How to Start a Cannabis Business

While cannabis legalization may be a revelation to cannabis users, it’s also a boon to would-be business founders. How so? With a steadily growing number of states legalizing marijuana for medical use (37) and adult recreational use (21), the cannabis industry is, in a word, BOOMING! And this has a plethora of budding potprenuers eager to cash in on this potentially lucrative enterprise. Meanwhile, launching a cannabis business requires careful planning, adequate funding, and well-executed marketing to turn a profit.

So, how do you get into the cannabis game? It’s likely no surprise we get this question quite a bit here at Cannawayz.com. So, here’s a basic overview of the steps involved in starting your own cannabis business.

Preliminary Research + Industry Education

As is the case when starting any new business, understanding the ins and outs of the trade is integral to your success. This is especially important in the cannabis industry, given the added dimension of legal and regulatory requirements. A clear grasp of the various state and federal laws and any local regulations applicable to cannabis businesses is critical.

Understanding different types of cannabis products and services is another crucial factor. From growing and selling marijuana to manufacturing cannabis-infused products to operating a dispensary – There are various business options, each with unique requirements. Attending cannabis industry conferences, networking events, or seminars can help you gain a clearer perspective on the industry.

Create a Business Plan

Most new businesses fail within the first two years. One of the biggest reasons? Poor planning. Which is why a business plan is an essential roadmap for any new business. And that includes launching a cannabis enterprise, too. An effective business plan typically describes your products or services, target market, competition, marketing and sales strategy, financial projections, and funding sources.

Your business plan should also address the unique challenges involved in the cannabis industry. Legal and regulatory compliance, funding challenges, and location limitations will directly impact your business. Consulting an attorney or cannabis industry specialist to ensure that your business plan is comprehensive and compliant with all legal regulations is generally recommended.

Choose a Business Entity + Register Your Operation

After completing a business plan, choosing a business entity and registering your business with the appropriate state and local municipalities is your next task.

While you can launch your business as a sole proprietorship, forming a limited liability company (LLC) or corporation helps protect your personal assets and limits your liability should you be sued or run into other legal issues. It’s also wise to consult an attorney or accountant to determine which business entity best services your particular needs.

Once you establish your business entity, you’ll need to register with the appropriate state and local agencies. And there may be additional requirements related to the unusual legal status surrounding the cannabis industry.

Secure Adequate Funding

With potential expenses, including equipment, inventory, legal fees, and the like, you’ll need adequate funding to get your weed biz up and running.

If you can’t cover the costs yourself, where do you turn? Given the federal prohibition on cannabis, you can’t turn to your local bank for a loan. Fortunately, there are several private investors, venture capitalists, and other funding sources specifically aimed at supporting the cannabis industry.

Of course, working with a third-party source to secure funding makes a business plan, financial projections, and proof you’ve obtained the necessary permits and licenses essential.

Find a Suitable Location + Launch Operations

Setting up shop as a cannabis business can be tricky. Many states have strict regulations regarding the proximity of cannabis businesses to schools, parks, and residential areas. Your physical location must comply with all legal regulations and suit your operational needs.

After settling into a space, it’s time to outfit your operation. Purchasing or leasing equipment for cultivation, manufacturing, or dispensary operations, hiring employees, and implementing prescribed security measures are all on the list.

Obtain Necessary Permits + Licenses

Cannabis businesses are HIGHLY regulated. State and local municipalities typically require various operating licenses and permits, along with additional permits or licenses for zoning, building, and fire code compliance. All of which you need to obtain BEFORE opening for business.

Again, it’s wise to consult an attorney or cannabis industry specialist to ensure you’ve acquired ALL necessary documentation to operate your business legally.

Implement A Marketing Strategy

To keep your cannabis business afloat (and ultimately profitable), you need customers. How do you attract customers? With effective marketing. And that starts with developing a marketing strategy.

Who are your ideal clients? Why do they need your products or services? And how are you going to reach these folks? These are all questions you need to answer when creating a marketing strategy and developing promotional and advertising campaigns to attract new customers and generate repeat business.

Ready To Launch Your Cannabis Business?

Launching a cannabis business is no easy task. You’re bound to encounter many challenges along the way, not least of which is the fact cannabis remains illegal at the federal level. But this burgeoning industry offers plenty of opportunity and huge financial upside for skilled and tenacious entrepreneurs.