Research, Creativity and Organization Will Set You Up For Success
So you’re thinking about starting your very own cannabis business, huh?
Congrats! Now what???
As with any business, you need to understand the supply/demand/niche/regulations that are involved in the industry. Because the legalization of marijuana is still somewhat new and differs from state to state, it’s important to do your due diligence and research the market fully before deciding to jump in.
Because the “legal” cannabis industry is new, it’s hard to track the longevity of thousands of cannabis retailers that have joined the fun, with states like New York, New Jersey, Connecticut, and Rhode Island now launching legal recreational cannabis industries joining states like California, which has had a live recreational market since 2016, producing over $400 million sales.
The good news is that the legal cannabis industry is expected to add about $20 billion in annual sales between now and 2026. So here a few things you need to think about before you hang your very own “Open for Business” sign:
Know the Laws
Currently, there are 39 states that have legalized the use of medical cannabis with the approval of recreational use in 21 states in addition to the District of Columbia. Do your research to make sure you are in a state where you will be able to develop your business legally. If you currently live in a state where the legal use of cannabis has not yet been approved, it may be worth packing it up and heading to a place like California or Colorado where business has been booming!
What Type of Business Do You Want to Start?
Do you want to grow, deliver or open a dispensary to sell cannabis? You need to know what part of the industry you want to be in so you can focus your resources and energy in that space. A strong business plan and marketing to your clientele will be integral to your cannabis business’ success and sustainability. Talking to other business owners is also a great idea as they more than likely have already experienced a bit of trial-and-error insight and may be willing to share. This is all great information to include in your business plan.
Registering Your Business
Keep in mind that marijuana is still not legal “federally”, meaning the laws regulating cannabis sales vary from state to state, which means cannabis cannot legally cross state lines. That means your business will be a local business that still needs to be registered with the state to pay the proper taxes, which will likely include “regular” sales taxes as well as taxes specific to the cannabis industry. You can attain an Employer Identification Number (EIN), by registering your business with the IRS.
If you are in a state where sales are legal, prepare to be hit with quite a few cannabis taxes including potential taxes on the grower\ and retailer in addition to other sales, city and federal taxes. You need to be sure you take all of these costs into consideration as you are preparing your plan for operation, sales costs as well any projected profits. You also will need to consider the potential impact of 280E federal tax regulations on your bottom line.
Applying For a License
In every state where cannabis is legal, you will need to apply for and be approved for a cannabis specific business license. This license will be tied directly to the vertical (i.e. grow, processing, retail, delivery, etc) you plan to operate in and the application process can be quite onerous. Some states even require to own or control the rights to the real estate where you will run the business before you apply, even though it can take months or even years to find out if you have won a license. The difficulty of acquiring a license also varies widely from state to state, as do the rules for how many licenses and of what type you can hold and what you can do with those licenses. Depending on the difficulty of acquiring a license in your state you should consider hiring legal counsel with experience in cannabis to help you through the process, which is another cost you’ll have to consider.
Also, keep in mind, getting the license is often not the end of the road. Even after you’ve been approved, the build out of your space will likely need to be approved by both local business regulators and state-level cannabis regulators, a process that can also take months (or longer) depending on where you live. The magic phrase you will want to hear from regulators is that you have permission to commence operations, at which point you’ll be off and running.
Ready For Business
Ok, so you’ve done all the steps needed to start your cannabis business, and it’s time to open your very own dispensary. In addition to your store front you need to think about how many employees you’ll need to hire in order to keep your business fully and efficiently staffed.
Your cannabis point of sale software also needs to be great at ensuring government compliance, sales and reporting for your business. MyBud POS is the system cannabis retailers all across the USA rely on for cannabis compliance and business operations from seed-to-sale. MyBud POS includes state-of-the-art hardware and software to keep your cannabis business organized, increase bud sales and attract customers.
Click here to connect with MyBud POS to discuss which pricing plan will work best for you and your cannabis business!
