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CBD marketing

What Is a CannaBusiness? How to Start A Company?

Cannabusiness is any type of business that focuses on cannabis, whether we’re talking about medical or recreational products.

Although most people think that cannabusiness refers to dispensaries and agricultural growers, it can also include other types of organizations such as marketing agencies, software companies, financial institutions that focus on cannabis, and so on.

As you can presume, cannabusiness has experienced a major boom in the last few years. This has to do with legalization and regulation, allowing new competitors to enter the market without any fear.

Furthermore, lenient marijuana laws have incited financial institutions that were previously cautious of the industry. Unlike a few years ago, nowadays, you have much more credit and insurance companies that are willing to support cannabis organizations.

Is cannabusiness the future of the US economy?

Here are some of the reasons why we think that cannabusiness is the future of the US economy:

  • Cannabis is no longer stigmatized. The main reason why companies and governments stayed away from this plant is that it always had a bad reputation. In most cases, it was portrayed as a gateway drug that would encourage users to try even stronger drugs. But, with more and more studies, we now realize that cannabis is very similar to other vices like alcohol and tobacco. In other words, its impact isn’t as devastating as previously portrayed. Furthermore, hemp and cannabis have enormous potential as supplements.
  • The tobacco industry is at its historic low. Countries all over the world are restricting big players through increased taxes and unfavorable laws. So, a switch to recreational cannabis is somewhat to be expected. This is especially good for tobacco companies that can use the same facilities and manufacturing process for growing marijuana.
  • If we hadn’t discovered hemp’s amazing medical potential, cannabis would’ve probably remained in the same position. However, as we learn more and more about its potential properties, even those who always hated marijuana are now willing to embrace is a substance that might become universally useful in the near future. Pharmaceutical and cosmetic companies are doing their best researching and incorporating the plant in various items. Although our knowledge is limited, there is an enormous desire by all the market participants.
  • We also have numbers to back everything up. In 2019, we saw a 31% sales growth. In many ways, the cannabis rush is very similar to the 19th-century gold rush. And while there have been minor fluctuations in the market (especially the stock market), the increase in sales is continuous. The increase in sales coincides with legalization. As of right now, medical cannabis is illegal in only 9 states. To make things even better, numerous states have also legalized recreational marijuana, and Oregon has recently become the first American state to legalize all the drugs.

Main types of cannabusinesses

As we already said, a lot of different organizations can be classified as “cannabusiness.” Here are the main categories:

  • Cultivation and farming
  • Extraction and processing
  • Warehousing
  • Retail

Basically, these are the main activities that are necessary for creating cannabis products. We start by growing the plants and harvesting them.

During the next phase, marijuana is dried, or you extract oil. It all depends on the product that you want to make. Once the product is finished, it will need to be stored.

From the warehouse, it will reach cannabis dispensaries. Of course, you can also sell cannabis online.

Cannabis cultivation and farming

Everything starts with cannabis growing. A lot of places in the US have an ideal hemp climate. States such as Oregon, Colorado, and California are famous for their marijuana plantations, but you can grow it in other parts of the country as well.

Cannabis cultivation is very similar to any other agricultural process. If you wish to grow it yourself, you will have to invest heavily in machinery. Entrepreneurs who have already worked on similar projects will have a major advantage, needless to say.

While it is very important to set up your cannabusiness outside of an urban area, so you can avoid pollution and other negative aspects, you should still be close enough to transport the goods.

Finding the right agricultural property is rather easy; make sure to hire a soil expert who would test the ground before you start planting hemp.

The soil should have somewhere between 5.5 and 6.5 pH values. In terms of nutrients, the plant needs a lot of phosphorus, nitrogen, potassium, but also sulfur, magnesium, and calcium.

Cannabis extraction and processing

If you’re focused on medical cannabusiness, you will need a proper extraction and processing plant.

Today, there are a lot of different marijuana products on the market, but most of them work under the same principle: take cannabis leaves, extract oil from them, and place it in a carrier oil. No matter what you’re selling, there is a good chance you will need to apply this methodology.

The good thing is that once you set up a processing plant for oil extraction, you will be able to make almost any type of hemp product.

Whether we’re talking about CBD, THC, or other cannabinoids, you can place hemp’s oil in products like edibles, bath bombs, cosmetics, tinctures, creams, and so on. The only thing that changes is the vessel as well as the carrier oil that you want to use.

Most companies rely on C02 extraction. This is the most sophisticated process that ensures the purity of the substance.

However, the equipment will cost you a lot. Alternatively, you can go with some other extraction methods, but they are much less reliable.

Some of the extraction methods can produce toxic substances, which can harm your customers and get you in legal trouble. So, be warned!

Cannabis warehousing

Depending on your particular cannabusiness, you may or may not need a storage facility.

Of course, big agricultural growers will need a warehouse; the same goes for packaging companies. But, if you’re a small dispensary, you might have enough space within the store itself.

The need for a warehouse is also influenced by product diversity. If you’re offering just one or two items, you likely won’t need a lot of space.

Serious cannabis companies have their own packaging plants, plantations, and stores. Because of that, they need space for packaging items, fresh and dry cannabis, oil, equipment, and everything in between.

If you’re a small cannabusiness, you might not need a lot of space. For example, it is possible to outsource some of the processes so that you don’t need to rent storage.

Cannabis retail

Cannabis retail can refer to any type of store that is specialized in marijuana products.

While we usually associate this term with marijuana dispensaries, it can also refer to cosmetic hemp companies, food stores, and shops that sell packaging items. Basically, as long as cannabis is the focus of your business, your store can be regarded as “cannabis retail.”

Cannabusiness has progressed so much in the last few years. With new laws and, in particular, the 2018 Farm Bill, it is much easier to open a store and run a hemp business.

Almost every American state has legalized medical marijuana, and some of them have legalized recreational cannabis. As the trend continues, it makes more and more sense to open a dispensary.

Having your own hemp shop is crucial for several reasons. If you wish to increase your cannabusiness, you will need to have dispensaries that would help build your brand image.

Selling products through your own stores also ensures they won’t be tampered with. This might sound silly, but keep in mind that cannabis regulation is still trailing behind. Some cannabis companies implore shady tactics, which can hurt your image if you’re in any way associated with them.

Lastly, dispensaries are important as they put you in touch with final customers. Although a lot of cannabis shopping is done online, don’t neglect the importance of direct contact with the users.

Ancillary cannabusinesses

Ancillary cannabis businesses include things such as software development, legal services, pharmaceutical companies, security, dispensary marketing, and so on.

Although it isn’t uncommon for a company to have its own plantations, processing plant, and retail, most of these services are outsourced.

It simply doesn’t make any sense for cannabis companies to have their own in-house marketing and legal teams unless we’re talking about major organizations.

Here are some of the main ancillary cannabusinesses and what they entail:

  • Software development (various types of software that can be used by clients or by companies)
  • Legal support (making sure that a company is complying with the latest laws and regulation)
  • Security services (cannabis has a high street value, which is why it needs protection during transportation and storing)
  • Marketing (cannabis companies are very limited in terms of their advertising options, but promotional activities are still necessary for serious organizations)
  • Accounting and finances (this includes various services such as accounting, consultations, planning, brokers’ services, and so on)
  • Packaging (nowadays, there are a lot of companies that product packaging solely for hemp organizations)

Although ancillary businesses are often overlooked, they play an important role within the cannabis ecosystem.

How to start a cannabusiness?

Starting a cannabusiness can be arduous, especially if you have limited entrepreneurial knowledge. Due to its fluctuating legal state, you need to be well acquainted with all the laws.

It is also preferable if you have the same agricultural expertise, and you can recognize good cannabis from a bad one. Here are some tips that will help you get going:

  • Consider the costs

Running a dispensary isn’t that complex. You will have to consider the cost of commercial space, the product itself, packaging, utilities, and wages.

But, things are a bit more unpredictable and complex when it comes to farming. Not only will you need equipment, but you will need to consider all the agricultural risks involved.

Anyway, if you don’t have potential clients lined up to buy your items, you might soon encounter major issues. Luckily, cannabis items are selling like hot bread right now, but you should be wary of additional costs that might ramp up as you start your enterprise.

  • Consider the permits

Getting all the permits can be quite an issue. In some states, you can get a cannabis license within 90 days; other regions are more selective.

So, if you’re unable to get the initial documents, you won’t even be able to start your business. In some cases, it might even be cheaper to buy off a company than to get a license yourself.

This all depends on the state where you wish to set up shop. Make sure to get acquainted with the licensing procedure before you start anything else.

  • Location is everything

Whether we’re talking about a plantation or a dispensary, you need to make sure they’re close to the major markets.

Although you might think that having a dispensary in a young, vibrant neighborhood is ideal, you might make larger profits if you set up a CBD store within an elderly community.

Check if there are other dispensaries nearby and if there are enough clients to make it worthwhile.

  • Creating a brand image

Cannabis companies are often very similar in terms of their visual and marketing presentation. So much so that it’s sometimes hard to distinguish one brand from others.

Creating a captivating brand image is crucial for the success of your cannabusiness. Hire a design company that can properly handle your website, logo, promotional material, store interior, and other details.

  • Marketing and advertising

Although brick-and-mortar stores are not that dependent on marketing, other types of businesses can be destroyed if you lack a marketing direction.

This is especially true if we consider the fact there is a limited number of marketing channels available to cannabis organizations. Because of that, we suggest that you give us a call!

Our marketing agency has extensive experience with US-based cannabis companies, and we can certainly help you as well!

With these small tips and tricks, you can begin your marijuana journey!

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