Entering the Cannabis Market: The Top Five Realities Cannabis Businesses Need To Know
The cannabis industry is growing rapidly, but it is very complex for any cannabis business to navigate for many reasons. Whether you are an entrepreneur considering entering the adult-use cannabis market for the first time, or you’re a legacy operator seeking entry into the adult-use cannabis market, there are a few things to understand. It is important to do your homework, consult experts, and build a strong team that is prepared for the challenges you will face as a cannabis entrepreneur. This nascent and complex industry is filled with challenges, but if your plan is prepared thoughtfully and executed carefully, the outcome can be tremendous. Here are our top five tips for entering the adult-use cannabis market.
Understand the cannabis regulations. Cannabis remains federally illegal in the US, so each state has its own set of complex laws and regulations around legalization and business requirements. Make sure you fully understand the legal landscape in the state you want to operate in before starting your cannabis business. Consider the local regulations and zoning restrictions to decide the best place for locating your cannabis business.
Secure proper funding and capital. Starting a cannabis business can be expensive with licensing fees, real estate, equipment, and construction. You should prepare to fully fund at least one year of operations without net profit. Make sure you have adequate startup funding and access to capital. Many traditional lenders don’t work with cannabis yet, so it is important to seek cannabis investors.
Focus on cannabis compliance and recordkeeping. The cannabis industry is heavily regulated. There are strict compliance rules for every aspect of the supply chain that touches the plant, which include cannabis growing, manufacturing, testing, retail, delivery, distribution. Build rigorous systems for compliance and document everything thoroughly. Research the rules on recordkeeping in your state.
Create a cannabis business plan. Operating a cannabis business is challenging. Investors and regulators will scrutinize your cannabis business plan and model. Ensure it is realistic, compliant, and attractive to investors. A great business plan includes an executive summary, a company description, market analysis, a product and services pitch, marketing and sales plan, an operations plan, a financial plan, and risk analysis.
Prepare for cannabis marketing challenges. The first step to creating a successful marketing strategy is to understand your customer. However, there are tight controls on cannabis marketing and advertising. Use influencers, word-of-mouth, and education-based marketing smartly within regulations. Understand that many marketing channels are not accessible to cannabis businesses. Be creative.
The cannabis industry requires dedication and perseverance. Surround yourself with knowledgeable cannabis professionals who have a passion for the plant. Cannabis businesses face significant challenges, and it is the resilience of cannabis operators and cannabis business owners that succeed. Stay optimistic and be patient through the challenges.
It is essential to have a team of cannabis lawyers and cannabis business consultants with experience and industry knowledge as you pursue and enter the adult-use cannabis market. At Feldman Legal Advisors, we provide clients with strategic guidance on regulations, securities, intellectual property, licensing, trademarks, insurance matters, and more. Our lawyers are admitted to practice in New York, Pennsylvania, Colorado, Florida, Texas, and California, plus we have a global network that is prepared to support you wherever you are. With competitive rates and no equity required, our team is ready to help you start your business- not take advantage of it. Get started with us today by contacting us here or emailing us at info@feldmanlegaladvisors.com so we can make your budding dreams a reality.