OrIginal Article By Tia M., Editor and Contributor at AskGrowers
Globally, the legal marijuana market has grown to have a value reaching $17.7 billion and by 2027, it is predicted to grow and reach $73.6 billion. Everyone wants to have a piece of the pie in this market but it is not as easy as it seems.
A lot of cannabis businesses shut down immediately after opening up doors for various reasons. If you are hoping to start a business in this promising industry, you must be aware and cautious of the common pitfalls.
To help you navigate this industry, here is a beginner’s checklist to succeed in the cannabis industry and make most of the green rush.
Determine what role you will fill in the supply chain
When starting any business, the first step is to determine what role you will be fulfilling in the supply chain. In cannabis, there are various roles a business might take care of, such as being a grower, processing business, or dispensary.
If you choose to be a grower, there is quite a lot of learning to do because growing the perfect strain of cannabis takes time and expertise.
The same applies to the processing businesses. They have to know how to extract CBD oil or turn cannabis into edibles. They also have to know what essential oils to mix with CBD to make tinctures and other products.
That is how to start a marijuana business. By starting with conceptualizing the role, you will be filling and working towards getting more knowledge and experience in it.
Register the business
All states and countries have their own unique laws about incorporating a business and making it official. There are proper authorities or legislative commissions that oversee this process and adherence to guidelines they have stipulated.
When starting a cannabis business, you should dot every “i” and cross every “t”, thus getting in touch with those relevant authorities.
Try to determine what they need for you to start operating within their jurisdiction. In most cases, all that is needed are your personal details and those of other directors of the business.
You can even do it online in most states and countries that are technologically advanced. Once that is done, register with the IRS or other relevant organization for taxes. As you start to operate, ensure that all financial books are updated and accurate to remain compliant.
Research what legal obligations you need to fulfill
Like most industries, there are regulatory boards or associations you might need to satisfy when starting a cannabis enterprise.
The regulatory boards or associations might have a set of rules and laws they enforce on the business of your nature. In some cases, a department of the government might play that role of regulatory board or association.
In either case, when researching how to get in the marijuana business, also see what requirements are there. Perhaps if you are a processing plant, there might be lab tests required and site inspection visits to ensure everything is above board.
Dispensaries might need to obtain a certain kind of permit in some jurisdictions and it is important to be aware of this before money has been invested in the business.
Document a business plan
Once all of these matters have been considered and resolved. You should then draft a cannabis business plan detailing operational, marketing, and other planning.
This business plan will help you gain a clearer perspective on how to run your business and what kind of challenges to expect. Get a comprehensive business plan template online that will guide you when drafting this document.
After following that template’s guidance, you will then be in a better position to dominate competitors in this industry. After researching and drafting the business plan, knowing the weaknesses and strengths of the competition will be much easier.
Besides, you will have a detailed view of how the business should be managed and marketed. Do not delegate this task to a professional or other family or friend because you should know every section of your value chain.
Raise funds for your idea
One of the critical phases of starting a marijuana business is raising enough capital to set up your facilities and workplace. To get the ball rolling, you might need funds to start operating for the first few months or even a year or two. It will all depend on cash flow forecasts. When raising capital, there are certain things you need to be aware of.
Firstly, when drafting a financial budget required, have some 30% room for unexpected expenditure or to accommodate any sudden price changes.
Secondly, do not be narrow-minded about raising funds. For example, many people think the only way to get a business funded is by going to the bank. There are other options, such as crowdfunding, venture capitalists, and other equity funds to consider.
Market to relevant people
Once everything has been set up, you should try to implement the marketing strategy detailed when drafting the business plan. You should approach them and pitch your products with great enthusiasm and confidence. Be open and friendly to get that first sale done.
That will depend greatly on where you are in the supply chain. For example, if you are a processing business, your target market might include dispensaries. Go to them and convince them to stock your products and continue marketing those items on the side to get better brand recognition.
You have to be adaptable and flexible, depending on your role in the supply chain and other industry factors. Try to find the best marketing techniques tailor-made for that kind of business and tweak them a little to be more personalized.
Do not be overwhelmed by the thought of starting your own business but instead consider other great examples that have made it big in this industry. For example, companies like Canopy Growth, Aurora Cannabis, and others. They all started somewhere and that is what you should do. Just start and follow the tips provided above. Remember, proper planning will help you operate much more smoothly as time goes.