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In a short amount of time, cannabis has gone from being a taboo subject to becoming one of the U.S.’s cash crops. Recreational marijuana is legal in 18 states and Washington D.C., and medical marijuana is legal in all but 13 states. Furthermore, the recreational marijuana industry has become a multi-billion-dollar industry in short order.
As you can imagine, the excitement around cannabis and the profits to be made from it are enticing many people to jump into the cannabis industry. However, there’s a lot to learn about the game before getting off the sidelines and becoming a player. Continue reading to learn some things every cannabusiness entrepreneur should know.
Cannabis is still illegal at the federal level.
Even though many states have legalized cannabis for recreational use, the federal ban on recreational marijuana is still in place. One of the most serious applications of this federal ban is that it strictly prevents interstate shipping of cannabis. That means you’re not likely to find any trucking company or owner-operator who’s willing to transport your products for you. After all, it’s hard, if not impossible, to find a trucking job once you’ve been convicted of crossing state lines carrying a federally banned substance.
The federal ban on cannabis also makes it all but impossible to find a financial institution with whom you can build a business partnership. Until the federal ban on marijuana is lifted—and there’s optimism that it will be—you’re going to have to walk on eggshells to ensure you’re operating within the bounds of your local laws.
CBD is the fastest-growing cannabis product.
Cannabidiol (CBD) has become the most popular supplement on the market in recent years. Like THC, it’s a cannabinoid, but it doesn’t have the high-causing side effects that THC has. There are many CBD uses, from pain management to relief from anxiety, and people love that there are no harsh side effects of CBD.
If you want to enter a segment of the cannabis industry that’s less fraught with regulations and pitfalls, the CBD industry might be the right choice for you. Who knows, your CBD brand could be featured with other top CBD brands on CBDnerds.com someday.
You must have a business plan to guide your business operations.
As you know, launching a successful startup is hard work, and there is no guarantee of success. In fact, 30% of businesses in all industries fail within their first year—that number balloons to 90% when you concentrate solely on the cannabis industry.
The main reasons companies fail in the first year are a lack of understanding of business principles, planning, and market research. You may have in-depth knowledge of cannabis and THC, but knowing how to run a successful business is something altogether different.
The most important part of developing a business plan is performing market research. The point of market research is making sure your company and your business model are a good fit for the market which you plan on entering. The more you understand your local market, the easier it will be to come up with a business plan that meets a gap rather than over-saturating the market.
Whether you’re trying to launch your own dispensary or CBD brand, you have a long and hard road ahead of you. However, you can greatly increase your chances of success by doing the things that many leaders of smaller companies often neglect.
Hiring a business attorney, joining a co-op, creating a business plan, and performing market research are all things that will increase your chances of success. Proper preparation is the best way to prevent your cannabusiness from going up in smoke.