The cannabis business is huge and is continuously growing. In 2016, the legal marijuana market was $7.2 billion. By 2021, it was expected that the legal weed business would be worth $25.6 billion.
That is insane! *****
The illegality of cannabis has prevented any significant research from being conducted on its medical benefits and value. But with the legalization of medical marijuana in 29 states and recreational use in nine, the cannabis industry has exploded. This business is at the forefront of a new green rush. Attracting investors and business owners with promises of high profits.
For some prospective entrepreneurs, starting a cannabis-related business can be an excellent opportunity to make money while pioneering what could soon become a national industry. However, cannabis is still illegal at the federal level, so how exactly does one go about starting a business that could put them at risk of drug trafficking charges?
From permits to licenses and compliance with state law. There are many requirements business owners must be able to meet before they can start operating. Because of this, most business owners will need to consult with a lawyer who specializes in cannabis law. Cannabis attorney Hilary Bricken said she typically only gets calls from people looking to break into the industry when they are “three steps away from incarceration.”
Here is what you should know about how to start your own business related to Cannabis.
Cannabis is illegal federally. There are many requirements business owners must be able to meet before they can start operating. Cannabis attorneys have said people looking to enter the industry tend to be three steps away from incarceration.
There are a couple of different business models cannabis entrepreneurs can follow;
1) Cannabis Manufacturing Business Model
According to Cannabis Law Group, one of the most common structures for cannabis businesses is manufacturing weed products. Then selling them to retail dispensaries or directly to consumers. This type of operation is considered R&D (Research and Development) and requires a permit from the Cannabis Enforcement Division (MED) in Colorado.
2) Cannabis Cultivation Business Model
One way entrepreneurs can enter this industry is by starting a marijuana farm. Selling their crops to dispensaries, manufacturers, or both. This kind of business requires purchasing land, setting up greenhouses or indoor grow facilities, obtaining cultivation licenses, and fulfilling state rules for security and tracking.
3) Cannabis Dispensary Business Model
Dispensaries are brick-and-mortar businesses that sell cannabis to customers, including medical marijuana patients. Many states issue licenses for dispensaries. That often includes rules on where they can be located, how they operate, and what kind of products they can sell.
The Cannabis Law Group said there are more than 1,000 cannabis dispensaries in Colorado that employ nearly 10,000 workers and pay a total of $125 million in taxes each year.
What Cannabis Businesses Require to Operate
According to Cannabis Business Executive, “Everything from cultivation and retail operations to product manufacturing, testing and transportation requires a license .” These businesses must also have a location that is far from schools, parks, and other areas where children gather since cannabis is illegal in the eyes of the federal government.
One big cost for entrepreneurs starting a medical marijuana dispensary or retail store in Colorado is real estate. As Cannabis Business Executive explains,
“Cannabis businesses are typically not allowed to share a space with any other business that would put the cannabis industry at risk of being shut down”.
In addition, Cannabis Business Executive says security is a big concern for dispensary owners. Cannabis businesses are still at risk of robbery because they are a target for people who want to steal products and cash. So many dispensaries spend thousands on security systems with backup power sources in case there’s an outage.
A cannabis attorney can help you navigate the licensing process in your state to make sure your operation is compliant with the law. Cannabis attorneys can also help you find real estate for your business. Compare lease terms and negotiate favorable deals with landlords. Cannabis is a fast-growing industry that provides opportunities for entrepreneurs. Those are willing to work hard and meet its operational requirements. If you are willing to start, go for it.