As more states have legalized cannabis for recreational or medical purposes, opportunities continue to grow for entrepreneurs who might be considering starting a cannabis business. But, as in all new industries, timing is everything. Here are some of the reasons you should consider getting into the legal cannabis market now.
Despite its rapid expansion, cannabis is still a cottage industry with the potential for tremendous growth. Beyond hands-on cannabis businesses a wealth of niche products and services are being developed, creating a plethora of opportunities. Glass blowers, electricians, lawyers, farmers, accountants, trimmers, and distributors are just some of those who have found their skills in demand, and have started their own specialized cannabis-related businesses.
Many of the state and local cannabis regulations set strict limits on the number of licensed producers/distributors allowed into the industry. In some states it’s unclear when another round of licensing will occur. The opportunity to get in on the ground floor of a burgeoning market is tremendous and should be seriously considered. That being said some state regulations are so strict they could restrict profits for years, New York is a good example of this. In time New York’s medical cannabis licenses will likely be very valuable yet companies have been forced to operate at a loss for years while waiting for regulatory changes in New York. These challenges can be navigated with proper planning and strong financial backing. The upshot is if you miss the licensing application deadline, you’ve missed your opportunity.
In states like California, that have an extensive history of black market cannabis operations, the new regulations will clearly define who is and who isn’t operating legally. This clear distinction will lead to greater enforcement of those outside of the regulated market. The only protections ever offered to the cannabis industry by federal regulators were for medical marijuana businesses operating within the state’s laws and other specific guidelines. That being said the Department of Justice as well as state and local law enforcement will likely pursue illicit operations. If you want to operate in the cannabis industry moving forward now is the time get licensed and take whatever steps are necessary to be compliant.
To establish a safe and solid foundation for the industry businesses must step up and hold themselves to the highest standards possible. Some states have strict testing standards for contaminants like pesticides and mold, while others don’t. Responsible forward-thinking business owners know that the wellbeing of their consumers and employees are of the greatest importance. Therefore these business owners maintain strict safety standards and go above and beyond current regulations to prepare for federal legalization/regulation. The industry has come a long way from black market production in providing safe and consistent cannabis products. By taking action now businesses are setting themselves up for a long and prosperous future in the cannabis industry.
As the industry gains legitimacy and stability, an increasing number of investors are entering the space. In fact, last year over $1 billion was invested in the cannabis industry. Data from the first 4 months of 2017 shows a shift from debt raises to equity raises within the cannabis industry, demonstrating increased investor confidence.
Today, although some growing pains are being felt, most cannabis businesses are optimistic. According to the 2017 Marijuana Business Factbook (page 32), over 90% of cannabis businesses are expecting improved prospects. As the industry matures, we may find the window of opportunity closing to those not already inside. For legal cannabis, there may never be a time as good as now.
Are you considering starting a legal cannabis business?