The future is bright in the blossoming world of commercial cannabis. With an ever-expanding market, cannabis industry sales revenue is expected to grow not just in the U.S. but globally, from $13.4 billion in 2020 to $33.6 billion by 2025.
This tremendous growth of the cannabis industry comes despite immense obstacles stemming from the plant’s legal status, social stigma around marijuana usage, and other difficulties such as the licensing process and few options for financiers.
This article explains the basics of the booming cannabis industry, including advice on the best way to launch your cannabis startup.
Quick Stats
- In 2020, the states with the highest sales per capita of cannabis were Colorado, Oregon, and Alaska.
- In 2020, the U.S. cannabis market employed around 243,700 full-time workers, with a projected growth of more than 400,000 jobs by 2022.
- The percentage of adults in the U.S. consuming cannabis in the past month increased from 7.5% in 2013 to 14% in 2019.
Where is Cannabis Legal?
There are 21 states in which recreational use of marijuana is legal:
Alaska, Arizona, California, Colorado, Connecticut, Illinois, Maine, Maryland, Massachusetts, Michigan, Missouri, Montana, Nevada, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont, Virginia, and Washington.
What is the cheapest state to open a dispensary?
Oklahoma is the cheapest state to open a dispensary due to its low application fees and annual renewal fees for the license.
While states like California and Colorado are pioneers in the movement to legalize cannabis, it’s usually very difficult for an entrepreneur to open a new dispensary because of the taxes and licensing fees.
Marijuana laws and regulations vary widely between cities within a state, so it’s important to check the specific laws and regulations for the area where you are considering opening a dispensary.
4 Tips to Stand out with your Cannabis Business
Though there is plenty of opportunity to make money, the cannabis industry is fiercely competitive, and the strict regulations and licensing fees make it difficult for new businesses to get going. To make it in the marijuana business, you’ll need to use every strategy to your advantage. Here are some tips on how to make your business stand out:
1. Choose the Kind of Business to Start
There’s more than one way to get into the booming cannabis industry. Here are a few license types:
- Dispensary / Retail: sell cannabis and cannabis-infused products to customers at a physical retail location.
- Cultivation: Cultivators are farmers; they grow and harvest cannabis plants. After obtaining a growing license from a regulatory body, cultivators plant seeds and harvest buds in a growing facility. They make money by selling raw marijuana to other businesses.
- Manufacturing: These businesses process raw cannabis into edibles, concentrates, topicals, and tinctures. It may involve mixing and cooking ingredients, filling and sealing containers, and labeling and packaging the finished products.
- Distribution: With high demand for cannabis comes a high demand for the transportation of cannabis. Distributors will acquire cannabis products from producers and wholesalers and deliver them directly to retailers or consumers.
2. Write a Good Business Plan
To run a successful business, you’ll need a good business plan. It’s important for gauging if your business is tenable and sustainable. Also, it will help you build confidence when it comes to financing.
Perform rigorous market research and analysis to find an opening for your niche. Develop a deep understanding of your product, what makes it unique, and the day-to-day operations that are necessary to sell it.
No business plan is complete without financial projections, a description of the management and organization of your company, and an overall summary that includes your mission statement, goals, and target market.
3. Obtain Licenses or Permits
It’s critical to make sure you have all the necessary licenses and permits before you plant your first seed!
To be sure you’ve got all your ground covered, there are useful cannabis software, websites, and specialized legal services that help you keep track of the regulations in your area and the licenses necessary for each type of cannabis business.
It’s easier said than done.
4. Get Funding
Getting funding for a cannabis startup business is difficult because it’s still illegal at the federal level in the United States. Many traditional financiers are hesitant to put capital into a dispensary or other marijuana business.
Instead, try funding via private investment, grants, or crowdfunding platforms like Fundanna.
If you’ve been thinking of opening a business in the cannabis industry, there’s no better time to start than right now. Find your niche, perform market research, get all your permits and licenses, and then you’ll be on your way.
