Getting into the Cannabis Business
Growing in Legality
Cannabis is becoming increasingly legal to buy and sell in the United States. It is an opportune time to start a business that can benefit as this trend continues. Due to legalization not yet in place at the federal level, the laws regarding growing, selling, transporting, and using cannabis varies across each of the 50 states. While this makes things more complicated, it provides a unique opportunity to get into this growing market early. You have the potential for eventual nationwide legality that would magnify your business opportunity tremendously.
Learn the Laws
The first place to start is to learn the laws in the state you have in mind to start a business. Each state will fall into one of the following:
- Not legal – Not legal in any circumstance.
- Legal for medical use – Legal for medical reasons, needs a doctor approval.
- Legal for recreational use – No restrictions, can be used for medical or pleasure.
You can use this Weedmaps list to get a high-level understanding of the laws in your state. Click through on the state to get a much more detailed description. If cannabis is not legal in the state you are in, you will either have to wait for it to become legal, or start your business in another state.
Before investing any significant money in a cannabis business, it’s highly recommended that you consult a cannabis business lawyer. Ensure the lawyer has the expertise for your state.
Types of Cannabis Businesses
There are many sectors to get into this growing market:
- Open a retail dispensary.
- Open a mobile delivery dispensary.
- Start a growing operation.
- Sell accessories, whether retail or online.
- CBD only sales.
- Marketing services.
Be sure to identify any needed licenses and permits you may need at state and local levels.
Risks of a Cannabis Business
There are unique risks to a cannabis business. These do not need to scare you away, rather you can understand the risks and ensure you are reducing them as much as possible.
One such risk is dealing with a cash only business. Depending on the nature of the business, you may need to only accept cash, to avoid issues with federal laws. Cannabis is technically illegal at the federal level, and most banks will not want to handle cannabis related money and risk being prosecuted. Due to the large amounts of cash, you may be targeted by thieves. Either find ways to avoid handling of the cash, or ensure you have sufficient security in place.
The next area of risk is with future changes to laws and regulations. Breaking a local regulation could result in fines or even having your business shut down. There is also the risk of running into issues with federal law, with cannabis still being classified a Schedule 1 drug. Again, ensure you consult with an attorney.
The last big area of risk is quality control of product. Most suppliers of cannabis will be smaller grow operations. There is risk of contaminated product, such as mold and pesticides. If you plan to sell product, then you must consider how to ensure the grower is providing product that is safe to sell.
There is certainly a bright future for the cannabis industry. See this cannabis retail sales estimate, which shows tremendous estimated growth. There is growing demand as cannbis loses the stigma associated with it historically as being an illegal or dangerous drug. There is also a growing understanding of the medical benefits, such as for chronic pain, depression, anxiety, inflammatory bowel disease, and much more.