Thinking about starting a cannabis business? With the industry being somewhat new, there are lots of unknowns surrounding the market. To help you realize if your idea is scale-able or not, here are 11 crucial questions to answer before you fully commit to cannabis:
1. Is It Legal?
This may be an obvious one, but with the cannabis laws being varied state by state, it’s a good idea to know if what you want to do is actually legal or not. It would be a shame to focus time and effort on starting a business only to find out you are not going to be able to proceed. There are already enough federal grey areas, so make sure you take the time to research your states laws.
Find out more about your state laws on cannabis HERE
2. Do I Know Enough About My Field?
Its easy to assume you know enough about the field you would like to enter, but starting a business is knowing more than just the basics. Don’t let the “green rush” fever hit you so hard that you don’t take a step back and educate yourself on cannabis. Even if it is clothing or accessories and not directly related to the “leaf”, make sure to take time and learn how things are made, the science behind it, and how do make your brand work the way it should.
3. Have I Tested The Market?
So your cannabis-based idea is awesome and will make you millions? Great, but make sure you test the market out before dedicating months of work to something your not sure people will want. This goes beyond family and friends because they can be supportive to a fault; meaning you need feedback from someone who doesn’t “love you”. You need to find a group of people in your niche or targeted demographic and test the idea out. This could be in a survey, product samples, or launching a beta/pilot group for your idea. This will not only test your idea, but also will give you great feedback on improving and fine tuning the business.
4. What Does My Competition Look Like?
How do others in the same sector pair up to what you have in mind, and how successful are they? If they are succeeding that is actually a good sign that your idea is good. The question then becomes what can you add on to the idea to make it improved. Use competitors as your own focus groups. Ask customers what they like and don’t like about what the competition is offering. This will give you valuable insight on how to make happier customers by offering higher quality products that meet their direct needs.
If your competition is struggling you need to then ask why, and if it is something you can improve with your version of the brand. Don’t be afraid to look at those competing with your business, and do not be discouraged if they are already successful. This is the dawn of cannabis business and some niches have plenty of room to grow. Do your due diligence and see if this is something the market will continue to grow in and how you can add your on twist to it.
5. Do I Have Enough Money?
Cannabis businesses are hard to scale because there are many uncertainties about the markets. The fast growing marijuana sector is full of dollars to be made, but as the old saying goes, “it takes money to make money”. Its important to know and plan for all the expenses you may encounter. Cannabis businesses tend to be taxed higher, have higher licensing and certification fees, and need special attention when compared to traditional businesses. These expenses can all add up very quickly, and the last thing you want is to be out of money half way through getting your company up and running.
Especially if your are growing or selling marijuana directly, you will want to plan out all the expenses before knowing if you have the funds to proceed. You can find out many of this information at NORML
6. What Licenses or Certifications Do I Need?
When you are finding out the expenses you need, you will most likely run into this question. The legal Marijuana business is still so new, it can be hard to know exactly what you need in order to operate your company. Besides normal zoning permits and business licenses, there are special requirements, especially if you are growing and selling.
Many states require background checks be done, so if your record isn’t exactly squeaky clean, you may have trouble getting your business approval. If you are going to be working with infusion, edibles, or baking with THC and CBD, there are many strict rules and regulations you will need to follow.
You can find California’s rules on edibles HERE to give you an idea
7. Do I need An Attorney?
The answer most likely is yes. The only cannabis businesses I could see not needing an attorney would be a head shop, online directory, blog, or cannabis clothing line. Even then, you need to be careful about what you can sell, market, and promote to the general public. Marijuana accessories need to be safe and so don’t think that since you are not touching the plant that you are completely safe. Not to scare you, but protecting your business is the most important thing. My rule of thumb is if there is even one question, it’s worth consulting a lawyer for.
If you are working directly in the cultivating, selling, or infusion sector, getting an attorney is a must. It will cost you yes, but it will also save you time and headaches, allowing you to focus on growing your business without wading through legal work.
You can find attorney’s specializing in cannabis business HERE
8. Do I Have Enough Time?
Another way to ask this question is can I afford to wait? The cannabis sector can be very exciting and stimulating when you are up and running, but getting started can take companies a very long time. Getting the necessary funds, team, certifications, and business plan together can be a painstaking process. Executing these things the right way will pay off big time, but you need to be able to wait and have patience. This can be hard especially when all your eggs are in the cannabis basket. Some may need to work another job for an income while they work the new on venture on the side.
9. Do I Need A Business Partner?
A one-man/woman show may be necessary when you are first starting, but statistics show those companies who started with two founders tend to succeed more. Having a partner that compliments your strengths and weaknesses will boost productivity and also get you out of doing things that annoy you. If you do not need a partner yet, imagine at what point you will need one, and begin to think about whom viable candidates would be. Remember not to just go to your friends, try and find someone you know will be a good fit for the success of the brand.
If you are still in the very early phases, you may not be ready to think about bringing someone else on board until you know more on how the products and business model will look.
10. What Are The Risks?
Its nice to think about the rewards of the multi-billion-marijuana industry, but take the risks in consideration. Weight the pros and cons to make sure it will all be worth it for you. Most of the time it won’t change your mind, but you will be prepared to handle setbacks if you see them coming before you start. Risks shouldn’t be negative; they can often be motivators and just little signs that you need to be careful. Running your own business will add stress in some areas, and other areas will feel more freeing and independent.
11. What Is The Reward Potential?
This is a fun thing to think about, and can give you valuable information on whether all the risks are worth it. Is the monetary gain and profit potential high enough to scale a business and allow you to live the lifestyle you want? And besides the whole money thing, will day-to-day operations satisfy you and make you happy? Every business is stressful, but hopefully when you think about the pending business it brings a sense of accomplishment and satisfaction to your mind. Money is good, but if its all for money it could get old and bothersome quickly.
Cannabis is an exciting sector just on the verge of exploding as legalization continues both recreationally and medically. This is an exciting time for those with entrepreneurial spirits to blaze new trails, and become industry pioneers. Good luck and good fortune.
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