While that means great things for anybody who wants to invest in the cannabis future, it also means that the competition is strong. It is tough out there, especially in the USA where there is still inconsistency between state and federal law. There is no doubt that there will be many businesses that open and close within a year’s time, unable to meet the demands of such a fast growing and controversial industry.
The entire objective of this article is to help you not to be one of those people whose businesses fail within the first year. With some creativity, some persistence and a little bit of sound advice, you can secure your place in a growing industry that is destined to get bigger and bigger for a long time yet.
We can’t teach you to have the inspiration and passion required to be successful in the cannabis industry. We just have to assume that you’re coming to the table already well equipped with that. If you just want to make money, you’re better off to trade stocks. If you want to make money doing something revolutionary in this world, something that the modern world has literally never seen, then maybe – just maybe, you should open a cannabis business. A growing industry needs pioneers, and with this article, we hope to spawn the next generation of cannabis pioneers.
If you are still thinking about taking your share of the proverbial cake, be patient and read this book first. By the time you’ve powered through it, you should have some idea of what you need to get started and what you need to stay afloat. You should understand the ins and outs of branding and the role this is going to play in your growing business. Finally, hopefully you will understand that embarking on this adventure will probably be one of the biggest buds you’ve ever encountered in your life: beautiful, but terrifyingly intimidating.
Chapter 1: Who do you want to be? Formulating an idea and executing it
“You see things and you say, “Why?”, but I dream things that never were; and I say, “Why not?”” – George Bernard Shaw
It is one of the biggest, most pertinent questions in business, isn’t it? How does one be innovative in business? As easy as it is to be discouraged by the magnitude of the task, everybody has to remember that even the greatest invention (sliced bread, of course) started with an idea.
Obviously, we think about how to innovate a lot. Every business should. In fact, if you believe the formulation of ideas and innovation is something only necessary at the beginning of this business endeavour, then you need to reassess. Innovation is required every step of the way to sustain your business over the long term.
How to innovate in business
There are many different steps you can take to innovate in business:
- You can observe another product or business in the market, copy them and apply that relevantly to your business.
- You can collaborate with other cannabis businesses.
- Source a business mentor or coach (kind of like what you are doing by reading this article)
- Attend cannabis events and get an idea of what is already happening in the industry
But perhaps, the most successful way to innovate in business is:
Observe the market, its trends, its customers and its tendencies. Then identify which part of the jigsaw puzzle is missing. If you can fill in a “blank” in the jigsaw puzzle that is the cannabis industry, then you’re well on your way to developing a golden idea.
Foria Pleasure is exemplary of the “jigsaw” approach to innovation. Foria started as a Californian start up business in 2013, and has now grown into one of the USA’s favorite cannabis brands. Foria released the first product of its kind in the USA, an all natural sensual enhancement specifically targeted towards women. Following this product, Foria released a whole range of cannabinoid-infused products targeted towards women. Some have been for the relief of period pain while others have been to enhance the woman’s orgasm.
Upon discovering that in fact, cannabis can specifically help women, the founders of Foria also realised that no product existed that was specially formulated for women. And just like that, Foria expanded into a brand, a reliable place that women could find cannabis products tailored to their needs.
Possible cannabis business types
There are many different roads you can take within the cannabis industry. There are many different aspects of the industry as a whole which essentially all come together in the retail sale of products. However, that does not necessarily mean that every cannabis business is a retail business.
Business types include:
- Cannabis cultivation: Businesses that are concerned with cultivating cannabis which can then be sold to dispensaries. Alternatively, cannabis may be sold to manufacturing companies who process the plant material .
- Processing & manufacturing: These are the people responsible for making cannabis products such as edibles, oils, topicals, tinctures, transdermal patches etc. These companies have the facilities to manufacture products and then go on to sell them, either direct to the public or to retail businesses.
- Distribution: Distribution involves transporting marijuana between licensed vendors, manufacturers and retail businesses. This can also involve delivering cannabis to a medical marijuana patient or purchaser within the state.
- Retail sales: This is the point of sale. Retail sale of cannabis is essentially a dispensary. However, it is not necessarily limited to that. For example, certain businesses sell custom made dabbing rigs. This is absolutely a part of the cannabis industry, but at the same time, these businesses are not dispensaries.
Once you have your idea, research it
The founders of Foria didn’t simply throw together a recipe and stick a label on it that said “for women”. Their recipes and formulas are based on ancient traditional use of plants and on the pH balance of the female reproductive organs. Once you think you’ve identified a gap in the market, do some research about your idea.
If your grand idea is to invent a new kind of vaporizer, for example, you should research what materials it will be made of, what kind of design it will have etc. You will also need to research what was done in the past, why you think you can make it better and the different ways that you can go about doing that.
What we’re trying to say is that ideas are entirely conceptual, much like a seed. To execute the idea, and really bring it into the physical world, you first need a layer of properly nourished soil. Research is the foundation of your idea and the vehicle through which you will be able to bring your idea into the real world.
Chapter 2: Defining a target audience
“You can’t hit a target if you don’t know what it is.” – Tony Robbins
Remember when you were a little child desperately wanting a sweet treat? Perhaps you didn’t ask your father, knowing full well that he would decline your request. So you went on over to your mother, knowing that she could not resist you. This is a perfect example of choosing your target audience, and you’ve probably been doing it since you were very young.
Most of us have been exposed to the marketing idea of a target audience since high school. Before writing any essay, short story, play or any other piece of media, students are encouraged to think about their target audience. This is because your style, message and even personality should be adaptable to the target audience you are trying to reach.
Some places you can start with defining a target audience in the cannabis industry:
- Medical cannabis users or recreational users?
- Novel products for experimentation or health and wellbeing?
- Young people or elderly?
- High income earners or middle class?
- Gadget types or technology-challenged types?
- Is ethnicity a factor?
- Academics, business people or the trade labour industry?
How to choose a target audience
When you are shooting an arrow, you have to be focused on the target. If your arrows are flying all over the place, you’re probably not going to hit anything. It’s best to choose a precise target audience.
Not too big, not too small
Vague and imprecise target audiences make it very difficult to enter the marketing stage of owning a business. With that being said, choosing a very narrow target audience seriously reduces the amount of people who are “eligible” to buy your product. It’s good to be somewhere in the middle.
An example of a vague target audience:
- People of the world who use cannabis
An example of an extremely narrow target audience:
- Professional males between the ages of 18-25 who earn over $66,00 per annum and are also clinically diagnosed with Crohn’s disease
A perfect example of a target audience:
- Californian medical marijuana users between ages 18-40 who work full time
As you can see, when a target audience is too vague, it is very difficult to collect information about it for marketing purposes. When it is too narrow, you face the same problem. However, in the third and perfect example, there is an easily definable target audience with appropriate boundaries. It isn’t too big and it isn’t too small. It can be researched and in fact, much information already exists about the purchasing patterns of this target audience.
Choose a target audience you can empathize with
While you are still spawning the ideas of your cannabis business, it’s easiest to choose a target audience you can empathise with. This is because you will already know all of the feelings associated with that demographic, what it’s like to be them and essentially, what they need. This does not necessarily mean that women can only choose female target audiences, or that entrepreneurs can only target other entrepreneurs. It just means that if you have never had direct personal experience with your target audience, you must do a lot of market research.
Ultimately, your target audience makes up the people who are going to buy your products and fundamentally pay your bills. You have to know them in order to get them to voluntarily hand money over, even if in exchange for a product. The better you know them, the more your target audience can trust you.
Some things you can do to better understand your target audience:
- Surveys, questionnaires delivered to your target audience
- Market research about purchase trends of your target audience
- Research in general about the kinds of problems that afflict the demographic of your target audience (for example, the rate of drug use in middle aged men)
- Research about the kinds of solutions this particular demographic uses to solve their problems
Defining the target audience
Create a character profile of a stereotypical member of your target audience
The next step, after choosing your target audience and doing some research, is to create a character profile. Go into extreme detail. If there is something you don’t know, then it’s time to hit research mode again.
Here are some examples of what you can include in your character profile:
- Social demographic (high class, middle class, lower class)
- Level of education
- Daily tasks (do they cook dinner at home or do they eat out most days?)
- Leisure activities (what do they do on the weekends?)
- Challenges (high pressure jobs, having very little personal time, being financially limited etc)
There is no limit to the amount of information you can include in a character profile. You can go so far as to find a photo online of someone who looks like they’d perfectly fit the bill. This will help to make your target audience personalized. This will also make it easier to empathize with them.
Identifying the area of opportunity within your target audience
This is where it all comes together with the idea you formulated in Chapter 1. Where are the opportunities? For example, if you are targeting the elderly generation, then an area of opportunity is in cheap products that don’t require a lot of technological know-how. If you are targeting the younger generation, then perhaps an area of opportunity is in high-end products that can be used in the context of socialising. If you are targeting entrepreneurs, then an area opportunity may lie in reducing stress. You get the idea.
Identifying the area of opportunity means taking your ideas and making it relevant to the target audience. How is it going to solve some of the problems that they have or how is it going to enhance what they already love to do? How can you give something to your target audience that they want, that isn’t already excessively available on the market?
Who influences your target audience?
Your target audience, who are the people who are going to pay you, are the most important people to get your message across to. However, another player, albeit less important, in this game of audiences is the person who influences your target audience. For example, if your target audience is sufferers of epilepsy, then a person who influences them is their doctor. The “influencer” is the number 1 person that your character is going to consult before purchasing your product.
You should be able to target the influencer with your product. That is to say, that if you really want to penetrate through your target audience, your product should also be something the influencer would approve of. This is sometimes a very difficult task, but if executed correctly, expands the avenues through which you can reach your target audience.
There is a leather crafting company called Walnut Studiolo. They specialize in custom made leather bicycle accessories. From leather handle grips all the way to leather beer holders that attach to a bicycle frame.
Possible target audience: city dwellers who do not drive, probably in a younger age bracket (18-35)
The area of opportunity: beautiful leather accessories to add to a bicycle
Here is one perfect example of taking advantage of an area of opportunity. It is not easy to find leather bicycle accessories such as beer cases that perfectly attach to the bicycle frame! In fact, this product probably addresses a problem that most cyclists didn’t even know they had until the advent of the product.
When you look at the Walnut Studiolo website, you’ll find a Stockists page. These stockists are essentially the “influencers”. Most of the stockists are bicycle stores. This is because those who are searching for bicycle accessories are first and foremost going to attend a bike shop, taking the advice of the staff who work there.
Chapter 3: Understanding the law
“Justice? — You get justice in the next world. In this one you have the law.” – William Gaddis in A Frolic of His Own
One of the biggest hurdles for all cannabis startups is the law. Everybody must still remember that according to the Federal Government, marijuana is a Schedule 1 drug. For most industries, the law does not impede too much on business decisions. For example, there are no strict regulations surrounding the sale of fashion clothing and accessories. However, those who want to sell food products are limited to the approval of the FDA.
Navigating the current American legal standpoint on cannabis products is extremely difficult. There are a lot of risks involved, depending on what kind of product you want to sell. At the very least, there are unique tax and regulatory considerations in the USA with respect to cannabis. Then there is the issue of access to traditional banking.
Understanding the law is particularly difficult for the average person. This is why it is important to use resources so you can have the best idea of what’s going on in your local area. If you do not understand the law before starting a cannabis business, you will surely end up with many unwanted surprises. Plus, you could be putting yourself in a compromising position by acting outside of the confines of the law.
Using your resources efficiently
So you may not necessarily have the time or the patience to browse through literally hundreds of pages of cannabis law, trading law, banking law, and property law. That’s reasonable. You’re starting a business. So here, we’re going to give you some pointers on how to use the resources around you and what kind of questions you need to ask.
Get a lawyer
If you are going to be selling consumable cannabis products, it is advisable to get a lawyer. At the very least, they can guide you through the initial process until you thoroughly understand your requirements as a cannabis business owner. You may only pay for their time a couple of times to ask questions and obtain an understanding of the legal limits of the cannabis industry. This is an invaluable resource to have available to you in the initial stages of your business.
Ask your local government
Every state has different requirements about product labeling, cultivation of cannabis and whether it is recreational or medicinal. Ask your local government for the documentation that outlines cannabis law, what is legal and what is not. This will also give you an idea of the penalties involved with breaking the law.
In almost all legal states, there is a Member of Parliament who actively pressed for the legalization of cannabis. Do not hesitate to contact that person, asking for what you need to know. This person is, after all, the one who instigated the political movement.
Contact any local cannabis advocacy groups
The local advocacy groups are also a great resource to you. They fight for cannabis and the rights of cannabis business and users, so they are quite familiar with the law. Plus, they may also know ways in which you can mitigate certain aspects of the law. It’s always advisable to go back to your lawyer with this information, as you don’t want to find yourself in trouble. However, they are generally able to give you information about laws.
Taxation law in the cannabis industry
The fact that marijuana remains a Schedule 1 Drug according to the Federal Government makes taxation quite a tricky issue. Almost every business relies on tax deductions, but the cannabis industry has to do almost entirely without it. This is because tax is Federal jurisdiction, and the current cabinet don’t think too much about cannabis legalization.
Most businesses declare tax deductions through the IRS. By doing so, they are able to bypass some of their taxation costs by declaring the costs involved with maintaining the business (paying staff, purchasing stock etc). Those who sell otherwise Federally illegal cannabis products are not eligible for this tax deduction.
Cannabis businesses must report to the IRS through a separate section of Federal law. The United States tax code that relates to cannabis businesses is called 280 E. This was essentially set up by the IRS so that drug dealers could declare their otherwise illegal income to avoid tax penalties as well as criminal penalties. So while cannabis may be perfectly legal in the state you’re in, the Federal Government stops you from declaring income without the 280 E tax code. Through this tax code, businesses are not eligible for tax deductions.
For a lot of cannabis businesses, this makes it nearly impossible to make money. Essentially, the entire cost of running the business comes directly out of the pocket of the owner. For many, this means operating the business at a loss. For others, it means operating at very minimal income.
Ways to mitigate the tax problem
As it currently stands, there is no real way to mitigate the tax problem without some very savvy, and probably unethical, moves by an accountant. However, by altering the kinds of products you sell, you may be able to mitigate the tax problem.
For example, it is not illegal to sell cannabis paraphernalia, even according to the Federal Government. If you would like to get into the business of selling bongs, vaporizers or custom dabbing rigs, then you are not limited to the 280 E tax code. You can claim tax deductions just like any other business.
The same is true for hemp-derived products. Thanks to the 2018 Hemp Farm Bill, hemp derived products are now legal across the USA. With that being said, there are still strict regulations on labelling and testing, but tax is not affected.
In fact, the 280 E tax code applies basically exclusively to businesses who sell medical or recreational marijuana-derived products. That is to say, they contain THC. Any way that you can be a part of the cannabis industry without stocking marijuana-derived products makes you exempt from this strange and limiting taxation regulation.
Banking and the law
Another important factor to consider when building a cannabis business is the matter of banking. Until very recently, marijuana businesses were basically forced into dealing entirely with cash because of the reluctance of banks to get involved with the cannabis business. The disparity between state and national cannabis law has caused a lot of confusion for banks, putting them in a very compromising situation.
What does this mean for those who need a loan, or someone through whom to pay vendors, rent and taxes? A lot of alternatives have been proposed over the years that include:
- Using Bitcoin to manage finances
- Green banks (an initiative by the Californian government to allow limited-charter licenses for banks and unions to cooperate with the cannabis industry)
- Operating entirely on cash
As you can see, some of these alternatives are far less than desirable. Using Bitcoin is difficult, as it requires customers to buy Bitcoin in order to make purchases in store. As for using cash, everybody knows that this is a huge liability. Finally, California was one of the only states who began the Green Banks initiative, and not many other states followed suit. In Alaska, for example, there is not one single bank willing to serve the cannabis industry, a big issue for a state that has imposed a legal cannabis program.
In the last twelve months, there has been a 20% rise in the number of banks willing to cooperate with cannabis businesses. Although this is positive, there are still many businesses who are operating independently of a bank. Some companies have even had their bank accounts closed down because of being linked with cannabis sales. It is something every cannabis business owner needs to think about before starting sales.
Is the cannabis industry destined for change?
If you want to play by the law, you also need to have some idea of the trajectory of this industry. For example, if you do not genuinely believe that cannabis will, at some point, be Federally legal, then you probably have no business opening up a cannabis industry. If you are willing to sit patiently within the confines of the law, then you must be able to predict change that comes in your favor.
It is very difficult to say what the future of cannabis holds. In the last 20 years, the cannabis movement has spread around the USA like wildfire. Any reasonable person would assume that the industry is bound to grow, having a profound effect on law reform as a result. However, given the current instability of American politics, it is very difficult to state this conclusively.
The cannabis industry has just spawned after 100 years of prohibition. There are still many changes that need to occur in order to fully incorporate this change in to the American way of life. From law reform to banking to taxation, there are steps the entire country has to take for cannabis to become a fully fledged part of American life. It is shaky ground, only for the bravest of souls who do not fear losing anything but look forward to gaining everything.
Chapter 4: Raising money
“I’d like to live as a poor man with lots of money.” – Pablo Picasso
And now, for the topic that is both the most delightful and the most challenging: money. Raising the capital you need to get your foot in the door of cannabis is perhaps the hardest aspect of this entire endeavor. Plus, you are going to be competing with some big, established, very well funded names in cannabis. And as we all know, money talks.
So, what kind of costs are involved in the process of opening up a cannabis business? What are the overheads, what is the income and where is the margin for profit? All of this is going to matter, because cannabis entrepreneur or not, you have rent or a mortgage to pay, food to put on the table and bills to pay.
The unfortunate reality of opening a business is that it can be very difficult to see profits in the initial stages. Upfront costs are among the biggest you’ll have to deal with in your cannabis career, and if you haven’t got a pool to start with, the first year is going to be tough.
The $100,000 and $1,000,000 examples of opening a dispensary
To give you an idea of how much it may cost to open a cannabis dispensary, we’ve put together the following guidelines. The first guideline assumes a $100,000 starting costs. The second assumes $1,000,000. However, it is important to know that this is completely and utterly a guide – it is not conclusive. All costs are going to depend on the choices you make as a business owner, such as where a dispensary might be located, the size of the place and of course, your goals and objectives as a cannabis business owner.
Starting with $100,000
This rough business plan gives you an idea of the startup costs involved when starting out with around $100,000.
- $15,000 legal fees
- $38,000 for the first six months rent
- $20,000 for renovations on the space
- $400 for display equipment and material
- $50 office supplies
- $150 for a security system
- $75 for the sign
- $330 for storage and packaging (bottles and jars)
- $50 on labels (all white)
- plus salaries for manager and guard
- plus deals with growers and manufactures
This comes to a grand total of approximately $100,000-$150,000 start-up expenses.
Starting with $1,000,000
If you’re starting out with $1,000,000, there is obviously much more room for a more developed business plan. This is what it might look like.
- $50,000 legal fees & insurances
- $150,000 for renting a space including a security deposit
- $70,000 for products and packaging
- $2,500 to build a website
- $70,000 marketing campaign
- $150,000 for renovations on the space
- $67,500 security system including multiple camera feeds and metal/weapons detectors
- $50,000 furniture, display counters, refrigerators, freezers, multiple POS/cash registers, registration computer, commercial label printer, storage hardware and shelving, etc.
- $7,000 computer software
- plus salaries for director, managers and guards
- plus deals with growers and manufactures
Depending on what kind of business you want to start, a $1,000,000 scenario may not be necessary. Plus, the examples given are purely examples. Many of these costs vary according to where the business will be located and the costs and taxes associated with that state.
Sustaining cash flow
Once you have found a way to raise enough money to start your business, you must think about how you will sustain your business. This means understanding the kind of costs that will be ongoing, such as rent and your inventory of products. Here are the kinds of costs that will continue to be overheads during your business:
- Wages for your staff
- Rent for the space
- Inventory of products
- Security for the location
- Ongoing marketing costs
- Website maintenance (although this can be mitigated if you know how to do it yourself)
It is important to understand how cash flow is somewhat compromised by the taxing system for cannabis businesses. The cost of running the business comes entirely out of the pocket of the business owner, as there is no opportunity for tax deductions. It is extremely important to keep this in mind. When putting together a business plan, do not deduct the cost of running the business from the “income” of the business.
Don’t be afraid of numbers
It is very easy to become intimidated by the numbers involved with opening a cannabis business. We are, quite obviously, not talking about spare change. However, it is important not to let the numbers terrify you in the early stages of opening a business. With proper strategy and increased efficiency, the cost of running your business can mould into the perfect shape, ensuring you also have an adequate paycheck at the end of the day.
Efficiency does not mean cutting corners. Cutting corners on your product or security, for example, can end up costing far more than it saves. It’s imperative not to mix up efficiency with cutting corners. When you are trying to be more efficient, you can consider things such as power costs, the volume of products you sell, the hours you are open and perhaps incentive programs for your employees.
Chapter 5: Marketing, selling and building a team
“Speak to your audience in their language about what’s in their heart.” – Jonathan Lister
Innovation has been at the heart of the cannabis industry, not just in the products that have been pioneered, but in the ways they have been marketed. Thanks to the Federal stance on cannabis, there are strict regulations about how it can be marketed. This has forced those involved with cannabis marketing to be particularly strategic about their use of words and their media platforms for advertising. And if ever you are in doubt, it is highly recommended to consult a marketing attorney before publishing any marketing material.
National regulations for cannabis advertising
At the end of 2018, the National Association of Cannabis Businesses (NACB) released the national regulations for cannabis advertising. While these regulations are not “laws” per se, anybody who is a member of NACB and acts outside of these regulations faces expulsion from the industry. With that being said, some states have begun to implement these kinds of regulations as statutory law, such as California and Oregon.
The basics of cannabis advertising can be summarized:
- Any and all cannabis advertising must contain the following statements:
- Cannabis products are only available to adults
- Medical cannabis products are only available to authorized patients
- A warning for the health risks associated with using cannabis products
- A warning for the use of cannabis products while pregnant or breastfeeding
- Advertising cannot include false or misleading information (this includes claims about the medical efficacy of cannabis)
- Advertising cannot target people outside of the cannabis legal state
- Advertising cannot target minors
- All online cannabis marketing must use a neutral age-screening tool, such as requesting the date of birth of anybody wishing to enter a cannabis website
- The advertising cannot depict a person smoking or inhaling or ingesting cannabis products
- Advertising may not disparage any group based on race, ethnicity, sexual orientation, gender or religion
For the most part, all of these advertising requirements are quite generic and easy to comply with. However, certain kinds of media put you at a higher risk of breaching some of these regulations. If your website contains a blog that preaches about the medical efficacy of THC conclusively, for example, then it is in breach of the advertising regulations. We’ll get more into this when we talk about different ways that you can use marketing and advertising to drive sales.
Marketing strategies for the cannabis industry
While the cannabis market seems to be growing organically, e-commerce plays a huge role. For that reason, many cannabis businesses are focusing on online marketing as a method of driving sales. And it is extremely effective. Fundamentally, you’re not going to sell anything if nobody knows about your product. Thus marketing is going to play a big role in the maintenance and success of your cannabis business.
Make use of online sales
Until recently it was illegal to sell cannabis online. However, the climate is changing quickly within the cannabis industry, and cannabis purchases can now be made online. With that being said, cannabis can only be shipped within the state.
Products that can be shipped all over the USA include cannabis paraphernalia such as papers, pipes, vaporizers and growing equipment. Make use of selling products that can be shipped all over the USA.
Facebook recently lifted its ban on marijuana-related groups and pages. This means that you can now engage with your customers through Facebook, market your products to them and directly reach many people across the state and country. It is worth taking advantage of social media when marketing your product, as almost everybody uses Facebook.
The best way to use Facebook as a marketing strategy is to provide your own input, share relevant and meaningful content and give your customers a lot of information about your company and what you do.
There are influencers online in just about every single industry. These are people who heavily influence public opinion on a matter, whether because they are experts or simply because they have many followers. Influencers exist on Instagram, Facebook and a myriad of other social media pages.
It is always worth making contact with influencers and involving them in your marketing campaign. However, it is important to make sure that they stay well within the advertising guidelines when they are giving a shout out to your product. Otherwise the whole thing can be compromised.
Publish good content and utilize SEO
Once upon a time, when Google was just a baby, SEO was all about keyword density. Now, as Google progresses and gets more intelligent, it is much more than that. Using SEO means publishing good content that is relevant to your product. The content does not always need to be about your product, but rather to be relevant to the cannabis industry and your target audience. Simply packing a lot of keywords into your website simply won’t cut it anymore.
It’s good to have some sort of blog on your website. It gives people a chance to engage with your website and of course, it makes them stick around for longer. But most importantly, having a good quality blog can help you rank on Google, and therefore get more customers to your website.
It always has been, and will always be, a great form of free marketing. Giving people the chance to make a small commission off the sale of your products is a great way to advertise. A small incentive goes a long way to getting people to advertise and sell for you, and almost entirely without a cost.
All you have to do is provide the information about how interested parties can get involved with your affiliate marketing program. You can even market your affiliate program by getting in contact with influencers in the industry.
Make an app
If you really want to get elbow-deep into e-commerce, then why not try designing an app? There already exist social media apps such as High There or Mass Roots. There also exist apps for finding dispensaries that are close to the person who is using it. By creating an app, you can have people directly engage with your company. You can offer them a service to use, such as My Dx, a diagnosting app that comes with another companion device. It’s used to test cannabis products before consuming them.
Building your team
It’s almost unfathomable to achieve all of this on your own. From strategizing, to purchasing stock to marketing to building a website – how on Earth is all of this done by one person? Well, it’s not. This is why you have to become proficient at building a team of people to help you achieve your goal. You may outsource some of the tasks or you may personally build a team of people you trust around you.
In the end, a team of people working on your business might look like this:
- A board of directors
- An accountant
- A lawyer
- Graphic design
- Website technical team
- Staff for point of sale
- Security for your business
These are the kinds of people who are going to help you build your business over time, not just be there at the beginning. Having a skilled team of people assisting you with tasks is fundamental to any growing business. There are going to be tasks you simply don’t specialise in, and it’s always better to have a specialist take care of these tasks.
Chapter 6: The importance of networking and resourcing
“Your network is your net worth.” – Porter Gale
It is very easy to be convinced that good business means completely demolishing the opposition. It simply isn’t true. It pays to have friends in the cannabis industry if you are just starting your business, and the way to do that is by “helping out your friends”. Your product does not need to reach the top simply by forming a monopoly on the market. Rather, by collaborating with other people in the industry, you can build a solid framework for a product that will continue to perform.
Fundamentally, networking is about building relationships that are mutually beneficial. It means that everybody wins from this serendipitous friendship. What you can achieve from good networking is priceless in the dog-eat-dog world of business. If you’re going out to hunt, you’re going to need your pack. Your networking skills are going to completely define the quality of your pack. And if you refuse to network, then you’re out on the battlefield all on your own.
Benefits of clever networking
If you’ve got some handy networking skills, then you can expect a lot of benefits to roll in to your business. If you don’t quite understand yet how networking can benefit you, then consider this list of potential advantages.
More referrals, more contacts
By making friends in the cannabis industry and serving them in a way that also serves you, you can open yourself up to making new referrals and new contacts. At the end of the day, these people know people that you don’t, and being connected with them can help you bridge that gap. This helps to create opportunities for the future, such as joint venturing, new contracts, and overall expansion.
Assistance with problem solving
When you network, you put yourself into direct contact with people that have been operating within the cannabis industry for a while now. They have encountered many of the problems that await you on this path, and if they are still around, it means they have solved those problems. They have literally been there and done that. Your networking contacts are around when you have a problem and can help you creatively solve those issues.
The knowledge marketplace
Your network is essentially your marketplace for knowledge and experience. Sharing with each other is a great way to progress in your business, understand some of the challenges of opening a cannabis business and how to successfully move through them. It is a place where people can give advice about working in the industry and staying within the legal framework.
Staying current in the industry
The cannabis industry is constantly changing because of how new it is to the USA. It is imperative to stay current with the changes that are taking place. You can do this by attending conferences, seminars, speeches and other cannabis events. You can network at these events, stay up to date with news in the rest of the country and possibly even make business partnerships.
Ways to incorporate networking into your life as a cannabis entrepreneur
The idea of being in touch with a million people you don’t necessarily know can be daunting. Plus, at the beginning of your business venture, you might be wondering what you can actually offer them in order for the relationship to be mutually beneficial. Well, there are a multitude of ways that you can engage in networking, some of which you have probably never considered to be networking before.
When you choose a CBD wholesaler, you are networking! The process of deciding who you are going to wholesale products from is important. Are they in line with your values? Do their products reflect the message you are trying to send to your customers? By asking these questions, you are building a network of people around you who fundamentally share the same message as you.
A wholesale relationship is beneficial to the wholesaler because you purchase products from them! And of course, it’s beneficial to you because you get to stock their products and fill up your shelves. It is just one example of a networking style relationship.
Buy white-label products
If you’re trying to develop your own brand, you can purchase white-label products. You get to choose the product that fits your brand and then stick your own label on it. This is a great way to develop a product without having to go through the process of cultivating cannabis and processing it. Plus you get to build relationships with the people who grow cannabis and process it!
Organize events at your store
Having social events in your store is a great way to get networking. Like minded people can come and discuss the industry, exchange contacts and perhaps even give you feedback about your products.
Attend local cannabis events
One of the best ways to get yourself out there and into the cannabis network is to attend the events that happen around you. It is a great way to make friends in the cannabis industry and know what else is happening in your state.
Cannabis is controversial, so it’s better to have friends
When you are starting a cannabis business for the first time, it’s important to remember that as it stands, cannabis is still a controversial matter in America. Yes, the industry is growing and yes, the public opinion is changing. However, we can never predict the future and the fact of the matter is that cannabis is still illegal according to the Federal Government. On ground as shaky as this, it’s worth your while to have friends in the cannabis industry.
It almost sounds like common sense, but it’s difficult not to develop a competitive attitude in business. In fact, it’s healthy to have a competitive attitude, but not at the cost of having support in the industry. When you are mingling at events or searching for contacts, remember that everybody needs each other in this industry.
There are big players in the cannabis industry, as everybody is well aware. It pays to have people on your side, and not just in a financial way! You will appreciate having a bunch of phone numbers handy in case you are challenged and need the advice of your peers.
Chapter 7: Working through challenges
“Ever tried. Ever failed. No matter. Try Again. Fail again. Fail better.” – Samuel Beckett
Perhaps getting into business is not the most challenging aspect of this endeavor. Actually, staying in business is the hardest part. There is no successful life venture that takes place without challenges, a cannabis business included. It is essential to work through challenges with grace and understand that there’s no smooth road to success. This is exactly why we admire people who “see things through until the end” and “stick it out all the way.”
In fact, how terribly bored you would be as a business owner if everything went exactly to plan. The whole purpose of taking on something new is to stumble, learn, get back up stronger and keep going. This is what separates a successful business from one that fails within the first 12 months. Those that are not ready or prepared to deal with challenges often toss their dreams in the bin prematurely.
You can prepare yourself by first understanding that there will inevitably be challenges. You may deal with dishonesty and betrayal along the way. It’s okay, and all of your long-time cannabis friends will remind you that it’s all part of the journey.
Preparing for the worst
Prepare for the worst, and hope for the best. There’s nothing wrong with that. Actually, it makes you ready for just about anything that’s going to come your way. When we say prepare for the worst, we mean foreseeing some of the most common challenges people encounter in business.
Finding the right staff
It is really difficult to find staff that care as much about your business as you do. Actually, it’s near impossible. Most people are working for an easy buck, and don’t feel like they should have to invest their energy as if it were their business. As a result, many businesses end up with staff who don’t care about the finer details. Be patient. It can take some time to find people who are just as passionate as you are about your business. And when you do find them, it’s important to encourage them and remind them that they are an important aspect of your business.
The easier it is to start a business, the more competition there is. Since the dawn of the internet, it has become progressively easier to open a business. Just $25 for an internet domain is enough to get yourself started. With this comes an ever increasing market, and this is especially so in the cannabis industry. This industry is growing faster than any others, so expect there to be a lot of competition. But competition is just that. It’s a chance to be better, to innovate again, to be new again and to stay on top of your game. Without this competition, you would never improve as a company and nor would your products.
The supply chain
Developing a reliable and consistent supply chain is one of the biggest challenges in any business, let alone the cannabis industry. It relies on plant material, which is subject to climate and the soil, among many other factors. When you are moving through your business, it’s important to try to keep costs low when supplying your store with stock. It is also important to develop reliable supply chains, so you do not have to be debilitated by disruptions to it.
Knowing the value of your products and services
If, for some reason, you lose self-confidence as a business owner, it’s easy to lose the value of your products and services. It’s important not to. You should always remember the value that your products and services can add to the lives of your customers, and you should always have faith in that.
Uncertainty of the future
Many business owners reach a point of panic in the moment they realize that they cannot be certain about the future success of their business. It is a reality check that every single business owner is having. Ultimately, you are not alone in the uncertainty of the future. Economies are subject to change, as is the market and even the law. But it is not something to fear. Everybody shares the same uncertainty. And of course, nobody said that this adventure would not be risky!
The bottom line
There are challenges to face. That is the bottom line. In the end, it is not going to matter that you faced hundreds of challenges on your cannabis business journey. What is going to matter is how you moved through those challenges and how well you maintained composure.
Work hard for a solid reward
Nothing in life is ever guaranteed. Why should it be any different with money or business? You will always have to work hard for a solid reward. This is why the most successful business owners are those who pump their hearts and souls into their businesses. Those that become lazy or complacent often lose money or are taken advantage of. However, for the person with the right work ethic, there can be a universe of rewards awaiting.
Do not fear a world full of risks, where only one step can be taken at a time. Anybody in business is operating with this risk factor. It is what makes business so exciting. Good strategizing, great planning and a good network are the only pieces of solid ground in business. In the end, you are the final constant. You cannot always completely control your environment, but you can always manage yourself gracefully and accept challenges as they come.
You are going to learn so much more about building a cannabis business as you do it. So much of the knowledge of opening a business is experiential. With a good solid ground that you have hopefully acquired by reading this article, you should be well on your way to understanding the basics.
There’s not much left to say other than to thoroughly enjoy your journey through the cannabis business endeavor.
You’re off to great places! Today is your day! Your mountain is waiting. So… get on your way! – Seuss