Hit the jackpot with pot! The cannabis industry grew by 21% each year between 2019 and 2021. Starting a cannabis business can help you make hundreds of thousands of dollars and create new jobs in no time.
But you can’t just open up a business and expect to make money. Selling cannabis requires a lot of hard work before you open your doors.
Thankfully, you can learn the basic steps of starting a cannabis business in just a few minutes. Here’s your easy guide on how to open the business of your dreams.
Research the Market
Market research will help you determine what subindustry you should pursue and how you can fulfill needs in the cannabis marketplace. Look at potential competitors, including large companies that may expand into your line of work.
Figure out what the most pressing need is in your local area. Cannabis consumers living in a city may need to have their cannabis delivered to them. Consumers in rural areas may want new strains or a comfortable store where they can buy products.
If you’re struggling with ideas, try looking at demographics and target audiences. Older cannabis consumers may want to experiment with recipes, baking cannabis into cookies and snacks. You can run a cannabis kitchen or write books for these people.
Talk to cannabis business owners and ask them for any business tips they have. They may recommend you buy equipment like a cannabis waste shredding machine.
Write a Cannabis Business Plan
Once you have ideas for your business, you must write a formal cannabis business plan. You can give this plan to investors and the board of directors to get funding and approval for your company. You can also use this plan as a blueprint for your first year of operations.
You can structure the plan however you want. Specify what your goals for your business are and identify clear steps you will take to achieve them. If you’re running a kitchen, a goal can be a sales figure you want to hit, and clear steps would include partnering with suppliers.
You should mention how much money you need to start, maintain, and grow the business. Be specific with your figures and break down how much you need for each step of the plan.
One section of your plan should also describe the risks to your business. Identify each risk, rank them in order of importance, and describe steps you will take to resolve them.
Get Money for Starting a Company
You can fund your business predominantly or entirely by yourself. The more self-funding you have, the more control you have over your business, and the more profit you can keep.
However, getting money from other people can decrease your risk. Your investors can give you advice on how to run your company and use connections to help you reach your business goals.
You can get your money from friends, connections you’ve made from work, and banks and angel investors. Try to find experts in the cannabis industry with a long history of investments.
You may need several types of insurance, depending on what cannabis companies you plan on running. If you’re growing cannabis strains in a warehouse or delivering cannabis, you will need worker’s comp insurance to cover the cost of injuries. If you’re running a lab or working with doctors, you will need errors and omissions (E&O) insurance.
Talk to an insurance lawyer and a broker about the coverage you need. You can bundle your policies together to save money and make filing claims easier.
Find the Perfect Location
You can start your business in the area you are now living in. However, starting your company in a newly legalized state can help you grow your business in a short period of time. Many investors want to spread their money across several newly legalized states, so you may get funding from them immediately.
You should also find a state that has low application and license fees. Alaska, California, and other states charge only small amounts of money to apply for and receive a cannabis license.
Some cities offer social equity programs. They may give grants to companies run by BIPOC or formerly incarcerated people. Research these programs and see if you qualify.
The federal government regards cannabis as an illegal substance. You should be fine as long as your business is in a state with legalized cannabis.
But if you expand across state lines or need interstate transportation, you may have legal problems. Figure out how to expand your business to different locations while following federal rules.
Your physical location is also very important. If you’re growing cannabis, you need plenty of space for your plants and equipment. If you’re running a store or restaurant, you need a location near a parking lot and public transportation to make it easy to access.
Figure Out Starting a Cannabis Business
Starting a cannabis business may seem tricky, but it only requires a few steps. Research your marketplace and figure out a goal for your business. Create a plan to achieve that goal and reduce your risks so you turn a profit.
Take your plan to potential investors and get your business funded. Find a good location for your business, such as a city with cannabis programs. While you’re starting your company, connect with cannabis experts to leverage their experience.
Once you’ve started your business, you must run your business. Read cannabis business management guides by following our coverage.
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