5 Things to Know Before Opening a Cannabis Business
The Cannabis Industry is one of the most exciting industries in to emerge in the last decade. The once forbidden plant has received an updated reputation as more countries and states move towards legalization. With the new changes in law, there are more opportunities for entrepreneurs to get involved in the space.
It is important to start off on the right foot to enter this new space. There are some main focus areas that every new business owner and operator should be aware of and thoroughly understand. Here are five crucial things to know before starting a cannabis business:
1) Understand state laws
States determine the rules and regulations of the cannabis industry. Every state is different, so it is important to understand state regulations to know exactly how to operate your business. The first thing that you need to establish is whether your state has a cannabis program in place and if it is medical only or includes adult use. If your state has not established a cannabis program, begin tracking the laws to stay abreast of where they are in the process. In the meantime, writing a business plan will prepare you for the license process and will get your started to open your business.
2) Decide the type of business you plan to open
If your state has an established program, your next step will be to determine the type of business you plan to operate. Each state may license each type of Cannabis business differently, and each type of business has its own unique requirements for application and licensure. When most people enter the industry they focus on cultivation, manufacturing (processing), and dispensing, however, states offer other licenses including testing and delivery. To make your application competitive, it is important to find someone who has experience in the industry in relation to the license type you plan to pursue. Those scoring the application (states and local municipalities) like to see that a potential business has someone involved who has successfully operated in cannabis or a similar highly regulated industry.
3) Get to know the local community where you plan to operate
In addition to the state, the local government is a critical piece to opening a cannabis business. Most states require local approval to receive a license. Even if the state does not require local approval to receive a license, municipalities can create ordinances that can block cannabis businesses from operating in their jurisdiction. Local governments can also limit the types of operators in their area. For example, some towns will allow retail but will not allow cultivators and manufactures. Some may limit the number of licenses issued their community. Taking time to go to engage with local officials and attend meetings will help you understand the community’s plans and process to open a cannabis business.
4) Consult with professionals
Cannabis is highly regulated, and it takes a lot of work to get into the industry. Hiring a professional to assist you with the application process and operations will help make your application more competitive and your business stronger. An experienced cannabis business consultant will help write your business plan and application while helping you navigate the application process. Working with an architect who specializes in cannabis designs will help ensure that your facility meets local and state standards. Most applications require that you submit floor designs. A botanist with prior cannabis plant experience can assist you with many aspects of your business including maximizing product yields and developing consumer education. Hiring a CPA and an attorney with a cannabis background will help you avoid tax and legal issues in a market that has a lot of liabilities.
5) Budget accordingly
Starting any business requires a financial commitment, and the cannabis industry is no different. Between business and application fees, construction and facility costs, design and maintenance fees, and operations, it is very easy to underestimate the financial commitment that it takes to get open. Writing a great business plan will help you be more prepared to better understand the unique needs of your business to secure the funding necessary to ensure that your business is well funded.
Through our group CSG, we provide custom-tailored solutions and facility-specific guidance to business owners and management to ensure profitable and sustainable operations. Schedule some time to meet with us to help you get your cannabis business started.