Growing (the) Cannabis (industry) + 5 Tips for Cannabis Entrepreneurs
Over the past few years alone, a handful of states has legalized the use of marijuana for a number of uses. Some states, such as Colorado, have begun allowing marijuana use not just for medicinal purposes, but for recreational adult use as well. Other states continue to allow medicinal use only, and only with the use of a prescription-based medical marijuana card. With all these changes, the cannabis industry is quickly growing, and now is a great time for founders who have been thinking about throwing their hats into the proverbial (cannabis) ring to make it happen.
By having a better understanding of what types of businesses are currently making up the cannabis industry, how the industry is changing, and how to be successful as a startup in this space, founders can make well informed decisions.
The Makeup of the Industry
Currently, the makeup of the cannabis industry is pretty straight forward. In fact, most businesses will fall into one of two categories or segments: plant-touching businesses (those that work directly with cannabis plants) and ancillary services (companies that provide additional services for plant-touching businesses).
Some prime examples of plant-touching businesses include:
- edibles manufacturers
Outside of the core product, ancillary services include companies that service the needs of the industry, such as:
- product liability insurance
- Inventory and point-of-sales tracking software
- customer loyalty companies
- dispensary analytics firms
- Hardware manufacturers (vapes)
Evolution of a Taboo Industry
The cannabis industry continues to change dramatically, and it’s perception and size has evolved dramatically over years if not months. Perhaps the biggest change that we’ve seen take place over the years and decades is the fact that the negative stigma associated with marijuana is dissipating quickly. No longer is marijuana being closely associated with “Bob Marley” stoners and hippie culture. Instead, the industry is beginning to be legitimized by responsible people and companies who are going out of their way to obtain insurance, product liability coverage, and the like.
Cannabis as an industry is actually growing faster than not only the “dot com” boom back in the day, but faster than modern technology as well. Now that it’s fully legalized recreational use, California alone is expected to see $5.5 billion in annual sales, a 550% increase in one year. That’s just in one state. When you consider the fact that more states are continuing to pursue legalization and its benefits, it’s probably only a matter of time before most (if not all) states have legalized cannabis to some degree. The potential for growth is massive.
With all that in mind, founders must be giddy thinking about the huge amount of opportunity in this space. And while it’s true that there are already a number key players and businesses in the industry, there is still plenty of room for more businesses to make their way to success.
Tips for Founders Launching a Cannabis Business
For those who are thinking about launching a startup business in the cannabis industry, there’s a lot to keep in mind.
1.Learn and Master the Industry
One helpful tip is to take a look at some other successful cannabis companies and how they have reached success in the past. What did they do that worked, and what might you do differently? Be sure to tailor your findings to your specific state, since each state in the country has its own regulations and laws surrounding cannabis. And of course, always follow best business practices just as you would for any other business in any other industry.
2. Don’t Fall Behind
Perhaps above all else, staying informed with changes and advancements in the industry is also key. The industry is changing so rapidly that remaining on top of everything can be a challenge, and this isn’t going to change any soon (especially with new cannabis legislation being proposed on a regular basis). Fortunately, there are plenty of great ways to stay in loop for these industry changes. One of the easiest ways is to subscribe to newsletters from reputable cannabis businesses and organizations. The National Cannabis Industry Association (NCIA), for example, is a great source of information.
3. Test The Industry Waters
Actually taking the time to get involved in the industry before you start a company in the space is always a good idea for potential founders. There are all kinds of annual events, such as conferences and trade shows, that are specific to the cannabis industry. Consider attending these on an annual basis. This can be a great way to network with others and to also stay on top of any major changes.
4. Build Relationships Early
Find local meetup groups related to the cannabis industry and attend events with them whenever possible is also a must. No matter where you live, even if you’re currently in a state where cannabis consumption is not currently legal (or is only legal from a medicinal standpoint), there’s a good chance you’ll still be able to find some great meetup groups where you can share ideas and learn new things from others.
5. Choose Your Path
From there, it’s all a matter of deciding on the type of business that’s right for you. Will you launch a plant-touching business or more of an ancillary service? Either way, making sure that your business model serves to resolve a problem is a must.
The cannabis industry offers a great opportunity for founders who are interested in getting involved in a rapidly growing and evolving sphere. By keeping these insights and tips in mind, you’ll have the best chances of success should you choose to launch a startup in this realm.