Creating a Cannabis Business Plan
If you’re thinking about creating a cannabis business plan, there’s never been a better time than now. There are now 11 states which legally allow for the recreational use of marijuana, along with plenty more which have legalized medical cannabis programs. Not to mention other countries like Canada where legal marijuana is now widely accessible. […]
If you’re thinking about creating a cannabis business plan, there’s never been a better time than now. There are now 11 states which legally allow for the recreational use of marijuana, along with plenty more which have legalized medical cannabis programs. Not to mention other countries like Canada where legal marijuana is now widely accessible. Attitudes towards cannabis are becoming much more relaxed as more places around the world loosen up laws.
As the legalization of cannabis continues to grow, so does the demand for it. Statistics suggest that there’s now a $52.5 billion demand for cannabis, with the industry expected to grow even further over the next few years. Of course, there are tons of users seeking out cannabis and cannabis-infused products from stores and dispensaries. However, there’s also a demand for other businesses such as cannabis growers, product manufacturers, B2B services, and all kinds of other businesses related to the industry.
With that said, it’s important to create a business plan if you’re looking to get into the cannabis industry. Although there’s a huge potential to make a profit, the industry also comes with some unique challenges, especially regarding things like laws and logistics. You’ll need to figure out where you’ll start your business, how you’ll handle the legal aspects, who your target market is, and what you can offer to them to stand out.
There’s a whole lot to consider before you even get your business off the ground. However, the payoff is well worth it. Here’s a guide to creating a cannabis business plan.
Why Should You Create a Cannabis Business?
The cannabis industry is growing fast. Recent statistics estimate that US retail marijuana sales are expected to rise by 35% in 2019 and hit over $30.4 billion by 2023. Attitudes towards marijuana are becoming more positive on the whole, especially as research continues to show its medical benefits. Laws are also becoming more and more favorable towards cannabis consumers. As such, it’s an amazing time to start considering creating a cannabis business.
There’s still a big demand for the sale of cannabis. Stores are beginning to crop up all over legal states and further afield in countries such as Canada. Medical cannabis is also a huge industry with many people looking for high-quality medical cannabis. Plus, strains of weed aren’t all people are in the market for. There’s also a demand for products such as concentrates, edibles, tinctures, topicals, and other unique cannabis products. Not to mention the massive demand for CBD.
In addition to the demand for new retailers, there are also tons of gaps in the industry you can fill. From seed-to-sale, there’s a need for all kinds of cannabis experts when it comes to extraction, production, logistics, and all kinds of other cannabis services. Overall, it’s an exciting industry with a huge potential for profit, but you’ll need a solid business plan first.
Creating a Cannabis Business Plan
There are many things to consider when it comes to creating a business plan, especially with the unique challenges that come with the industry. First of all, you’ll need to consider the legal implications of starting your cannabis business. Not only will you need to go through the usual legal process of registering your business, but you’ll also have to consider local licensing laws.
Each state has its own rules on how to get licensed, and you’ll have to do your research to make sure that you can. In some cases, you could be waiting for months for licensing. You may wish to base your location around where it’s legally possible to sell cannabis. Of course, you could also consider alternative business ideas such as offering B2B services to cannabis businesses or selling hemp-based CBD products.
You’ll also have to consider funding. Cannabis can be fairly cheap to grow, but there are the usual costs of setting up a location, hiring staff, marketing, and getting everything off the ground. You may want to look into taking out a business loan, getting investors or even crowdfunding.
The logistics of transporting cannabis products can be tricky, so make sure you plan out the whole process from seed to sale. Many cannabis businesses get in touch with local growers or wholesalers to manage this. You’ll also have to consider all the regular business necessities such as accounting and bookkeeping.
Make sure you plan out every aspect of your cannabis business before you start. Having an in-depth business plan will help you get things off the ground more smoothly. It also helps significantly when it comes to getting investors or a business loan.
Consider Your Target Market
One of the factors to consider in your business plan is who exactly you want to sell to. Cannabis now appeals to many different demographics. Many young adults have a keen interest in recreational marijuana, but it’s also becoming more appealing to older users and, of course, medical users.
Naturally, you may just want to use a catch-all approach where you target your business at all consumers. However, also consider that honing in on a specific demographic can make your business stand out. For instance, some cannabis businesses focus their marketing efforts on attracting elderly patients looking for medical relief.
Of course, selling marijuana isn’t the only option. You may be a grower targeting local dispensaries and stores. Or, you may want to become a cannabis legal expert helping other cannabis businesses run their operations smoothly. Whichever way, consider who exactly you’re selling to, how many customers or clients you can expect to attract, and where is the best place to do so.
Choose the Right Location
Choosing the right location can be crucial to the success of any business. It’s also particularly important when it comes to creating a cannabis business plan. Some states make it much easier to get licensing and run a cannabis business. But in addition to the legal aspects, the right location can depend on factors such as what kind of people live nearby.
You might want to consider some of the top-selling states for marijuana. States such as Colorado, Oregon, California, and Michigan are major states for cannabis businesses. You might also want to consider emerging markets such as Illinois and Massachusetts. Some states where recreational sales are still illegal are still big on medical sales, such as Florida and Arizona.
Naturally, big cities are hotspots for weed. However, you’ll likely also face much more competition here. You might want to consider other locations such as college towns, cities with many working professionals, tourist towns, or even places with high retirement rates if you’re selling medical products. Do your research and find somewhere where your business can thrive.
What Kind of Products Should You Sell?
If you’re planning on selling cannabis, then there are a lot of products you should consider offering. Although buying weed is still hugely popular, consumers are beginning to demand cannabis in different forms. Things like oils, edibles, and capsules make things easier for users- especially medical users.
Cannabis flower, otherwise known as weed or simply cannabis, is still in high demand. Stocking a wide range of indica, sativa, and hybrid flower strains is always a must for any store or dispensary. Cannabis concentrates such as shatter, wax, and hash are also popular. These appeal to users who want stronger effects and they’re often used by vaping or even dabbing.
Cannabis Oils and Tinctures are also becoming much more sought after. These liquid cannabis products are easy to use by simply applying the oil under the tongue to absorb the effects. They make for a novel and convenient way to get the effects of cannabis.
Edibles are another unique and popular product. There are all kinds of cannabis-infused foods from gummies to chocolate. These products provide much stronger effects and can last for as long as 8-12 hours. They appeal particularly to recreational users who want the strongest effects possible.
Topicals offer a unique way to get the medical effects of cannabis. These come in the form of creams, balms, lotions, and other topical products infused with cannabinoids. These don’t make you high as the cannabinoids aren’t absorbed into the bloodstream or brain. However, they are particularly useful for pain relief and healing skin problems.
Vapeable products are another type of cannabis product in high demand. These come in the form of cartridges or oils which you can use with a vape pen or vaporizer. They also come in various different flavors and concentrations
Most cannabis stores and dispensaries also sell CBD products. These provide the medical benefits of cannabis without any intoxicating effects. They’re especially popular for medical users and even rival the popularity of cannabis itself. CBD products can also be made from hemp, which is legal in every US state and much easier to sell as you don’t need special licensing.
How To Fund Your Cannabis Business
Like with any kind of business, you’ll need to calculate your costs and figure out how to fund your operations before you get it off the ground. You’ll likely have to consider expenses such as your stock, logistics, staff, marketing, and the general costs of starting a business.
There are a few different ways you can get funding. One of the most common is to take out a business loan from the bank. It can take a while to pay off, but if you have a successful business it can be worth it. Make sure to present your business plan in order to gain the funding you need.
You can also look into investors. Many financiers are now becoming interested in the growing cannabis industry, so it’s a great time to seek these out to fund your business. Having a business plan also helps significantly here, especially if your business offers something unique to competitors.
Crowdfunding is also an option. Sites like Kickstarter and GoFundMe make it easier than ever for businesses to get off the ground by crowdsourced donations. It’s a great method of funding as you won’t have to pay it back, although you’ll need to offer some kind of incentive if you want people to fund you.
Building Your Cannabis Brand
With so many cannabis businesses now emerging, it’s important to make yourself stand out. In other words, you’ll need to build your cannabis brand in order to attract more customers and be successful.
There are many effective ways you can do this. Having a strong brand name and logo will help- this is something that can help you get recognized as your business begins to grow. You can even get custom branded cannabis products. These will raise brand awareness as more cannabis users start to see your logo and become familiar with it.
Of course, providing good service is also essential. The more people you impress, the more your business will grow via word of mouth. It can also help to have a clear mission. Some cannabis companies focus on cheaper prices or unique products. Find ways to make your business stand out and build a strong brand identity.
Marketing Your Cannabis Business
Marketing your cannabis business is also crucial to your success. Marketing for cannabis businesses can be tricky- some states have legal restrictions on how and where you can market cannabis. For instance, billboards and radio ads might not be an option. However, with all the digital marketing methods available today, there are still many effective ways to advertise yourself.
Having a website can help significantly with this. You can advertise your products and your brand and catch the attention of customers. You should also get your business listed on cannabis directories such as WeedMaps and Leafly. It also helps to register on Google My Business to make yourself visible on Google Maps to local consumers.
Working on targeted SEO content can give you a huge boost in viewers. Creating blogs aimed at things cannabis consumers search for will help you reach your target demographic. It also helps to promote your content on social media. With many modern consumers using the internet to find cannabis, marketing your business online can be extremely successful.
There’s a lot that goes into creating a cannabis business plan, and there can be differences in what you can do and how complicated it’ll be depending on your local laws. However, if you plan it out wisely, it’s a rewarding industry that can net you huge profits. Make sure you consider all of the factors from location to marketing for a standout cannabis business.