The term “marijuana business” was once defined as the illegal cultivation and distribution of cannabis. Still illegal under federal law, cannabis has been legalized by a growing number of states.
Whether legalized for medical use or recreational use, the federal government has allowed each state to develop and implement their own unique regulations.
Legal Cannabis Industry
In 1996, California became the first state to legalize cannabis for medical use. Since 1996, more than two dozen states have approved the medicinal use of cannabis.
Expected to grow exponentially over the next decade, cannabis is now a multi-billionaire dollar industry. Offering numerous opportunities for entrepreneurs, the cannabis industry operates under a complex and ever-changing web of regulations and laws.
When crafting a successful marijuana business, a keen sense of law and a willingness to explore a variety of growing, operating, marketing and advertising methods is necessary.
Types of Cannabis Businesses
There are three main types of marijuana businesses, including cultivation, retail sales, and product manufacturing. A cultivation business consists of growing marijuana, is heavily regulated, and requires a large initial investment, as well as horticultural knowledge.
Product manufacturing requires knowledge of various marijuana infusions, including edibles, salves, tinctures, etc. Retail locations, or dispensaries, require significant sales knowledge and a large initial investment, but are the most lucrative type of marijuana business.
How Cannabis is Grown
Using a variety of agricultural methods, there are several ways cannabis can be grown. Learning the many aspects of cannabis farming ensures the successful operation of a new cannabis business.
Influenced by market potential, scale of production, and square footage available, cannabis production often mirrors food production.
One high-tech alternative to traditional food production methods, hydroponic systems are increasingly being used for cannabis cultivation.
Allowing marijuana production without soil, plants are rooted in nutrient rich water in one of many configurations. Configurations include:
- Bubbler Systems. A nutrient solution is pushed with an air pump towards the root systems of suspended plants.
- Drip Feed. Nutrients are fed into a plant’s potting medium with drip tubes.
- Nutrient Film. A tray holds water the plant feeds from continuously.
- Aeroponics Hydro. Seedlings are suspended above a dark chamber set to full humidity. Maximum oxygen and nutrients are absorbed.
- Ebb and Flow. The root of a plant is periodically flooded with nutrients and then drained.
- Passive. Plants are set above a reservoir of nutritious solution. Plants absorb solution through a wick.
Setting Up a Successful Cannabis Business
Similar to other industries, a cannabis startup requires the right combination of market differentiation, investment, and management.
Due to the unique nature of the industry, regulations and federal marijuana prohibition must be thoroughly researched on a regular basis. Following a few simple steps, a new marijuana business will thrive.
- Make a Business Plan. Outlining a company’s goals, costs, timelines, etc. a business plan helps a new company stay organized and on track.
- Find a Location. Thoroughly research state licensing requirements, as well as local and country zoning laws and regulation. All information must be evaluated to determine the best areas for a new marijuana business.
- Craft a Business Structure. Once partners and initial investors are secured, a business must be formed within regulatory and legal constraints.
- Secure Licensing. Often taking several months, any applicable licenses must be secured before a cannabis business can open.
- Become Operational. Post-licensing, all necessary regulatory requirements must be implemented. Ensuring compliance, a cannabis business must follow all state and local operating guidelines.
- Partner Contracts. Depending on the type of cannabis business, partnering with cultivators, dispensary owners, or infused product manufacturers may be necessary.
- Promote. Several types of marketing and advertising, both in-person and online, should be done to adequately promote a cannabis business.
Promoting a Cannabis Business
In today’s world, both a digital and in-person presence is needed to successfully promote a cannabis business. When developing a web presence, a professionally designed website is key.
Additionally, relevant advertising tactics must be followed to attract new customers, such as advertising on industry-relevant websites and following IAB’s standards for digital ad placements.
In a growing industry, content production is a key area to consider when developing a marketing and advertising plan. In the wake of growing legalization, people are becoming increasingly curious about marijuana.
Producing blog posts, infographics, videos, and other engaging media attracts new audiences. Engaging in search engine optimization (SEO) practices also ensures that a new company’s website is indexed by search crawlers, creating further exposure to new audiences.
Requiring patience, dedication, and an understanding of complex legal regulations, a cannabis business is often a difficult, but very lucrative endeavor.
A growing industry, cannabis is quickly being legalized throughout the country. With a thoughtfully crafted in-person and digital presence, a cannabis business will thrive.