It’s remarkable to think how far the marijuana business has expanded since it started. Just a couple of decades ago, the idea of legal, recreational, or even medical marijuana seemed inconceivable. But here we are in 2021, in a country where the luxury cannabis business is thriving and poised to expand in new markets.
That said, the road to a profitable cannabis business is not straightforward. It is plagued with complex rules and regulations, expensive taxes, and a slew of additional unexpected hurdles and hoops to jump through. While giant dispensaries can yield massive cash returns, the cannabis sector can be a risky venture to get into with the smallest profit margins. As the legalization of marijuana spreads across the United States, the price of marijuana will decline, leaving those who run grow-ops and dispensaries with decreased earnings over time.
Crucially, savvy entrepreneurs and business people throughout the country are capitalizing on what is a new and uncharted field. But how do they do it? How simple is it to establish a legitimate marijuana business? What are the legal gaps or potential drawbacks?
Here are some insights on what you should know before entering the cannabis industry.
The industry is competitive, and it’s important to develop your brand and go-to-market strategy before operating.
Identifying your area of expertise is an essential step in starting a cannabis business since it allows you to stand out. Some rules regulate what you can and cannot do inside a certain specialty, whether manufacturing, growing, or distributing.
To develop your brand and strategy, a good starting point is to ask yourself the following:
As the industry becomes increasingly competitive, expect that creating a brand that connects with a specific target audience can make or break your business. Creating a strategy for spreading the word and warming up your client base is critical regardless of where you are in the supply chain of the cannabis business.
Getting local approvals and your conditional use permit might be the most difficult milestone.
In comparison to the other milestones required in becoming operational, this one can be tricky as it involves getting approval from local officials who reside in the area. Many local governments do not want cannabis businesses to operate in their region. Even if cannabis is legal in the state, local governments have complete control over what happens within their borders. There’s more lobbying and networking than you’d think necessary to get things done.
Based on local legislation, municipalities will frequently establish an autonomous agency responsible for granting and regulating cannabis licenses and operations. The type of license and documentation required for your cannabis company will be determined by the area of your operation as well as the type of business you are operating. Growing and marketing marijuana to retail companies, for example, may require different licenses and permissions than operating a dispensary.
Just because a property is “green zoned” doesn’t mean it’s suitable for your business.
Finding a suitable cannabis location is far more intricate than it looks. There’s no guarantee that you’ll get authorized just because you’re in a “green zone.” Some green zones, for example, are only allowed for particular sorts of cannabis businesses, such as production and sale, but not for growing.
Some properties are unfit for cannabis activities. Be cautious when investing in a property before it has been evaluated for compatibility, or you may end yourself paying far too much for improvements.
You might be able to get operational quicker by purchasing a business instead of building it from scratch.
Time is one of the most expensive commodities in the industry. Depending on your location, getting to market fast is frequently critical. Funding is essential for each company to get your business idea off the ground. Work on identifying private investors. While some are still hesitant and apprehensive, there are cannabis businesses for sale that have met many of the operational milestones. You can explore markets here to see what’s available.
Laws and regulations are constantly changing.
Be wary of outdated or even inaccurate information found on the Internet. Your best approach may be to investigate the laws of your state, as well as the laws of your county and city. This allows you to decide whether you are eligible to establish a cannabis business and what additional measures you must take to stay on the right side of the law.
Stay updated on state and local rules and regulations, or employ a consultant to do it for you. A qualified attorney will keep you in the loop on any legal developments that occur. Setting up your standard operating procedures and personnel training quickly is also a vital element of keeping your licenses and permits up to date after you’re up and running.
All cannabis-specific permissions, licenses, and registrations are required in addition to registering your firm in the state to do business there. Don’t forget that while you’ll be tasked with additional marijuana-specific responsibilities, you’ll still be responsible for all of the taxes and registration that a typical firm would be required to complete.
The thrill of profit potential in a relatively new and quickly developing sector must be balanced against the drawbacks, including expenses, financing difficulties, and regulatory load. If you decide to go through with your cannabis business, you’ll need to get property insurance, hire employees, and acquire commercial space.
Your cannabis business might be easier to start when all of the above is taken into consideration. There are virtually limitless chances to work with a wide range of enterprises. Hopefully, you now have a better understanding of what it takes to start a business in the cannabis industry.
Let Us Assist You Build A Profitable Cannabis Business.
This market is highly complex and nuanced, so the more entrepreneurs review their options, the higher their chances of getting the best results. BeGreenLegal is a full-service firm that assists businesses in being operational and successful. We have a team of business strategists, land planners, consultants, real estate agents, and legal professionals that can help you on and with every step of the process to get your business up and running and successful. Contact us today to get an initial opportunity analysis.
