The cannabis industry is one of the fastest-growing industries in the world today – and one of the most attractive to would-be entrepreneurs. According to new research from the Brightfield Group, the cannabis market is estimated to reach over $31.8 billion in annual sales by the end of 2023 alone. Opening a cannabis business can be a great opportunity for entrepreneurs looking to break into the industry. But it requires thorough research, knowledge, and planning in order to stay compliant and ensure your business’s success in the short and long term. 

The Before: What You Need to Know Before Opening a Cannabis Business

The cannabis industry is unlike any other industry – and still relatively new in the U.S. What does that mean for you as a new cannabis entrepreneur? The first thing you need to know about the cannabis industry is that regulations vary drastically by state and region, as cannabis is not yet federally legal. These regulations are likely very different than any other industry, so even if you have experience as an entrepreneur in other areas, joining the cannabis industry will be a new challenge.

Even things like taxes and insurance are very different in the cannabis industry, so consulting experts early on is advised. Regulations also vary depending on your business’s position in the cannabis lifecycle, so it’s important to decide what role you want your business to play as soon as possible.
Here’s a quick rundown of some of the different types of cannabis businesses that exist across the industry:

  • Cultivators
  • Laboratories
  • Manufacturers
  • Distributors and Transporters
  • Dispensaries/Retailers

You will also want to consider the culture of the cannabis climate in your area. Does your state offer an adult-use market or medical only? Will you be joining a newer or more established market? What does regional competition in your area look like? Ultimately, the more information you can gather about your unique position and the industry at large, the more prepared you will be as you begin building your brand.

Getting Started: How To Begin Opening a New Cannabis Business

Opening a cannabis business can be a complex and time-consuming process. There are a number of important steps that must be taken in order to ensure the success of the venture. Securing funding, selecting a cannabis-friendly banking partner, obtaining the proper licensure and permits, marketing to customers, and establishing standard operating procedures are all critical components of the process.

Banking & Financing Banking is a particularly challenging subject for cannabis businesses as many banks express hesitation or outright refuse to work with such companies due to a lack of federal legality and  increased liability. This fear is further propelled by the fear that if the federal government conducts a crackdown on the cannabis industry, any assets held by the bank would be seized. Yet, even still, there are a number of reliable banking partners available to cannabis businesses. It’s important to explore those options and determine how your business will handle finances at large, from securing funding to handling day-to-day operations, transporting cash, keeping financial records, and more. 

Obtaining Licensure Depending on the type of license being sought, the cost will usually range from several hundred to several hundred thousand dollars per application. Additionally, the process is often lengthy and complex; it typically involves registering with state agencies, participating in background checks, submitting detailed plans for operations, paying any applicable fees and taxes associated with the license application, and more. Once approved by the state agency, businesses must then comply with any rules and regulations associated with their specific cannabis license. All of this makes it important that potential business owners do their research and secure funding beforehand so they can ensure they understand all of the necessary steps involved in obtaining licensure in order to avoid any delays.

Establishing SOPs Standard Operating Procedures (SOPs) are the bedrock of your company; like a sports playbook, it’s what keeps everything functioning cohesively – compliance included. Your SOPs guide process efficiency and future projections to ensure you meet key performance goals efficiently. Without them in place, many organizations suffer costly errors that start eating into their bottom line before they know it! So don’t hesitate – get those procedures sorted and make sure all members of your team understand how fundamental they are for success at every level. Looking to get the most out of your SOPs? Take it a step further by considering how your SOP will include your daily, monthly, and yearly systems – in every area from employee hiring and training, to document management, and more. 

Marketing & Building a Memorable Brand Marketing a new cannabis business can be a daunting task given the competitive nature of the industry. To stand out, businesses should develop an attention-grabbing brand strategy that includes utilizing creative tactics to reach their target audience- including adding some personality! Businesses should create engaging content across multiple platforms and focus on developing meaningful relationships with key influencers in the cannabis space. Additionally, investing in digital marketing strategies such as SEO, PPC advertising, and social media campaigns can help increase brand visibility and drive sales while keeping businesses mindful of cannabis advertising regulations. Above all else, businesses need to ensure they are creating content that will resonate with their target customers and build an emotional connection with them that will last for years to come – including investing in customer loyalty perks and discounts. 

The cannabis industry is a complex and diverse industry, so it’s important to note that there is no “finish line” when opening your own cannabis business: keeping a pulse on your business is crucial to know how to best adjust as you grow. Looking for more guidance on how to open and maintain your cannabis business? ProCanna is here to help. Reach out today to learn more!