Key Considerations For Starting A Cannabis Business
Starting any business is hard. Starting a cannabis business in a newly legalized environment is even harder.
Perhaps with any venture, we need to look inward and ask, what is your motivation?
Is it money? There are so many who started this journey because they thought it would be their green lottery ticket. While operating a business should lead to profitability, this industry is not an easy win.
Is it cannabis? While it is honorable to want to work in an industry that produces a product you believe in, this too cannot be your sole motivation. This is a business. Remember, not all who love food should own a restaurant, and not all who love wine should own a vineyard.
Once you are clear on your motivation, you need to figure out what you are going to do and where you are going to do it. Will you start a vertical organization and tackle cultivation, manufacturing, and retail? Will you focus on cultivation? If so, will you focus on indoor, greenhouse, or outdoor? Do you aspire to build an MSO (multi-state operator)? No matter what you decide, make sure you take a phased approach. Start with something manageable and expand as you gain the capacity and resources to support the expansion.
There are three phases in the cannabis industry. The first is licensure. You need to know the state and local regulations. They are your literal guide on how to apply, build, and operate. They tell you what you can (and cannot) do. This is a tremendous lift. Once licensure is secured or eminent, you need to raise money and build your facility. This requires a business plan that is financially focused and a team capable of building your facility. The last step is operating and dialing in your business. It is not enough to start operating. You must continue to dial in your operations and SOPs. Many start operating, but completely forget to adjust their procedures to meet new challenges.
These three phases take tremendous effort. The first phase feels like the most difficult, until starting the second phase. Then the second phase feels like the hardest phase, until phase three. So celebrate each milestone, but please make sure you are very clear that the operational/dial-in phase is the most difficult.
This then leads us to the seven things you need in your business:
Amazing People/Team - Your team is the reason you will or won’t be successful. Period. You need to invest in people who bring individual expertise and overlapping experience. They need to know they are signing up for hard work that will lead to something amazing.
Identity - You (and your team) need to know what you are doing. In our case, we are a Local Premium Sun-Grown Flower Farm.
Core Competency - Your team needs to know how you are doing it. For us, we are a single-season outdoor farm.
Focus - This gives you permission to use your time and energy on your identity and core competency. This minimizes distractions. It gives you a playbook.
Discipline - In addition to focus, discipline fuels your ability to dedicate yourself to what you are building, how you are building it, and how you support your team.
Quality/Consistency - These last two work hand-in-hand. Your product needs to maintain quality and consistency. This will allow people to develop a relationship with your business that sits on a foundation of knowing what they are going to get.
So, you are ready to start! Fantastic. Let’s make sure we are clear on some of the considerations in which we need to apply caution. Please be careful of loans that require you to pay application fees before you are funded, are predatory in nature, you cannot afford or is simply a bait-and-switch offering. Work with good operators. Avoid having competitors. There is plenty of healthy business for all who want to run one. There are a lot of bad actors out there too, so choose your partnerships wisely. Prepare yourself for an ever-changing regulatory landscape. Lastly, you need to know your financial health. You need to know your numbers inside and out. If you are not familiar with financial planning and health, then you need to hire someone to help.
The last aspect to starting your cannabis business is…you.
You need to take care of yourself. You need to make sure you are eating right, exercising, sleeping, keeping good company, and taking quiet time. You should not (and cannot) do this if you don’t take care of yourself. Build good habits. Make sure you have your routines. Protect them. Because you are going to need your habits and routines as you navigate your way through your cannabis business pursuit.
