Analysts predict the industry will be worth more than $21 billion by 2021, and that’s just in the handful of states where cannabis is legal for either medicinal or recreational adult use. The industry is expanding rapidly and there is even more room to grow.
With numbers that promising, you may have found yourself thinking about launching a cannabis business of your own. But where do you start? There are truly limitless ways to secure your piece of the cannabis industry’s predicted revenue, many of which newcomers haven’t even considered. These five steps will guide you as you consider the options in this vast, expanding industry.
1. Decide how you want to be involved
Cannabis industry businesses are generally broken down into two categories: plant-touching, which come into direct contact with the cannabis plant, and ancillary, which do not.
Some examples of plant-touching business are cultivation, owning a dispensary or making edibles. Ancillary businesses support the industry without touching the plant, such as accounting, legal advice or cannabis marketing. Like any other industry, the cannabis industry requires all kinds of professionals of both types to achieve success.
Last November’s MJBizCon in Las Vegas saw nearly 700 exhibitors, from cultivation technology to packaging manufacturers to security solutions. It’s proof that everyone has a skillset which could be applied to the industry, from chefs to design infused menus to contractors who can build facilities. Decide which is right for you – working directly with the plant in a new role or utilizing an existing skill to serve the industry.
2. Read up on your state’s cannabis laws
While consulting with an attorney is a must, it’s important that you brush up on your legal knowledge as well. Legal cannabis is still a new industry everywhere, even in the earliest states to legalize, and state laws are various and ever-changing. It’s crucial to not only learn the lay of the land in the state or states in which you operate, but to keep tabs on regulation as it churns its way through state government. If you assume today’s regulations will be there tomorrow, you could find yourself running afoul of new laws, a literal and figurative costly mistake. As the industry expands and stabilizes, this might change, but for now it’s imperative you remain on top of public policy developments.
3. Educate, consult and network
Once you’ve developed an idea for your business, it’s time to hit the books. Knowledge is of utmost importance in the cannabis industry, and the circumstances are constantly changing in this ever-evolving legal landscape. Read cannabis industry news every day so you are well-versed in the topic. We recommend making a Twitter list to help you easily follow trusted news sources, magazines and blogs.
Once you have a firm grasp on what’s happening, you’ll be able to better identify the industry’s pain points. This will help you determine where your business idea could flourish, either geographically or along the supply chain. This may also be the appropriate point to consult with a law firm which specializes in cannabis. An attorney can confirm if your business can operate within the proper legal framework.
Finally, it’s time to hit the pavement and network! The cannabis industry, more than others, is largely built on face-to-face meetings and personal relationships. Cannabis businesses tend to work with people they’ve met in person and developed a rapport with, so make sure you get in front of other professionals for a chat and a handshake.
4. Determine if you need funding
Funding is always the million-dollar question, and that’s quite literal in the legal cannabis industry. Financing for the cannabis industry works a bit differently because cannabis is still illegal on the federal level. As a result, many banks are hesitant to work with cannabis businesses in any capacity, and that includes access to conventional sources of funding. Luckily, many private investors have seen the opportunity and have jumped in to fill that gap.
Determine early on if you can afford to be self-funded or if your operation needs outside financing. If you do, you’ll likely have to appeal to investors, whether that means friends and family, angel investors or venture capitalists. To do so, it’s wise to have a professionally-created pitch deck and other materials with which to wow your prospective investors. Landing this deal could be the difference between launching a top-notch cannabis startup or struggling right out of the gate.
5. Develop a great website
Your website serves as a landing page for all potential customers, investors and partners who find you on the web. It is often the first thing that people see, as they will Google you to find out more about your company. Their judgments will be made on the quality and the content of your website, which could make a significant difference in an ever-growing, but still emerging industry.
Additionally, your website is a central location for traffic driven your way via organic search. The cannabis industry currently cannot pay for advertising on Google Ads, Yelp and other digital advertising avenues, so organic search through content and social media becomes of the utmost importance. A properly-built website therefore becomes a key hub for all of your online activity.
The train has left the station: legalization cannot be stopped
Don’t be discouraged by the recent revocation of the Cole Memo, which directed U.S. attorneys to not go after cannabis businesses which were operating legally in their home states. There is too much on the line in terms of political clout, tax revenue, economic stimulation, public health and criminal justice reform to scrap an entire industry. The memo was a suggestion and not rule of law, and although the industry is still working through the consequences of revocation, early signs point to business as usual for legally-operating entities.
The legal cannabis industry train has long since left the station. Now is the time to board!