The cannabis industry offers a plethora of business opportunities, ranging from growing to manufacturing and lab testing to transportation. Statista estimates that there is between 20000 and 28000 cannabis business in the US this year – and they continue to grow. But how do you ensure you run your business in the most cost-effective manner?
How to Operate a Cannabis Business in the Most Cost-Effective Manner
There are strategies that can help you run a cannabis business profitably. They start with good planning. Right before you set up the business, you must know how you plan to grow and promote your brand.
Let’s assume you have already decided on the type of cannabis business you want to do. The following are some steps you need to follow to make your operations cost-effective.
Requirements to Open a Cannabis Business
The first thing to consider in opening a cannabis business is to comply with the existing laws and regulation for registration, taxation, and all other operations in your region. Laws differ from state to state and county to county. And the laws differ depending on your business.
Set up business
Acquaint yourself thoroughly with the laws regulating the cannabis business you want to set up. Better yet you could procure the help of a legal professional. It will be worth every penny. After all, what is the point of setting up your business and then get it closed down by the authorities because you overlooked some law somewhere? You can find yourself slapped with a heavy fine or worse, end up in jail.
Choose Your Business Type, Name, and Register It
All businesses have names. Right? That’s an identity. You must decide what type of business you want. Will it be a sole proprietorship? A partnership? Or a limited liability company? Each type comes with responsibilities from who is liable to debts to how the business is taxed.
Get business name
Once you have decided on the business type and got a name for it, the next step is to register it, often with the Secretary of State. Find out what the law says in the area you want to set up the business. In some states, it is not necessary to register businesses owned by a single individual.
Seek Local Permission to Operate
Before the state gives any cannabis business a license to operate, the business must show proof that it has permission from the local government. This is usually to confirm that it is legal under the local law to conduct the business.
Get the Right License from the State
All cannabis businesses need a state license to legally operate. Apply for your cannabis business license. Each type of business has its license type. For instance, growers need Type 1-3 licenses, manufacturers – Types 6-7, dispensaries Type 10, and so on.
In addition, you might get some licenses from specific state departments. For instance, manufacturers of cannabis products should get their license through the State Department of Public Health. You may have to pay a fee for this license.
Figure Out How to Finance the Business
If you are a start-up, where do you get the finance to set you up? Bank financing might not be an option. Banks won’t touch cannabis business money with a barge pole.
It’s too risky for them.
And they take their cue from the federal government. While cannabis business is legal under state law, in federal law, selling cannabis is illegal. And handling the proceeds of a cannabis transaction is taken as money laundering.
So, look for alternative sources of finances. Is it possible to pool resources with a group of friends? Family? Are there small credit banks that fund cannabis businesses in your area?
Promote Your Business Widely
Nothing beats quality service in promoting your business. Strive to offer first class service. Happy and satisfied customers will tell others. You will get more clients and your business will grow.
Your staff can build or break your business. Ensure that they are knowledgeable about the products and services you offer. Remember that cannabis has not yet received wide acceptance. Many gray areas still exist in how medicinal and recreational cannabis improves health and wellness. Your staff should give information to help your clients understand the pros and cons of using cannabis.
You should also use available marketing channels to promote your business.
Protect Your Brand; Keep a Clean Image, and Stay Safe
Cannabis businesses still suffer from stigma. Work hard to cultivate respect and dignity for your business. After all, it is a business like others. Isn’t it?
Always try to invest something back to the community where your business is operating from. By so doing, the community appreciates and values your business. They will support your stay in the area. Also, strive to meet statutory obligations. File your tax returns in time. Take insurance cover for your staff as required by law. The aim is to ensure your business operates above and beyond what is required by the law.
Finally, good planning, following the law, giving a great experience to clients, and participating in community affairs will yield good dividends to your business.