The marijuana industry is a new frontier that some of us are too chicken to invest in, why? You are unsure about its future and how to profit off it, right?
Before you venture into any type of business, it is of utmost importance that you learn how the industry works. If you go in head first with no plan you will fail, why? Industry regulators don’t allow you to do a number of things. For example, in some states you are not allowed to deliver weed if you don’t have a permit. if you violate that rule and get arrested, you may spend 1 year in prison and pay a $1,000 fine. If it’s a second offense, you may spend two years behind bars and pay a $2,500 fine.
Remember, Marijuana is not candy. That means that. You must play by the rules or the regulators will shut you down. Generally, you need to know three things:
- Never sell marijuana to anyone below 21.
- Never cross state lines with marijuana.
- You must comply with the rules of the industry.
The Marijuana Industry is Heavily Regulated
If you want to start a legal marijuana business in the US (Legal states only), you must be 21, and have no criminal record. You may be denied a license if you have been convicted of a serious felony involving:
- Drug trafficking
Also, if you have been fined or sanctioned for unlawful production, cultivation, or commercial activity involving weed. You may be denied a license (depends on state law). The types of licences available are:
- Production license
- Processing license
- Wholesaler license
- Retail license
- Laboratory license
- Hemp certificate
Take some time to read and understand your state’s requirements before you set up an operation. There is also the issue of fees. If you are in Nevada for example, you will have to pay a onetime non refundable application fee of $5,000. On top of that you will also have to pay:
- $20,000 for a retail store license.
- $30,000 for cultivation facility.
- $15,000 for a testing facility.
- $10,000 for a production facility.
What Happens If You Don’t Comply?
Your operation may be shut down, you may be fined, and depending on the rules you violated, there is the possibility of jail time. It’s worth noting that, it is possible to lose your license. If you violate the law or if you don’t comply with the rules, your license may be revoked. To keep that from happening you should:
Keep Up With Local Laws
Cannabis laws are not uniform across the country. Also the rules keep changing; it is up to you to stay compliant with regulation updates. If you don’t, you may end up losing your business. Grow your business alongside regulations i.e. if changes are required make them. I must mention that in some states you may be required to report sales daily and in others monthly. To make things easier for you, I recommend that you invest in a ‘Point Of Sale’ (POS) system.
This will make it easier to control your inventory and also:
- Prevent employee theft.
- It will make it easier to report sales.
- You will know who you are selling to.
Taxes suck, but if you don’t pay them you may face hefty fines that can put you out of business. If your operation is big enough, you should consider setting up a compliance team or outsource the job to legal and financial experts. If you can’t afford that at the moment, keep yourself updated with changes in regulations, and taxes in your area. I recommend you attend cannabis public hearings in your area of operation.
You should also ensure that your employees comply with the requirements, train them and teach them what to do and what not to do. Your employee’s actions can put your business at risk. For example, according to the Cole memo you are not allowed to sell marijuana to teenagers. If an employee breaks that rule you may have problems with the regulator. To keep the regulator happy:
- Follow the rules.
- Conduct financial, inventory and security audits.
- Train your employees.
- Pay taxes.
Keep Your Licenses Up To Date
Lack of proper documentation can get you shut down. To continue staying in business you must make sure that your retail, dispensary or cultivation licenses are up to date. To be safe, check your state’s requirements every week or every month.
How To Market A Marijuana Business
To stay in business, you will have to make profits. Profits come from customers, meaning, if you don’t have enough, your business will go under. Google and social media websites such as Facebook don’t allow you to advertise marijuana via paid channels. If you decide to market your business online, you should consider doing it on websites such as:
Another option is to start your own website or blog and use it to market your product. Remember, crossing state lines with marijuana, is a federal offense. To be safe, only advertise in your state. The easiest and the most effective way of advertising your cannabis business is through word of mouth. So, talk to your customers, and offer quality services and products. This will keep them coming back.