Asking yourself, how to start a cannabis company? It’s hard not to notice the epic growth of the cannabis market. Despite the COVID-19 pandemic and global upheavals, the cannabis industry is now worth $61 billion – with profits increasing year on year. It’s even more impressive when considering the stringent restriction placed on the cannabis banking industry.
How to start a cannabis company – that’s the question on everyone’s lips. It can seem a daunting prospect to get started from planning to financing. It’s not for the fainthearted. However, the rewards are remarkable; indeed, there’s never been a better time to get started.
In this article, we’ll discuss everything you need to know about how to start a cannabis company. We’ll begin with the basics, like choosing your business type and being honest about the real challenges you’re likely to face.
This is how to start a cannabis company.
Okay. You’ve decided to open a cannabis company… which one? As the cannabis industry grows, there’s been significant diversification. We’ve now got cannabis cultivation, extraction, retail, and manufacturing. You could extract CBD for oils (or one of the other 113 cannabinoids) or make the most delicious edibles this side of the Rockies.
Finding a sector that isn’t oversaturated is critical. Suppose there are a dozen dispensaries in your local area. In that case, you’re unlikely to turn a significant profit from opening one more.
Try to think outside the box.
There’s no point planning your dream cannabis business if it’s illegal in your state. On the other hand, if your state is on the brink of legalization, you could enter an open market.
Even if your state hasn’t legalized medicinal or recreational cannabis, many states do allow the sale of hemp-derived CBD products (though they must contain less than 0.3% THC by dry weight).
No business can start without capital. This is where things get tough. Because of the discrepancy between cannabis’s legal status at the state and federal levels, most big banks shy away from giving loans to cannabis businesses. They just can’t risk federal prosecution.
Apply for a cannabis banking account or cannabis business loan with Safe Harbor Financial!
It also means if a bank or financial institution does lend you money, they may not be the most above-board organization. In contrast, Safe Harbor only provides loans to clients who’ve been with us longer than six months. We do open bank accounts for businesses before that point, though. So, you can start to accumulate revenue.
Moreover, trying to raise money from legitimate sources without telling the truth can land you in a whole world of trouble. For example, if you’re trying to remortgage your house, always be honest about why.
Loans aren’t the only funding avenues. Other potential funding sources include friends and family, crowdfunding, and private investment. Each option has its pros and cons.
As you begin to create a business plan (more below), you’ll notice the challenges you face. Knowing how to start a cannabis company isn’t as easy as you thought, right?
You’ll need to have a clean criminal record to apply for a marijuana retail license. Indeed, numerous states have strict regulations about who can and can’t be approved. Nor is that the only trouble. You’ll need insurance, a bank account, legal protection, marketing, a business plan, and more.
Write down everything you need to do, and, as with any business: be organized!
Plans rarely survive first contact with life. That’s not the point. The plan is there to give you a guide – a roadmap – towards success. It forces you to sit down and think about your product/service, target market, business name, and branding. You’ll need to investigate your competitors: seeing what you like and don’t like
Writing a business plan is one hell of a learning curve. And a must-do in learning how to start a cannabis company.
There are also aspects of the business you’ll never have considered before. For example, you’ll need to develop a staff structure, an operations plan (how are you going to run the business), a marketing plan (4Ps of marketing: product, price, place, and promotions).
Oh, and decide on your cannabis business’s legal structure. Do you want to be a sole proprietor, a partnership, a limited liability company (LLC), a C Corporation, or an S Corporation?
Once everything is in place, it’s time to take action. Here’s a list of your top priorities:
Now you know how to start a cannabis company, the fun begins. Develop your brand, from your logo to your website. Build your social media accounts and generate hype for your business. The old adage – build it, and they will come – is nonsense. You should tell them first!
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