Front Page, Industry & Investment

Key Ancillary Services for a Successful Cannabis Business

June 1, 2018 / By 3C Team

To become a successful cannabis business, you will need to hire a team of experts. These experts will provide you with the key ancillary services to help ensure you are prepared and on track for success. It will cost you tens of thousands of dollars, perhaps over $100K, to hire the ancillary experts you will need just to get started.

Proceed With Caution

Now is not the time to pinch pennies. It’s the time to find the people with the most knowledge and a great reputation within the cannabis industry. Sure, you could try to figure some of these things out yourself, but we would not recommend doing that.
With inexperience comes mistakes. These mistakes could potentially be very costly. If there is a miscalculation or an oversight on something critical, you might just have to start over from square one. That would cost you time and money, not to mention potential revenue, pushing back your business launch date by months. After assisting over 100 cannabis industry clients throughout the U.S. and abroad design and build their businesses we know firsthand the importance of a having a strong team.

What is an ancillary business? Ancillary (in cannabis business parlance) refers to any business related to the cannabis industry that does not directly “touch the plant.” Some ancillary services are optional but the key ancillary services that every successful cannabis business must have are:

Legal, Accounting, Consulting, Real Estate Broker, Architect/Interior Designer, Contractor, Security, Insurance and Marketing/PR.


Legal Services for Cannabis Businesses

While every business needs an attorney, you may need more than one attorney to ensure that your cannabis business is adhering to the myriad of state and local regulations. Also, since many of these cannabis regulations are fluid, you need to have an attorney to stay on top of what the most current regulations are. In California, for example, new packaging regulations will go into effect on July 1, 2018. There are many items on dispensary shelves today that will need new packaging in order to be compliant with these new regulations. You may need a patent attorney if you have created your own strain or a product where you wish to protect your intellectual property (IP). You may need a trial attorney in case of a lawsuit from a customer, a competitor or a disgruntled employee. Pro tip, ask all employees to sign a mandatory arbitration clause in their contract prior to starting employment. That will save you time and money in the event that there is an issue at some point in the future. According to one study, 80 of the Forbes top 100 U.S. companies have been using mandatory arbitration clauses since at least 2010. Hiring a legal team with an extensive amount of experience in the cannabis industry is a must.


Accounting Services for Cannabis Businesses

As you may be aware, compliance is a critical factor in being allowed to continue operating legally in states which have legalized marijuana. Keeping accurate records of every expense and transaction is crucial in any business but even more so with a cannabis business. Hiring a certified public accountant who has been working with cannabis industry clients for several years will help ensure that you are in compliance and that you are not overpaying your taxes. An accountant can also do an internal audit which will allow a cannabis business owner to detect and investigate fraud, safeguard company assets, and ensure that financial reporting is timely and accurate.


Cannabis Consulting Services

There are many types of cannabis businesses ranging from cultivation to manufacturing to dispensaries. All of these businesses can benefit from hiring a cannabis business consultant.
An experienced cannabis business consultant can help you with the application process, review and refine your business plan, introduce you to potential strategic cannabis investment partners and other potential business partners (including other ancillary service providers), and ensure that you are following the correct steps in the correct order to maximize your chances for success. Consulting firms also can advise you on the best methods of structuring your business to maximize tax efficiency and protect your assets. There are many types of cannabis consultants. Some specialize in helping growers achieve maximum yield while minimizing losses. Other specialize in extraction or manufacturing. Others specialize in raising capital or launching a new product. Some cannabis consulting companies offer an umbrella of services from seed to sale. Hiring the right cannabis consultant can increase the chances that you will receive your cannabis license as they have gone through the licensure process many times, with many clients. Ultimately hiring the right cannabis consultant will save you time and money. It’s important to vet potential consultants. Be sure to ask any cannabis consultants you are considering hiring to provide references and testimonials from former and/or current clients.


Cannabis Real Estate Professional

Regardless of what type of cannabis business you would like to start, real estate is absolutely necessary. You will need either an indoor or outdoor space to grow marijuana, you will need a space if you’re planning on operating an extraction facility, manufacturing facility or a testing lab and you will need retail space to open a dispensary. Hiring a real estate broker who has experience working with other cannabis clients can save you countless hours which you might have spent searching for the right real estate for your particular cannabis business. Ultimately, real estate is the foundation of any cannabis business. You can have the best product, the best team, abundant access to capital, revolutionary extraction processes, a strong brand but without Real Estate that is zoned properly and compliant with state and local laws you have nothing.


Architects, Interior Designers, and Contractors

After you have secured your real estate, the next step is to hire an architect and a contractor to build a new structure or reconfigure your existing building or retail space. Your cannabis consultant (see above) can work closely with your architect and contractor to ensure that your cannabis business is built to maximize efficiency. First and foremost you will want to invest in a strong foundation to avoid costly remodels and potentially lost productivity in the future. It takes money to do things the right way but correct guidance from a consultant will help you avoid potential issues in the future. It’s more critical than you might think as improperly designed cultivation spaces will reap havoc on your business as the environmental conditions dictate the health and quality of your plants. If that environment doesn’t function properly you’ll either need to rebuild (costly remodel as mentioned above) or you will be forced into using harsher treatment methods (pesticides and herbicides) to maintain the health of your crop. The latter will expose your workers and your customers to potentially harmful substances. This could be devastating to your brand as well. A smart building design can save you money on electricity, labor, prevent accidents, etc. If you’re a dispensary, you will certainly want to hire an interior designer. Dispensary design is important because you want your customers to have a great experience, come back again and again and bring their friends. Almost every dispensary will be carrying similar products. The difference between them is in the experience, the decor, how unique and comfortable it looks and feels (and how well trained and courteous your budtenders are of course). So hiring a great interior designer is important for a dispensary but not quite as important for an indoor cannabis cultivation or extraction facility.


Cannabis Security Services

We’re all familiar with stories (hopefully not firsthand) of dispensaries being robbed at gunpoint by criminals. It’s not just dispensaries that need to have security. It’s a requirement for every legal cannabis business to have video surveillance and an alarm system. Many cannabis businesses also employ armed security guards to protect their product and their cash, which is sometimes kept on the premises due to limited banking options. In addition to video surveillance, an alarm system, and armed guards, there are additional security measures that are also essential including safes. Your safe should be fire resistant as well as unbreakable. Some security companies offer a comprehensive solution including electronic surveillance, cash and product tracking, cybersecurity services, armored vehicle transport, and asset protection. Pro tip: Ask your insurance agent if they offer discounts for having certain types of security in place.


Cannabis Business Insurance Coverage

Another type of security is knowing that your business is covered in the event of theft, fire, infestation of mold, fungus or pests, or whatever else might crop up to put a damper on your profitability. Cannabis business insurance coverage is relatively new but it’s spreading almost as quickly as legalization throughout the U.S. Prices will vary depending on state and type of cannabis business. According to a 2018 report in MJBizDaily, marijuana cultivator insurance policies range from $20K-30K per year in California, while dispensary insurance policies range from $10K-$200K per year. Spend the time to consider exactly what you need to insure. Most cannabis businesses will need general liability insurance (to cover accidents in the workplace) and product liability insurance in case of an issue with product safety. Hopefully, your cannabis consultant provides you with the proper procedures to minimize this risk. Always ask your insurance agent to explain to you what is and is not covered and have your cannabis attorney look over your insurance policy to ensure that there are no loopholes.

Beware of unscrupulous insurance agents who offer policies with loopholes (meaning they won’t pay you for your claim) that stipulate insured companies aren’t covered if they’re involved with an illegal activity or health hazard. In other words, that policy is essentially worthless to a cannabis business. It’s a scam. Do your due diligence, shop around and ask for referrals from your cannabis consultant or another trusted ancillary team member. Many states require marijuana businesses to have insurance coverage. Being compliant with state regulations often includes having cannabis business insurance. Either way, you probably want your cannabis business to be covered by a comprehensive insurance policy, just in case. Otherwise, you could lose everything.


Standing Out From the Competition

Ironically, after many years of hiding in the shadows, the best way to ensure your cannabis business is successful is to promote your company in a public way. The marijuana industry is growing rapidly. In order to attract and retain your share of customers (whether you are a B2B or B2C company), marketing and PR are essential. While word of mouth referrals are outstanding, it may take a few years before you are getting enough of those referrals to generate the type of revenue you need to stay afloat. In the meantime, you may need to hire a marketing consultant and/or PR firm.

First, you need to understand who your customer base is and what they are most interested in (even beyond the obvious, cannabis flower and marijuana products). Are your customers medical marijuana patients or are they adults buying marijuana for recreational use? What other demographic information defines your clientele? Essentially you need to know who your potential customers are and where they are paying attention online (and offline). Be creative and find unique ways and channels to promote your brand.

Building a brand guide is the next step. Hiring a branding professional will help you to ensure that your brand stands out from your competition. Once you have chosen your fonts and colors and a logo, you will need a website. Remember to be consistent in tone and messaging throughout all of your marketing materials and your website.

Social media is one of the best ways to communicate with your potential customers and your existing customers. It’s also a great way to listen to what people are saying about your brand and your competitors online. Find out where your potential customers are spending time online and engage with them regularly.

When you are first launching your company (or a new product, or your company received an award), it’s a good time for a press release. Press releases must be written in a very specific way so it’s best to hire a PR professional to write it and submit it to various media outlets.

Blogging is a great way to keep your current and potential customers informed about the industry and established you and your company as thought leaders and industry leaders. Also, blogging, if done correctly, can be very helpful for SEO (search engine optimization).

Marketing is a long-term process which requires testing and analysis as well as creativity.



In conclusion, you will need to hire a team of experts to help you launch a successful cannabis business. Regardless of which area of the marijuana industry you are drawn to, from cannabis cultivation to cannabis extraction to owning a dispensary or perhaps a new cannabis ancillary product or service, you will need a team of seasoned professionals to guide you and ensure that your business has the best chances for success as possible.

Are you considering opening a cannabis business? We would love to hear all about it.

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