you need to conduct thorough research of licenses, registrations, permits required to open your company. The best way to make sure you have covered all the legal requirements is to rope in a legal consultant or organization to help you acquire the complete list of documents required.
Make sure to complete general documentation other than marijuana-specific registrations as well, such as tax registrations. Once you have all the formal documentation ready for your business, you are all set to start your business.
Establish The Business:
Once you have all these items in place, you are ready to begin operations of your business. Make sure to discuss with industry mentors to purchase advanced equipment and other necessary raw materials for your business.
Keep in mind that, like most other businesses, the stream of digital marketing can offer tons of benefits to reach out to your customer base. Be mindful of customer feedback to improve your company and stay updated with the evolving cannabis laws that could benefit your company.
Starting a cannabis business can be a challenging step. But with the right resources and efforts, the scope for expansion and success is huge. Make sure to keep the legal aspects of working in the cannabis sector in mind before taking any step to carve a niche in this industry of growing possibilities.