Well, it is not that old when cannabis was struggling with the battle of legal or illegal status. After so many amendments and legislation of farm bill 2018, legal cannabis is one of the fastest-growing industries. With immense popularity and unprecedented growth, you might have thought about how to start a cannabis business? Well, it has become possible more than ever.
In 38 states across the country, marijuana is legal for recreational or medical purposes. At the same time, there are still some parts of the USA where Marijuana is entirely illegal. This amendment in the status of marijuana has increased its popularity and demand. It opened the way for businesses to opt for cannabis startups.
The cannabis industry is the new favorite of entrepreneurs, cultivators, distributors, and tech geeks due to the demand and impacts. This is high time to have your share of this multibillion-dollar industry.
If you are thinking of dwelling on the cannabis industries, take a look at the entire scenario first as cannabis; a mainstream industry is unlike any other business with its age and regulatory environment. What steps should you take to embark on this new legal industry and start a cannabis growing business? Let’s take a route!
Beginning Posture: The Cannabis Industry
The outbreak of legalization started in 1996, California’s passage of medicinal cannabis measure Proposition 215 and ended in 2012 with Colorado and Washington’s legalization of recreational cannabis. Now, marijuana is legal in 33 states of the U.S. for medical purposes, while in 10 states for recreational uses.
Further, 15 states have decriminalized cannabis, allowing a certain amount of cannabis possession that breaches the law will lead to a civil charge.
The cannabis industry has turned from a black-market to a mainstream industry just in the short time of 20 years, and still, the industry is in its early stage.
The federal government still keeps cannabis as a Schedule1 controlled substance even though it grabbed the mark of $20 billion by the early 2020s. Even though the federal government has its own set of laws, the cannabis industry has a huge rise in its prominence.
The Department of Justice published a letter in 2013 known as the Cole Memorandum that restricted the federal government’s interference in state regulatory cannabis operations. The missive was later canceled in 2018 by the former U.S. Attorney General Jeff Sessions, but the industry didn’t stop growing.
Undoubtedly, the federal government continued creating obstacles; even then, the legal cannabis industry kept flourishing. According to the New Frontier Data analyst, the cannabis industry’s worth was $10.4 billion in 2018 that will be bloomed to $26.3 billion in 2025.
The industry is filling up so many gaps already, and there is a projection to see the impulsive progress in the cannabis industry in coming years.
What is the Current Face of the Cannabis industry?
While commencing any business, this is very important to see and understand the entire framework of the industry, where it is lying in the current scenario, the future exposure of this particular business, what risks are involved, and the earning potentials.
In the cannabis business, you wouldn’t find a rich history as the industry has faced many decades.
To start and learn the essential steps of starting a cannabis business first, you must consider the status and demand of marijuana in your targeted area and how you can outclass your competitors by providing the same products and services. With more and more popularity and clearance of marijuana products, more people are jumping into the cannabis business.
Cannabis businesses are available in all sizes and shapes, starting from cultivation to trading and marketing. So, to start any booth, let’s learn first in simple steps how to start a cannabis business.
How To Start a Cannabis Business in 6 Simple Steps?
CBD industry is the burning career choice in the present era with so many possibilities. So, to start your own set of businesses in the cannabis industry, consider these steps to go on a long way of success.
Know your Interested Market
Cannabis businesses are available in all shapes and sizes, and the first step you must take is to decide the size and type of your business. The need is to decide what part of the cannabis industry you want to grow in, either the cultivation, processing, marketing, opening a dispensary, or all under one shade. So, carefully choose your niche of interest.
After fulfilling this aspect, you must know that the marijuana business requirements are up from the other businesses that require a fairly basic set of rules. The cannabis laws vary from state to state, and there is the possibility that marijuana is legal in one state and drastically illegal in a neighboring state. You need to spend much time researching and understanding the state and federal rules related to the marijuana business.
Prepare Your Detailed Business Plan
After you have decided your area of interest and understood the basic laws for the marijuana business, now it’s time to prepare a comprehensive business plan. The marijuana industry is a strictly regulated business, and you need to be a bit detailed while preparing a cannabis business plan.
Understand your state laws a bit more carefully, collect all the information from authentic resources from starting the business, target the audience, and follow the regulations. The laws related to the cannabis industry change more apparent, so keep a closer eye on each fluctuation. Make a plan that includes:
- Your investment and expected revenue
- You’re Marketing Move
- Know your competitors and how to Keep your distinctions
- From where you’ll run your business?
- Decide about your suppliers.
- Get services of legal counsel to keep things streamlined.
Once you have prepared all these, now move to the next step.
Register Your Unique Business Name and Entity
Due to federal restrictions, big businesses are not coming up much into the cannabis industry, and it is the ideal stage for small and local businesses to establish and flourish.
Either small or big, a business needs a proper entity, so choose the right one for your cannabis business. Either you choose LLC or corporation, Your business entity, affects the taxes you pay and the level of risk you’re exposed to. These entities protect the owners from personal liability.
Also, it would help if you chose a proper name for your marijuana business.
Check the availability of a specific name for your business and register your business name for a fixed amount of time by paying a small fee. These both things are important to register your marijuana business, so do it carefully to move further.
Register Your Cannabis Business and Get Licensed
Every state designed its own set of laws. That is why business permits, licenses, and registration practices will be required depending on the state/area you want to start your marijuana business. Before setting on any business, either it’s cannabis or conventional type, set your perk of rules to make things vigilant for long.
Do proper research and better contact the legal professional to know and understand the regulations to register your business and get the license. Acquire all the important documentation, license, and other regulatory bodies necessary to set up your marijuana business legally.
Some states have introduced registration portals to licensing marijuana businesses and website designing for the marijuana business to run it virtually.
The marijuana business is allowed under strict rules; even the dispensaries and retailers have to follow some rules and regulations. After the registration, your business is clear to take a start and boom in the specific state.
Make your Business Tax-filer
To register your marijuana business to pay taxes will be different in different states. However, in each state, Employer Identification Number or, in some states, business tax I.D. The number is necessary to apply for your marijuana business.
The business owner can apply for an Employer Identification Number online from the IRS directly and gets the approval in no time. Your EIN is mandatory to open a business bank account or apply for business funding. Also, this number is essential while you are paying payroll and income tax for your marijuana business.
Get Finance for your Cannabis Business
Your business needs finance, and the cannabis business is more demanding in this aspect as compared to other typical kinds of businesses. Every new entrepreneur must be pre-planned about the business.
The cannabis business has more expenses. To cover these, you must look for cannabis business funding to start and finance your business, which might not be possible without creating a detailed plan. Furthermore, any investor or lender you might ask for financing will first prefer to see your entire business plan to figure out the effectiveness of this business strategy to turn a profit.
In whatever field of cannabis business you want to invest in, make sure you have estimated all costs as the cost for the cannabis business is higher than expected.
At the start, you may need an application and licensing fees, and later, regular equipment, marketing, and startup costs will be there. And once the business has started, taxes, maintenance, and depreciation costs are sheer need.
Finding small business loans will be another hard-to-go thing. There is a lack of small business financing for this business as the cannabis business is still not legal federally.
Most of the banks offering small business loans are operating on a national scale and come under federal regulations that make the lending for cannabis business a big “NO.” The laws are stringent, and these banks can’t take the risk of financing federally illegal activities.
To fill up this huge gap, to some extent, the alternative lenders are providing small business loans for marijuana businesses and financing all types of canna-businesses.
As new to the cannabis business, you must be aware of all the obstacles lying in the way to be a successful marijuana entrepreneur.
The Bottom Line
The cannabis industry is in its initial stages, and the growth is showing a shiny future for it. So investing in the marijuana business will be a wise idea. However, all of the above, the vital thing is pre-planning and knowing and understanding all aspects of this business.
Must look into all the pros and cons of starting the cannabis business. This is one most complex and restrictive industry and laws are stringent in some states along with costs, financing struggles, and regulatory burdens. Don’t go blank without knowing how to start a cannabis business.
So, thinking twice about all the complexities. It will help you make a better decision. Once you have decided, follow up on all the above-mentioned steps to prolong progress. Rest assured with your decisions and dedication.