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How to Start a Marijuana Business

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11 States and the District of Columbia – that’s how many states have legalized the use of recreational marijuana. That number goes even higher to 33 states when you look at all the places that have passed or formulated laws that broadly make it okay to use marijuana in one form or another.

As things stand, more and more states are poised to get on this bandwagon, and as such, starting a marijuana business could be something that you might want to consider seriously.

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Getting Your Marijuana Business License

There was a time, not so long ago when the term “marijuana business” was a term used of criminals looking to make money in an illicit black market for peddling drugs. People who grew, harvested and sold marijuana, also known as “weed” were considered shady and outrightly shunned in the society. Today, however, thanks to the many benefits of the different forms of weed to the human body and mind, this business is thriving and even getting legislative favors.

It has become a legitimate business complete with licensing. California led the way by legalizing weed in 1996. Since then, the industry has grown into a $2.7 billion behemoth with medicinal and recreational marijuana gaining popularity among the masses.

To get a license to operate a marijuana business in any State, you first need to contend with the state laws governing the different forms of weed.

Different Types of Marijuana Businesses

The first thing you need to understand about starting a marijuana business is that there are three main categories: cultivation, manufacturing of marijuana-infused products and retail sales. There are several other offshoots of these businesses such as delivery services, testing facilities, software, online services and selling of cannabis consumption devices.

marijuana plant

Here is what you need to know about starting a marijuana business in each of these categories:

  • Cultivation: this is a heavily regulated category. Starting one needs you to have large initial investments and expert-level horticultural know-how
  • Infused Products: this sector is also quite regulated and will require some creativity to produce the best types of products such as weed edibles (preferred by many patients and users) or salves, tinctures and other forms of marijuana-infused products
  • Retail Sales: this is where more people looking to start a marijuana business will fall. This category isn’t that heavily regulated, requires you to jump through a few licensing hoops and as long as you have the funding and the supply, you are almost guaranteed to find the market, or it will come to you. Marijuana retail sales business is often referred to as a “weed dispensary”

General Factors to Consider Before Starting a Marijuana Business

While it is true that you will always find customers for your marijuana business, that doesn’t guarantee that it will succeed. There are many other factors that you need to consider before jumping into this type of business.

man weighing marijuana

Opening a weed store or a grow house legally is a bit more complicated than opening and operating other types of businesses. This is mostly because the regulations and laws that govern this kind of business are fairly new and as such, almost always vary in some form of transition or other.

The following are the most important factors to consider before starting a weed business:

  • The cost of operation: costs will vary from location to location and from state to state. The main costs that you will need to figure into your calculations are the costs of licensing, utilities, supplies, rent, security, employee and marketing. You will also need to consider equipment costs as the type of weed business you decide to start might require specialized equipment.
  • Your residency: as things stand now, virtually everyone who holds a marijuana business license needs to be a resident of the licensing state. States such as Colorado will require you to have been a resident in the state for at least two years.
  • Associated risks: as is the case with every business, there are associated risks with starting a marijuana business. Some of these risks include an ever-changing regulatory environment and the lingering “criminal” nature of the business that still dogs the industry.
  • Criminal records: in many states, you can’t get a license to run a weed business if you have a criminal record.
  • Partners and investors: under federal law, weed is still illegal. Even though many states are quickly legalizing different aspects of this business, most investors are still wary of that fact and reluctant to invest in what they deem as an unstable legislative landscape.

Another thing to remember is that you may be forced to wait several months for your license to be approved – if at all. In some states such as California, it could take anywhere from 3 – 10 months, while in Washington you could be waiting for up to 18 months.

Step-by-Step Guide to Starting a Marijuana Business

First of all, you need to know that there are some regulatory licenses when it comes to recreational versus medicinal marijuana. That being said, every business follows the same fundamental process as a start-up:

  • Write your marijuana business plan: this is the same as any other business plan and outlines your goals, strategies and timelines for your intended business. This is the document you will use to shop for investors and partners.
  • Find the right location: state licensing requirements notwithstanding, there are still local or county zoning laws to contend with and these will greatly determine where you can set up shop.
  • Form a business structure and get licensed: you will need a formal business structure and a legal license to run your marijuana business. As already mentioned, the license might take months to obtain.
  • Get the business up and running: this requires that you comply with every legal requirement as well as tap into the needs of your preferred clientele.

Even though a business in marijuana seems to be quite popular, there is quite a bit of competition in this industry, and you could easily lose your customer base to the enthusiastic competition. Learn how to meet your clients’ needs and always aim to reliably provide them with the best product.

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