How to start a cannibis business?
Wondering how to get a foothold in the burgeoning cannabis industry? Are you wondering how you can carve out your piece of this booming, high-growth market? You’re not alone. Thousands of entrepreneurs are looking for ways to make money as the cannabis business booms, and many are figuring out creative ways to do so:
- Making cannabidiol tinctures at home
- Running an extraction company
- Even starting a weed-delivery service
Why Open a Cannabis Business?
Before you open up your own cannabis business, consider a few things. First, it’s important to note that the industry is fragmented and influx—that’s good news for entrepreneurs looking to enter the field, but it also means that you’ll want to tread carefully. Here are a few reasons why you might want to start your own cannabis business:
1) There’s Big Money in Cannabis Sales
Cannabis sales are expected to reach $40 billion by 2020. In states where the recreational sale of the drug is legal, sales are expected to outpace medical sales by 2020. The industry is a high-growth market, and much of that growth will come as more and more users begin to purchase the product legally.
2) The Industry Is Ripe for Disruption
Like any other business, cannabis companies need to be innovative and find ways to stand out from their competitors. This year, some cannabis companies are trying legal action against Yelp—claiming that fake reviews of their cannabis business are hurting their bottom line.
3) There Are Opportunities for Cannabis Startups and Established Companies
Cannabis is a fast-moving industry, which means opportunities for established companies to thrive. For example, Costco announced this month that it would begin selling cannabidiol (CBD) products in select stores, including Kirkland Signature CBD Pain Cream. Costco is positioned well to profit from cannabis sales as an established company with a huge customer base.
4) Entrepreneurs Who Open Cannabis Businesses Could Stand to Profit
It’s no secret that the cannabis industry is a high-profit, high-growth field. However, the federal classification of marijuana as a Schedule I drug makes it difficult for cannabis companies to get loans and lines of credit, even in states where cannabis is legal. In May, big banks have recently started to dip their toes in the water. Capital One opened its first account for a cannabis dispensary in Santa Ana.
Start your cannabis business with these steps:
1. Register Your Business and Acquire Licenses
The first thing you should do when you open a cannabis business has registered the business with your state government and acquire all the necessary licenses. In California, for example, cannabis businesses must register with the Secretary of State’s office. However, even if you do everything right, your business will only be opened on paper; as long as it’s illegal to sell or consume marijuana in your state, any transactions connected with your cannabis business will be illegal. That means that you’ll want to talk to an attorney about incorporating cannabis into your company—you’ll also want to get a good lawyer on hand for advice about anything related to the business.
2. Plan Your Marketing Strategy—and Stick to It
Once you’ve registered your cannabis business, it’s time to think about how you can set yourself apart from the competition. Most cannabis businesses operate in states where the drug is legal for medical use, so it’s important to find a niche in the market. As noted above, cannabis businesses that sell marijuana tinctures and other oils have begun suing Yelp for allowing their competitors to leave fake reviews online. If small cannabis businesses can take on a corporate giant like Yelp, there are plenty of opportunities for smaller companies in the cannabis industry.
3. Build the Right Brand
The cannabis industry is similar to other fast-growing industries, quickly gaining market share, like craft beer, wine, and coffee. These industries are often ridiculed for their “niche” market and the small profits from serving their narrow demographics. However, by building a strong brand, cannabis entrepreneurs can appeal to a broad audience and carve out a profitable niche. (For more on creating your brand in the cannabis industry, see this post.)
4. Focus on Growing Your Business—and Not Paying Off Your Debts First
Many cannabis businesses open up shops with high hopes of making money quickly. However, cannabis is a tough industry for small companies to break into. That’s why you should focus on growing your business and building customer loyalty instead of trying to pay off debt. Cannabis sales are expected to boom in the next few years; by opening a cannabis business now, you’ll have plenty of time to prepare when demand kicks in.
Are You Thinking About Starting a Cannabis Business?
There are many reasons to consider opening a cannabis business. However, as the industry is still largely illegal, it’s important to tread carefully. If you’re thinking about starting your own cannabis business, contact the experienced attorneys at McAleer Law Offices LLC today. We can offer you legal guidance when starting and operating your company. We can also help you figure out how to make money in this fast-growing industry. Reach out today to get started!
Though the cannabis industry is still largely illegal at the federal level, it is clear that many states are moving towards legalization, and this trend will continue. Now maybe the best time to get into the cannabis industry with that in mind. Not only are you entering a growing field with huge growth potential, but people who open cannabis businesses. At the same time, it’s still illegal and may be poised to make some serious money once legalization is complete.
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