5 Considerations Before Entering Cannabis Industry


Cannabis legalization is expanding state by state and people are excited.    In states with legalization, there are business ideas flying around like wild and people from all walks of life are stoked about the opportunity that the cannabis industry holds.  This is an exciting time!


Being a cannabis industry consulting firm, our team is all about helping people gain success through business ventures in the cannabis industry.  That being said, this must be done mindfully.  Not every firm will suggest mindfulness, but ours will and it’s for your own good and the good of the industry (or so we believe).


Put simply, being mindful about your potential cannabis business means knowing what you are getting in to, knowing why you are getting in to it and understanding the responsibility that comes with being a cannabis business owner.  We only work with certain types of companies, but get asked questions by hopeful entrepreneurs and investors across the country about all types of potential cannabis businesses.  Those hopefuls and their questions have inspired this list of 5 simple things to consider before launching your cannabis business (in addition to usual new venture considerations like costs and license requirements!)


What are the industry specific scaling limitations or barriers to scaling your product or service?

Scaling limitations often have to do with licensing requirements, particularly if your business directly handles cannabis, and even sometimes if it doesn’t.  There are a few questions that you and your team should answer before getting started.  What licensing do you need within your state to have multiple locations, or to sell your product to cannabis retailers in different jurisdictions?   What specific licensing will you need in other states in order to provide your product or service?  Is your product or service allowed in some states with legal cannabis but not in others?


One thing we frequently see is people from the cannabis industry in one state charging into another state as if the same rules apply and being sorely disappointed when they realize that they are playing a whole new ball game with completely different rules.  Before starting your business, get acquainted with what scaling will look like on a local level and national level.


What effect would a federal crackdown have on your company and how would you survive?

Let’s say the Department of Justice came after adult use cannabis businesses, would your business or service survive?  If so, how?   Some of our friends and clients have companies that are currently cannabis specific but if the industry crumbled, could survive by translating to a mass, rather than niche, market.  Other friends and clients have businesses that would seriously suffer were the cannabis industry to come under attack.  We think the risk of being a cannabis business owner is worth it which is why we are in this industry. It’s just important to know where your business stands and how it will handle industry specific risks.


What effect would federal legalization have on your company and how would you sustain?

Federal legalization is the dream, but it will definitely change things for existing businesses.  It is important to think through what legalization on a federal level might look like and what that would mean for your business.  Cannabis legalization on a federal level will most likely mean another layer of regulations placed on certain businesses within the industry.  Take a look at some other federally regulated industries and what that looks like for them.


Also consider that there are a slew of big players just waiting for the moment that cannabis becomes federally legal. Upon legalization, the influx of money and social influence will change the entire business landscape of the industry.  When researching what federal legalization might actually look like, and do some situational analysis, playing out what each situation would mean for your business.  This will be incredibly helpful in guiding you in your business growth strategy. Who knows, federal legalization may mean rapid and lucrative business growth for you, and you’ll want to make sure your business is prepared to sustain such growth!


What impact do you want your product or service to have in defining the cannabis industry?

The cannabis industry is gaining some serious traction and has created some great successes so far.  Ultimately this industry is still in nascent stages compared to many industries, and therefore its image is still under construction.  Before you start your business, take a look at the industry as a whole and think through what you envision it looking like, then design your business so that it will play a part in creating the cannabis industry that you envision.  Many companies enter the industry without any clear intention for their impact.  We call those companies “noisy” since they don’t communicate any clearly defined or meaningful message.  Create a vision for your business’s impact on the developing image of the cannabis industry and you are already ahead of the game.


Is it legal?  If not, is there movement towards it becoming legal?

This one seems incredibly obvious, we know.  But a lot of excited entrepreneurs want to charge into the industry with their amazing ideas thinking that legalization means free reign.   Most states with cannabis legalization have a lot of operational restrictions.  So, a restaurant with cannabis infused dessert may sound like an awesome idea, but it may not be legal due to consumption laws and sales or distribution regulations.  Or, a guided Vespa tour through your city accompanied by creative cannabis products may sound like fun, but it may not be legal due to public consumption restriction or DUI laws.  While your idea may be great, make sure to check with a lawyer to make sure that it’s legal.  If not, check with a policy expert or industry specific consulting firm to see if there is any movement towards legislation that would make your idea viable.  If it is legal, have fun and make sure to stay compliant!




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