The marijuana industry is one of the most lucrative sectors today, with more states joining its legalization. There are 11 states where recreational marijuana is legal and more than 33 others where medical marijuana is legal. Other states have decriminalized the use of marijuana and its products.
If you live in a state where marijuana is legal, you can gain from investing in this lucrative industry. But, where should you start? This guide will provide you with all the crucial steps you need to launch your cannabis business.
Pick a Niche
When most people hear about starting a marijuana business, they only think of marijuana dispensaries. But actually, several other players in this industry. Cannabis businesses can broadly be categorized into:
Farming: It involves the actual growing of the cannabis plant and taking care of it until it’s ready for the market.
Manufacture: Entails processing of harvested cannabis plants, transforming them into products used by the public, such as edibles, oils, and vapes.
Shops/dispensaries: They are stores where people can buy weed online or in physical locations. These are mostly involved in the retail business of cannabis products.
Auxiliary services: Comprises of businesses involved in the cannabis business indirectly. These could be the security companies, professional advisors, and marketing agencies.
Make a Business Plan
A business plan is critical in running a business and especially the cannabis business. In such a regulated industry, you need to make a more detailed plan, unlike that of a regular business. The cannabis industry laws keep changing now and then, so your business plan needs to be flexible enough.
The business plan should answer the following questions;
- Where do you plan to run your business?
- Where to get your supplies?
- The business costs and profit projections?
- How to differentiate your business from competitors?
- What customer acquisition strategies will you use?
- What are your business strengths and weaknesses?
Register and License Your Business
These two go hand in hand because they determine when the business will start its operations. Once you decide on the type of business you want to start, the other thing is to get it registered. It involves paying for a name search within your state so that you register your company. It is wise to go for a limited company, which operates separately from its owners.
Registration should be followed by licensing. The licensing laws vary between jurisdictions, and the registration fee depends on your state laws, which can be a bit higher than for other regular businesses.
These two processes are critical, and you need expert advice to get through. It is good to consult an attorney to ensure that you follow the right procedure and remain within the law.
Understand How Taxation Works
Taxation is another issue that entrepreneurs need to know when venturing into the marijuana business like weedsmart.net Being a lucrative business, the state governments are closely monitoring tax revenue from this sector.
But understanding your tax obligation as a weed farmer or shop owner can be challenging. With cannabis illegal federally, and being legal in your state complicates the situation further. Knowing how to navigate the state and federal tax system is crucial when starting a marijuana business.
Besides, states have different taxation rules, so it is wise to consult with a tax attorney and get it right. It is also crucial to note that since the marijuana business is not federal, it incurs more taxes than other business fees.
Starting a marijuana business will cost you a considerable amount of money. There are many expenses to incur, right from company registration to setting it up and running it. So, if you haven’t saved enough, you need to get funds from other sources.
But since most financial institutions and banks are under federal law, getting a business loan is nearly impossible. The best way is to raise funds from friends and family who are willing to take the risk with minimal securities.
Here are other alternatives:
- Get an angel investor.
- Borrow from cannabis-specific funds.
- Borrow from celebrities.
- Source funds from high net worth individuals.
- Raise capital from Industry-specific holding companies.
- Ask for funding from business accelerators and incubators.
Develop Effective Marketing Strategies
Building your brand is critical when running a business. With the strict regulations running the marijuana industry, you need to be very careful with your marketing techniques. Before implementing any marketing strategy, ensure it’s legal.
The best way to create awareness is through leveraging digital media. There is a chance that most of your potential customers are online. So, you can start by finding a good developer to build for you a website.
Once you have a site, it doesn’t stop there; you need to incorporate important features on your website to allow easy navigation and enhance the user experience. You can then use effective SEO techniques to increase traffic and boost conversions.
Social media sites are also good places to win trust and loyalty from potential clients. Join powerful social media platforms like Facebook, Twitter, and Youtube and offer your followers useful content.
The marijuana industry has lucrative business opportunities, but they come with stringent laws and heavy taxation. While this guide provides you with crucial steps to follow to start your marijuana business, you can’t do it all by yourself. Surrounding yourself with industry experts makes the process much easier.