What are some business challenges you may face when starting a cannabis business?
To refer to a previous blog post, starting a hemp business is easy. Marijuana is different – it comes with many other problems. So, let’s go ahead and look at some of the techniques and problems you’ll need to solve. On the plus side, there are some boxes to check. Decide which sector of the company you want to work in. Know the rules. Know the plants. Understand products and distribution channels. Be clear about the regulatory and banking environment specific to your project. Create a compelling business plan, detailing the uncertainty and financial projections. Analyze your market. Assess your financial needs. Earn money. Get a license. Not in this order. Again, these are just the beginning.
First, marijuana and hemp are both cannabises, but . Similar in many ways, but different in many ways. They come from a type of plant called Cannabis Sativa L. But marijuana is psychotropic, and hemp is not. The main “nutrient” in marijuana is THC – in hemp it’s CBD. At the moment, the federal government takes it in this way: the Cannabis Sativa L plant, and any part of the plant, whether it is growing or growing, and the inclusion of delta- 9 tetrahydrocannabinol (THC) is less than 0.3% on a dry basis. hemp. Although the marijuana plant is another strain of Cannabis Sativa L, it is a strain that produces high levels of THC and, usually, low levels of CBD, which means what? If it’s marijuana, it’s a federally regulated drug, which means a lot. If it’s hemp and CBD, it’s a little tricky.
What do I need in my marijuana business plan?
A business plan can be a lot of things – from a 3-page summary on a canvas, to 10-50 slides, to a 15-page DIY brochure, to a 35-page plan. convincing investment presentation. What’s the difference? Success, usually. This is a blog post, not a marketing post, so I’ll stick to the experience. What separates good ideas from accepted ideas? Investors, by definition, have money and see many offers. What makes yours different from the corner pile of the investor’s couch? Look? Content? Storytelling? A granular representation of the market? What else? Simplicity? Confused investors don’t invest. How awesome is your job? Is it easy, digestible, tasty, easy to access? Will your investor develop this love for you and your business? Or not? Experience tells us that you need an excellent business plan to present your opportunity to partners, investors, investors, lenders, suppliers, market leaders, and – provide services to regulators and licensors. A good plan will include information on many topics, but you can start with business model, marketing plan, products and services, market research, legal environment, organization, size and milestones, financial plan, competition and marketing strategies among other topics.
How big is the marijuana market?
Here are some basic facts:
- It’s really big and growing like a weed (pun intended). By the way, many industry analysts and reports refer to “cannabis” when they actually mean marijuana. To keep in mind. Even some of the best industry reports refer to marijuana as “cannabis,” ignoring the fact that cannabis can also be hemp.
- The overall US marijuana market is expected to grow at a CAGR of approximately 18-23% over the six years from 2018 to 2025, growing from $12 billion to approximately $ 35-41 billion.
- California – the largest user of marijuana in the world – dominates the US market (about 25-30% of the total US consumption). Adult legal marijuana sales in California were approximately $2.5 billion in 2018, and are expected to reach $3.8 billion in 2020, and are expected to reach approximately $7.2 billion in 2024.
- About 39% of the total annual marijuana production in the United States will come from the legal business by 2025.
- Recreational use will continue to be a major growth factor in the United States. Currently, approximately 39% of US annual revenue between 2019 and 2023 is expected to come from the pharmaceutical market, and 61% from the entertainment market.
- Annual sales of medical marijuana (MMJ) are estimated to grow at a CAGR of 19% by 2025 to approximately $16.3 billion (from $5.9 billion in 2019), while recreational sales are likely to grow at a CAGR of 23%, reaching $25.1 billion. (Up from $7.4 billion in 2019). Note: Other analysts put the 2020 US healthcare market at a forecast of $5.5 billion to $6.8 billion and the 2023 US pharmaceutical market at a forecast of $6.9 billion to $8.4 billion.
Description of the marijuana industry
In the marijuana business, there are many business options in the industry, two different sectors (medical marijuana and adult recreational use) and many business options to choose from: grow, harvest, process, extract, and -provide tangibles, share resources, build consumer products, market, distribute, transmit, promote programs, provide information services, provide genetic science or testing services, or provide business advice or other professional services.
Keep in mind that the “black market” is still larger than the legal marijuana market, but the legal market is still very large. Why does the black market dominate? Because the tax on legal MJ is very heavy. But legalization is the way to go if you’re starting a cannabis business.
What types of fees apply?
Of course, this varies from project to project and state to state, but for startups starting with sales, some of the cost drivers include:
- Access and preparation of land.
- Construction and improvement of greenhouses.
- Production and processing tools.
- Safety equipment.
- Seeds and / or clone plug and equipment.
- Work on machines.
- Applications and license requirements.
- Business development and alignment of strategic partners.
- Marketing and promotion.
- Professional fees for legal (corporate, financial, intellectual property) and accounting aspects.
- Unpaid SG&A.
- Low salaries for critical information workers. 13. Security Services.
Is there anything else to consider?
If you don’t want to grow marijuana and plan to get it from others, then it’s important to find a supplier who won’t hold back when they get a better offer. Other areas of concern when choosing a supplier include resin content, purity, feminization, non-contamination, and of course, cost.
Next, regardless of the source, it is important to have cGMP (current good manufacturing practice) that meets state and FDA regulations. Other important certificates are the CoA (Document of Analysis), confirming the type of plant, the level of THC and CBD, and the presence or absence of other substances such as heavy metals, mold or pesticides).