Starting any business is a daunting task. From planning, strategizing to financing your business, there are a lot of factors to keep a check on. Pair that for the marijuana business and you have so many legalities to sort out as well.
Statistics from the New Frontier Data suggests that the Cannabis Business is going to be valued at $25 billion by 2025. Sounds pretty exciting, doesn’t it? Well, that’s where the journey starts. Just because the cannabis market is booming right now doesn’t indicate that you can start a business and expect it to grow.
Ideation doesn’t equate to success. You have to plan and implement the right business strategies to make things work for you. That said, remember that running a marijuana business is wired with a lot of legal obligations. Not just with the bans, you also need to get licensing and registrations before you can go out and kickstart your business.
Be it a full-blown marijuana dispensary or a product that focused on the use of marijuana, there are several factors you need to be mindful of. You need to reset, refresh and research about a lot of factors that influence the decision making.
If you are completely new to this foray of business thing, we got your back. You have come to the right place because we have done all the hard work for you. This guide explores every last detail you need to know on how to start a marijuana business from scratch.
8 Easy Steps to Start your Marijuana Business
Tapping your feet into the cannabis industry is a very lucrative choice. However, it comes with its fair share of highs and lows. However, with the right planning and marketing, you too can take your business from the depths to the top.
Here are some of the steps you need to keep in mind.
1. Start with the niche you want the business to be in
And, no, MARIJUANA isn’t the answer.
You can open a marijuana dispensary or you can start a CBD business that focuses on essence, oils and serums. You can also venture into medical marijuana and the products that come with it.
The choices are a lot more diverse than you think.
If you don’t lock your target niche, you’d have a very hard time finding and marketing to your target audience. Instead, what you will be left with is a lack of traction.
Since the opportunities are diverse and the competition is still comparably low, now is the time to seize the opportunity while it lasts.
Also, when choosing a particular niche in the marijuana industry, you have to be picky. Choose a niche that isn’t already saturated or reaching saturation. Making your new brand stand out in an already saturated market is very tricky and often impossible.
Take CBD oils for example. This is a niche that would have been a rave 5-10 years back. But, when you look up this niche now, it is brimming with more and more brands. So, try to introduce similar products but a step ahead of what’s already there in the market.
You have to start a business in a niche that offers resolutions to potential customers. If your audience is under stress or experiencing chronic pain, introduce products that address those complications.
A copy of a product that already exists and has good branding in the market isn’t something you want to do. Duping your product in the marijuana industry isn’t a credible choice at all. So, choose your niche very wisely.
2. Sort out a business plan
Despite what kind of business you start, planning and strategizing is crucial and quintessential. Unlike a standard clothing business that doesn’t have a lot of rules, legalities and regulations; the same isn’t the case with marijuana.
Since marijuana is an extremely vital ingredient, that holds the potential to be abused, you have to stand your business through a lot of barriers.
Before you even consider starting a marijuana business, familiarize yourself with the law of each state of your country. You want to conduct your business from a state or country where marijuana is legal. Not having that will block your resources and suppliers and put a stop to your business even before you start it.
Also, create a dynamic business plan that changes with the laws. If the laws tomorrow ban marijuana, you need to have a backup plan that ensures proper regulation of the business’ future. Similarly, if the laws become more lenient tomorrow, your business plan should be in a way so you can expand further.
When creating a business plan for your marijuana business, prioritize the kind of costs you’d have to make initially. Follow that up with the resources and the suppliers as well.
Also, when making a business plan, you have to run a thorough competitor analysis. This will sort out your idea about the current market and what you have to do differently to stand out.
Your business plan should also be done with your legal counsel in the room. This will deflect any complications that you might face in the future.
3. Create a subjective brand identity
With the business plan in place, your next step is to focus on your branding. What kind of name would your business have, what will be the logo, what kind of outreach are you expecting?
The list of questions is endless. Your brand needs to have a clear motive and understanding to proceed in the right direction.
Define your business’ mission and values. Define what kind of company culture you plan to foster. Define what you idealize your business to look like down the line.
When you are starting a business, the profits and sales do make a big chunk of the process. But, that’s not all. Several other factors make a lot of difference to a business’ fate down the line.
Besides the values and mission, you also need to focus on the business’ visuals. This includes the logo, feel and overall voice. Creating the visuals will help you spread the word about the business on social media platforms.
Also, when creating your brand’s voice, try to align it with your target audience’s needs. Your business should cater to the needs of the audience and your business’s mission and goals should define it. Approach the cannabis market competitors in the process too.
4. Register your business
Following creating your branding for the marijuana business, the next thing in line is hands down the most important – Registering your business.
Since marijuana involves a lot of legal bindings, you can’t skip out on this process. Legal registration of your marijuana business is not an option. There are several federal limitations when it comes to starting a marijuana business.
However, we don’t want you to be discouraged by it.
Opt for local business outreach instead. The rise of local marijuana businesses is on the rise and now is the time to tap into its full potential.
We’d recommend opening a marijuana business under the limited liability company or LLC or you can go all out and register as a corporation. Both options are viable and useful. However, registration for both has different approaches, legal fees and processes involved.
Also, when it comes to registering your marijuana business, it will depend on the state you are from. You have to take an available name. Your legal counsel can help you with the legal side of naming and registering your business, so discuss all of that in detail with them.
5. Run a Detailed Competitor Analysis
Although we are mentioning it now, remember that this is an important step you can’t miss out on. We’d recommend you do it before you formalize the registration process of your business.
Ideally, running a competitor analysis allows you to assess the market prospects for your marijuana business.
We’d recommend analyzing the biggest competitors and then gradually fizzling down your options to the least competitive ones. However, don’t miss out on any.
The least competitive one today might be your biggest competitor tomorrow. So, noting and analyzing every business’ strategy is important, especially if you want to stand out from the rest.
While you are analyzing the competitor, don’t just analyze their products; analyze every aspect of their business. This involves the kind of products they release, the frequency of the release, the content they are sharing and their social media presence too.
You want to take inspiration from your competitors and mould them into your business to make your business stand out from the lot.
6. Set up the website or offline selling
Once you are ready to kickstart your marijuana business, there’s another decision you need to make.
Are you planning to sell your products online, offline or both? Depending on your choice, you need to set up an offline dispensary and an online website to sell the products.
We’d recommend that you leverage the power of the internet. The kind of recognition that you’d get with offline selling will be a lot more if you sell your products online.
However, shipping marijuana products to other states or even other countries come with a lot of rules and regulations that you need to familiarize yourself with. Sit down with your lawyer to sort out these small factors before you start selling online.
Also, when you are setting up a website, we’d recommend that you hire a professional for the same. You want the website to be highly functional, especially when it is registering and logging in all the orders. So, hiring a professional is your best option.
7. Register for the taxes
With a marijuana business, you can’t forego the prospects of taxes. Also, when it comes to the taxes, we’d recommend that you pay attention to the taxing regime in the state you live in.
As a business, you’d have to apply for an employer identification number along with the business tax ID number to register for the taxes that you’d have to pay for the business’ profits.
You can directly apply for the EIN through IRS if you are confused. Also, if you don’t have any idea about the process, your business lawyer can help you out with that too.
Also, if you are starting a marijuana business with staff, you’d have to get them on the payroll as well. So, that involves a separate taxation process. We’d recommend setting up a completely different bank account for the same.
8. Focus on the marketing plan
Simply starting your marijuana business isn’t easy. You have to be mindful of the marketing side of things as well. This involves coming up with social media strategies and also focusing on ways you can amplify your business outreach to the target audience.
To be fair, it isn’t rocket science. All you have to do is curate a marketing plan and then implement the steps accordingly.
Also, the marketing tactics should be dynamic as well. Since most people aren’t that aware of cannabis and its usage, try to include blogs and newsletters as part of your marketing techniques.
This can make a lot of difference in the long run. Blogs and columns are the best tools for your marijuana business, especially if you want to bring in a dedicated audience back to your business.
Also, try to cross-promote your business across multiple platforms if you want to amplify your business outreach and take things to the next level.
Another marketing trick that can boost your business is releasing podcasts. These are hassle-filled but these can contribute to your branding, elevating your business’ credibility among the audience.
Starting a marijuana business is a challenging yet fun and exciting journey. With the right strategies and proper planning, you can make a lot of difference in a short period. Curating the right business plan is time-consuming but highly rewarding when you start seeing the results. We hope this guide gives you all the inputs that you need to be mindful of.