It’s crazy to think just how far the marijuana industry has come in a few short years. A decade ago, the concept of legal recreational and even medical marijuana was still taboo; a pipe dream reserved for burnt out hippies and Dave Matthews Band fans.
But here we are, in 2018, and we live in a country where a luxury weed market is now booming. Over half of American states currently have medical marijuana legislation on the books, nine of them have medical and recreational laws, and more are on the way.
We see states like Colorado, where recreational marijuana is not only legalized, but regulated and taxed, making out like total bandits. For the record, Colorado made over $247 million in revenue from marijuana taxes, licenses and fees in 2017, which is up from over $193 million the year before — that’s a 28 percent increase in just one year, in case you were wondering.
More importantly, astute entrepreneurs and businessmen and women all over the country are taking advantage of what is essentially a new and unexplored frontier. Edibles, clothing, dispensaries, grow-ops, restaurants and lifestyle brands are popping up like wildfire, which means it’s becoming more and more difficult to not see the appeal of the cannabis industry.
But how are they doing it? How easy is it to start an actual marijuana company? What kind of legal loopholes or potential caveats are there?
Pick Your Angle Wisely
The most important aspect of starting your own cannabis-related business is actually the most important aspect of starting any kind of business: picking the angle you’re most happy with.
Luckily, there’re a lot of industries and products that fall under the cannabis umbrella. Are you interested in the lifestyle aspect of it? Do you like clothing? Do you really care about the science behind creating the perfect strain? Do you have a green thumb? Are you fascinated by consumption apparatuses (bongs, papers, vapes, etc.)? Do you really like the way weed smells?
The possibilities are endless, because you can literally think of all the normal, everyday stuff you like, and then, like enhancement smoker Jon Stewart in Half Baked, add “with weed” to it. Bed and breakfasts are great. But have you ever tried a cannabis-friendly bed and breakfast? We love Uber eats, but could you imagine a delivery app for weed? Yoga, too. You know what makes yoga better? Weed. Scented candles? Cool. But scented weed candles? Fuck yeah.
The point is, the first step toward planting some roots in the cannabis industry is finding fertile soil. Take what you love most about marijuana and decide whether or not you think it’s a viable industry. If it is, roll with it. If it isn’t, move on and keep plugging away until something worthwhile pops out.
Figure out the Footwork
When you find an idea you think works, it’s not as simple as nailing it down and running straight to the bank with it — especially not in an industry as volatile and unpredictable as cannabis. The unfortunate truth is that even in well-meaning states, there are a lot of financial and even legal hoops to jump through.
But before you go through any of that struggle, try to have a look around. Find your competitors, explore their businesses and analyze what strategies are working for them. Put time and effort into learning what it takes to delve into that particular side of the industry. Remember: starting your own headshop is a drastically different experience from starting a dispensary, which is a drastically different experience than starting a design firm that specializes in equipping grow-ops, and so on and so forth.
There are several layers of things to consider: how much competition is there currently in that industry? What are your startup costs going to look like? How can you go about acquiring funding? What kind of legal loopholes—if any—are there?
Get a Good Lawyer
Every business should have some kind of legal representation on retainer, but that goes doubly for anyone trying their hand in the cannabis industry. Even in states where cannabis is legal, there are usually difficult and nuanced laws, regulations, and statutes on the books that make things as difficult as possible.
There are taxes and fees, licensing arrangements and more permits than you can shake a stick at. And then you have to do all the other stuff a normal business would, like investigating trademarks and copyrights, setting up tax paperwork, registering as a business entity, and all the other fun stuff no one ever really tells you about before you start laying the ground work.
Let’s also not forget that marijuana is still illegal on the federal level. If you intend on offering any kind of e-commerce store or doing any online advertising, there are states that actively prohibit your business from advertising or doing business within their borders.
The cannabis industry, although more widely accepted than ever before, is still full of potential pitfalls for investors. Even if you think you have all your bases covered, retaining the services of a legal professional is an absolute necessity.
Compile the Data Into a Business Plan
The biggest pain in the ass about starting a new business is putting together a business strategy. It’s not necessary 100 percent of the time, but if you’re going to be looking for investor money (see up top about “acquiring funding”) then it’s most definitely something you’re going to have to throw together.
Plus, it’s more important to have a solid business plan in the cannabis industry because there are just so many potential ways to slip up or accidentally forget something.
What is a business plan? Well, it’s basically a single document that has the gist of everything you want your business to be. More than a detailed summary, you should also talk about your market strategy, analyze your competition, talk about finance goals and issues, and even design a rudimentary development plan (like, how will you develop your business, and how do you intend on scaling and growing it into something larger and more profitable).
Resources and Networking
Because the cannabis industry is so new here in the States, some of your best friends in the industry will probably wind up being your competitors at some point or another. That’s more good than bad because if you do it right, you’ll be able to put together a very healthy circle of support and advice. So much of this industry is uniquely grassroots, which also means that it’s highly community oriented (for the time being, at least).
Reach out to industry leaders—especially ones in your area—to see if they’re open to talking with you about your idea and plan of action. The best way to get the lay of the land is by talking to people who presently inhabit it.
And if that doesn’t work, there are a ton of other resources out there:
This group is excellent and has chapters all over the country dedicated to helping people like you know the laws in your area and also get in touch with all the people you need to talk to.
Credited with being the country’s first marijuana law firm. If you’re looking for legal representation, these guys should be your first phone call.
An investment firm dedicated to connecting people with potentially great ideas to investors.
A venture capitalist firm that invests strictly in the legal cannabis market. Not only will you get funding here if you’re on some next-level shit, but you’ll also get all the proper nurturing and advice along the way. They’re a good play to keep in your back pocket.
They market themselves as a resources for cannabis professionals, but if you’re interested in keeping up to date with the business side of the cannabis industry, this website is invaluable. Not only do they have an expansive business directly, but they also post timely and important industry-related news and articles from around the country.
Next up; here are 6 tips on how to make weed edibles.