Predictions for US cannabis sales in 2022 exceed $30 billion as new innovations, products, and markets open up. More broadly, global cannabis sales could surpass $50 billion by 2025, according to Frontier Data. Such extraordinary figures are catching the eye of investors and entrepreneurs across the country.
Little wonder: a 2017 Statista analysis found that the average dispensary might generate around $1.8 million in profit from $3 million in revenue.
Learning how to get into the cannabis business is a question on everyone’s lips. But while some may simply recommend opening up a dispensary, the reality of the industry is far more complicated.
Given cannabis’s recent legal history – and the ongoing difficulties with cannabis banking – you’ll need to develop a foolproof plan for how to start a cannabis business if you hope to succeed.
You’ll need to consider everything from your business type, startup costs, state regulations, the application process, and more. Let’s go through these factors and find out how to get into the cannabis business.
Cannabis is a lucrative business opportunity – if you get it right. First, let’s answer a few key questions. Your response will depend on the capital you’ve got available, your past experience, and what is legally possible in your state.
The cannabis industry is undergoing rapid diversification. From the early days of cannabis cultivation and dispensaries, businesses have evolved, producing all kinds of marijuana-related products and services. Extraction companies can turn raw cannabis plants into oils and ointments – some for further use in edibles and novel cannabis beverages.
Meanwhile, a whole host of ancillary businesses exist to support the core cannabis company – for example, lawyers, accountants, graphic designers, and more.
Think about your existing skills and determine what cannabis-related business you’re best suited to.
Learning how to get into the cannabis business can only get you so far. If your state does not allow medicinal or recreational cannabis sales, then you’re severely limited in the options available.
Even in legal states, certain towns and jurisdictions can restrict the opening of cannabis-related businesses. In short: geography matters.
However, if you currently live in a state considering the legalization of recreational or medical cannabis soon, you may be in a prime position to take advantage of a virgin market. After all, it’s much easier to establish your business without the competition inherent to Colorado’s, California’s, New York’s, or Washington State’s cannabis markets.
Keep your finger on the pulse: follow local news and find out your options. You could also explore other avenues – hemp-derived CBD products are legal in the vast majority of states.
Funding a cannabis business doesn’t come cheap. You’ll need to pay for licenses, premises, product, employees, and more for dispensaries.
It’s even more expensive for indoor cultivation businesses, where the latest grow lamps, ventilation systems, and more are necessary to produce a sizable quantity of product. Even ancillary businesses need office space for administration and distribution.
Matters are complicated by the lack of access to the usual avenues for business funding. Because cannabis remains illegal at the federal level, businesses cannot apply to major financial institutions. Regardless, federal taxes are steep and startup costs excessive – so you cannot go it alone.
Other potential funding sources include friends and family, savings, venture capitalists, and financial institutions like Safe Harbor. In fact, our loan program is among the best available in the country – and is open to all sectors of the cannabis industry.
Naming your cannabis business sounds like the fun part – except your name needs to be available, respectable, and engaging. Choose a name too laden with cannabis terminology, and you may dissuade licensors from accepting your application. Meanwhile, a bland, dull name is unlikely to grab the attention of your target market.
You’ll also need to pick a business entity right for you. The big decision is between being a limited liability company (LLC) or a corporation. Both shield owners from personal liability: you’ll want to investigate the differences for yourself.
All businesses need a business plan. It should include the steps to register your marijuana business, obtain licenses and permits, and where you’ll source your products. Here are a few key considerations:
Alongside these core questions, you’ll need to think about creating websites, apps, branding, and much more. And, of course, ensure every step of your plan is 100% regulatory compliant.
From budtenders to experienced attorneys, creating your cannabis dream team is critical to a successful business. While direct experience in the cannabis industry isn’t essential, you do want smart, adaptable, and creative people to fill your ranks.
Consider what transferable skills you’re after and the ethos of your business. Is this person a good fit? Are they an asset to your business? If the answer is yes, welcome them aboard.
Opening a cannabis business is a daunting and complicated process – but it can be done. What you need is a financial institution experienced in guiding businesses to maturity.
That’s us! Here at Safe Harbor Financial, our personalized banking and impeccable regulatory advice are the best the industry has to offer. If you’re planning on starting a cannabis business in 2022, you’ll need our help to succeed.
Do you own a hemp, CBD, dispensary, marijuana, or cannabis business and need a business bank account? We’ve validated over $8 billion dollars in cannabis-related funds since 2015. Bank with confidence. Bank with Safe Harbor Financial today.Open Your Account