Starting a marijuana business requires a lot of specifics to be dealt with. Here are some steps that you should / could follow when you wish to start a marijuana business.
Step #1: Deciding on the type of marijuana business
First, you need to determine the type of business you want to work in. Would you rather produce marijuana, deliver it, or run a dispensary? You cannot move on with starting a marijuana business until you have made a decision regarding this element.
Marijuana businesses in the US, however, are dependent on the laws of the land. Different states in the US have different rules governing the setting up of a marijuana business. A good place to begin with how and where you want to start your business is to speak to the industry itself. Try to find out people who are currently in the industry and aim to understand their experiences and journey, if that is possible.
Step #2: Formulating a business plan
The plan that you come up with before you start your marijuana business will need to be extremely thorough. Starting a marijuana business requires skill, expertise, experience, know-how, determination, and consistency. The business plan that you do come out with must be more thorough than any other normal business.
You must also ensure that you abide by all the rules across states. Starting a marijuana business in the US will require you to pay keen attention to where exactly you want to set – up your business, who you want your suppliers to be, who you want your employees to be, your other supply-chain employees, etc.
While you work on formulating a business plan, make sure that you include the details in a precise and complete fashion. Note that it is necessary to pay attention to these points while you work on your strategy, and even when you are implementing them:
- Costs of your marijuana business and the associated plans.
- How to turn it profitable?
- What distinguishes your brand?
- What is your customer acquisition strategy?
- How do you plan on attracting customers?
- Who are your competitors? Can you effectively and healthily compete with them?
- Where will you run the business from, and out of?
- Which state will you set up shop in?
- Who will your suppliers be?
- Keep legal representation needed if necessary. You will need one to advise you on various matters as there are multiple rules that govern the setting up of a marijuana business in the industry today.
Step #3: Registering your business
In light of the legal complexity of the business area, registration is the most cumbersome project. Your choice of entity for your marijuana business will have an impact on the amount and kind of taxes you pay and the degree of risk you face.
You might be thinking of starting a marijuana business as a corporation or a limited liability company, also known as an LLC. Both entities and/or formations can protect owners from personal liability, but there are several significant distinctions between an LLC and a corporation. You must make an effort to acquaint yourself with such rules and then only embark on starting a marijuana business.
You must also choose an appropriate name for the business. There will be a strict process and guidelines to follow when setting up the marijuana business in the US. Make sure you abide by them and ensure that you have these things set in stone before you move on to anything else regarding the formation of your marijuana business.
Step #4: Paying your taxes
The state in which you set – up your marijuana business in the US will affect the taxes you pay and the amount of taxes you will owe. However, you need to apply for a certain employment identification number, often known as a business tax ID number, regardless of where you choose to start your marijuana business.
You can initiate your application for an EIN online and obtain a permit from the IRS. When the season to pay taxes arrives and you have to pay payroll salaries and income taxes for your company, you will need it. If you decide to open a company bank account or credit card, or if you even ask for funding, you will need your EIN number. It is crucial to obtain this piece of information to stay legal.
Step #5: Getting relevant permits
Depending on where you want to initiate and start your marijuana business, there are different forms of business licenses, permits, and registration procedures that will be necessary to complete. Each state has its own regulations with regard to how to start a marijuana business in the US.
You will need to do your research and also, speak with a legal expert/lawyer in the state where you want to set – up shop. This person must be well-versed with the law governing this industry and can guide you through the process of registering and starting your marijuana business, as well as obtaining the necessary licenses.
You must ensure that you know precisely what paperwork, licenses, and regulatory rules and organizations you must comply with to start your marijuana business and take it forward. This must be completed before you establish yourself.
To be authorized to set – up and conduct a marijuana business in the US, all of the previously mentioned marijuana-specific licenses and registrations are required to be kept up-to-date. This must be done in addition to registering your business formally in the state.
Keep in mind that even though you will have extra work and commitments that are particular to marijuana, you still have to ensure that you take care of all the taxes and registration requirements that a conventional business in any other industry would have to.
The challenges you must face
Entrepreneurs in the cannabis industry tend to confront a variety of difficulties. Your success in the cannabis market will purely depend on how well you navigate and sieve through these difficulties at the early start of your marijuana business. It will further depend on how well you establish a foundation that will enable you to expand and adapt when the laws governing marijuana inevitably change.
The following are some challenges that you may face, and some steps that you can take to overcome these challenges. They may not be easy, but the rewards are good.
Initiating and maintaining the right partnerships
In the cannabis sector, going at all of it alone is quite challenging, if not impossible. Early-stage partnerships that you form can make or ruin your marijuana business from the start. Make sure to avoid something like this. Choose wisely!
A good way to go about it is to hire an expert who can advise you well in such matters. Trust this individual enough, and make this individual earn your trust. After all, businesses such as marijuana businesses bank on trust among employees and other people involved to be successful. Relationships and partnerships must be forged while keeping a competitive advantage in mind. Get the right guy!
Consistently changing rules and regulations
The laws that apply to your marijuana business in the US may also be prone to modification as the sector is still in its lower stage of growth, and is still developing. Public officials are constantly striving to update and reform laws, and this will never stop or change. Keep track of all the changes that revolve around the industry, especially, about setting up a marijuana business.
The best way to have this is to hire a legal counsel/lawyer. A lawyer who can well interpret and apply the ever-changing rules and regulations can help you a long way.
Challenges faced with respect to banks, finances, and insurance purposes
For marijuana businesses in the US, banks are a particular source of frustration. Despite marijuana being legal in many states, the federal government in the United States still classifies the substance and its products as Schedule I drugs under the Controlled Substances Act. Banks and financial institutions are wary of working with marijuana businesses for fear of losing their FDIC status or attracting any sort of accusation/s of offenses such as money laundering related to “drug trafficking”. All this is despite the substance being legalized in many states.
Restrictions on advertising and marketing
The methods through which marijuana businesses in the US can advertise themselves are constrained and held back by state laws and corporate guidelines. In addition to being often prohibited from advertising marijuana on electronic means of advertising such as radio and television, or other static means of advertising such as billboards, many local marketing platforms such as Facebook, make it difficult to market and advertise by forbidding the purchase of sponsored content for marijuana businesses.
Due to the restrictions mentioned above, many marijuana businesses in the US must combine content marketing with more natural social media posts, email marketing efforts, and in-person marketing possibilities. Such in-person opportunities may be available at trade exhibits and industry gatherings.
Networking and word-of-mouth recommendations are crucial marketing tactics when starting a marijuana business. Such marketing must be conducted to shoot the business to the top of the chain.
Provided the way in which the cannabis industry functions today, and its recent history, nobody is able to, or certain of how the business would develop and how marijuana firms will prosper.
The demand in the area where you wish to / plan to start a marijuana business in the industry is extremely important to take into account.
It is through this way you may differentiate yourself from other marijuana businesses in the US, for example, that provide similar services. It is safe to assume, and consider that you will not be the only person who is interested in starting a marijuana business. There will most definitely be immense competition. But what sets you apart?
The Way Ahead
Marijuana businesses in the US have more opportunities, in the present day, to make more money than they ever dreamt of gaining in the past. More and more states are moving to legalize the drug in the present day. Setting up a marijuana business in the US is not a distant dream anymore.
For example, the state of Colorado in the United States has a regulated Cannabis sector. The sales generated through this regulated industry are almost upwards of $6 billion. This is since the legalization of cannabis in the year 2014. Sales of related products are further anticipated to reach $50 billion by the year 2026, through projected figures. This further demonstrates the potential of this industry being highly lucrative and profitable in nature.
The marijuana market in the United States is projected to reach high numbers in profits. By 2030, the industry is reported to reach a high of $72 billion USD. As perfect cannabis legalization moves towards a definite possibility, the numbers will only go up.