The cannabis industry: looking ahead
The future is bright in the blossoming world of commercial cannabis. With an ever-expanding market, industry sales revenue is expected to grow not just in the US, but globally, from $13.4 billion in 2020 to $33.6 billion by 2025.
This tremendous growth comes in spite of 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.
We’ll explain some basics about the booming marijuana industry including advice on the best way to launch your cannabis startup right now.
Some quick stats
- In 2020, the states with the highest sales per capita of cannabis were Colorado, Oregon, and Alaska.
- The percentage of adults in the US who reported using marijuana in the past month increased from 7.5% in 2013 to 14% in 2019.
- 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.
Where is marijuana 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 well-known for being pioneers in the movement to legalize marijuana, it’s difficult for an entrepreneur to open a new dispensary because of the high taxes and licensing fees.
It’s important to note that marijuana laws and regulations can vary widely between cities within a state as well, 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:
Choose the kind of marijuana business to start
There’s more than one way to get in on the booming cannabis industry. Here are a few common business types:
- Dispensary: It’s all in the name – dispensaries dispense (aka sell) cannabis and cannabis-infused products to customers at a physical retail location.
- Cultivation: Cultivators are essentially 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 products such as edibles, concentrates, topicals, and tinctures. This 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 transportation of cannabis. Distributors will acquire cannabis products from producers and wholesalers and deliver them to retailers or directly to consumers.
Write a good business plan
Much like any other enterprise, to run a successful business, you’ll need a good business plan. Not only is it important for gauging if your business is tenable and sustainable, but it will also 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.
Obtain licenses or permits to run your business
It’s critical to make sure you have all the necessary licenses and permits before you plant your first seed!
To be absolutely sure you’ve got all your ground covered, there’s useful cannabis software, websites, and specialized legal services that help you keep track of the regulations in your area and the licenses that are necessary for each type of marijuana business.
Getting funding for a cannabis business is difficult because it’s still illegal at the federal level in the US. Many traditional financiers are very hesitant to put up capital into a dispensary or other marijuana business.
Instead, try funding via private investment, grants, or crowdfunding platforms like Fundanna.
What are you waiting for?
Now that you’re armed with the necessary knowledge and resources, get out there and do it! 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.