Do you have a knack for the cannabis industry? Want to get involved in this market with a new business? Well, for that, you have to understand cannabis businesses and how challenging it might be to set your foothold. People often mistake the industry as a simple one, but there are underlying complications that ruin the game. But don’t worry, this blog will help you understand all the nitty-gritty of the cannabis businesses and their growth potential in the industry.
Currently, the cannabis industry is one of the rapidly growing industries in the United States, which can be considered one great opportunity. This “one great opportunity” is for individuals interested in this niche and wants to get involved by establishing a business. Yes, every year cannabis industry is proving to be an excellent market to establish a foothold.
But before starting a business in this industry, you have to be sure of its complexity and limitations. In this blog, you will know about the limitations and the benefits that come with a cannabis business. Despite that many budding entrepreneurs think the cannabis market is a simple but profitable market to invest in without going deeper into it.
Many think the cannabis industry is all about cannabis growers or cultivators, cannabis manufacturers, and cannabis distributors or dispensaries. However, these are the core part of the industry, and there are underlying complications, which newcomers always tend to overlook. Therefore, if you are starting a new, you need to have proper guidance regarding its marketing and concerns that can be best given by a cannabis marketing agency Los Angeles.
So, let’s dig a bit deeper into the cannabis businesses and the categories that flourish in the industry.
Categories of cannabis businesses
In this industry, cannabis businesses can be categorized into two broad types- ancillary businesses and plant-touching businesses.
What are plant-touching businesses?
It might come to your mind that these are the businesses that involve more dealing with cannabis plants like cultivators, breeders, manufacturers, or even distributors or dispensaries. Although they might not be that obvious and can even include transportation or delivery services. These services deliver harvested marijuana or finished commodities from one point to another.
Breeders are concentrating on the propagation of current cannabis strains as well as the development of novel strains via targeted breeding. They are in charge of creating the seeds that growers utilize and finding and maintaining the highest-quality genes to produce subsequent plant generations.
Cultivators oversee massive growth operations, often housed inside big structures like warehouses. They use a variety of growth techniques to produce healthy, premium marijuana plants, which are harvested and frequently sold wholesale to manufacturers or dispensaries.
Extractors, for example, are in charge of converting collected cannabis flowers into final goods that include concentrated extracts, cannabis edibles, and topicals. Manufacturers make it feasible for numerous cannabis products to be offered on dispensary shelves.
Dispensaries serve as distribution hubs for the cannabis business, much as retail storefronts in different sectors. Dispensaries handle the moment of sale differently. Nonetheless, they usually have a competent staff on hand to assist and guide customers and patients to the correct items depending on their requirements and tastes.
- Transportation and logistics services
The cannabis business could not exist without a transportation chain. Truck fleets transport cannabis flowers and goods from vendors to purchasers, as well as the tools that cannabis businesses require to operate. Direct-to-consumer delivery services, which are permitted in some areas, are also included.
Plant-touching firms are the most tightly controlled in an industry that is already heavily regulated. To launch a plant-touching business and get it promoted by a competent cannabis marketing agency Los Angeles, entrepreneurs must often get a marijuana company license through a lengthy application procedure that can be costly, without any assurance of success.
Application licensing processes vary depending on the state, and there is usually a limit on the number of licenses obtainable, akin to how liquor licenses operate.
Some states mandate “vertical integration,” or the management of all cultivation, processing, and dispensary industries by a single corporation. Other states use a specialization system in which permits for each type of business are maintained separately and are frequently given to distinct organizations.
Even with the challenges, if you have already managed to establish a plant-touching cannabis business, it is time to promote the business. Your best shot will be to hire a cannabis marketing agency Los Angeles to help you promote your business to the next level.
What are Ancillary businesses?
Any other type of cannabis enterprise can be considered an ancillary cannabis business. These organizations provide assistance to plant-related enterprises but are not always engaged in the breeding, cultivating refining process, or distribution of cannabis products.
They may include experts such as attorneys and marketers, as well as organizations that provide packaging or technology that can enhance the procedures of plant-touching enterprises.
- Professionals and services
Professional services including lawyers, company accountants, and digital marketers are essential for cannabis firms. Given the considerable legal limits and very different regulatory frameworks from state to state, these professional advisers must have extra cannabis business experience.
- Product packaging
Companies that make packaging seldom have direct contact with the cannabis plant. They instead emphasize complying with regulations, shelf attractiveness, and branding.
Plant-touching enterprises require a variety of equipment to function properly. Manufacturers, for example, employ enormous equipment to extract components from cultivated cannabis flowers to generate cannabis oils and waxes. Similarly, producers may desire to flash-freeze their produced flowers for transit preservation.
- Building facilities and dispensaries
Cultivation facilities and dispensaries are frequently required to be developed in accordance with local regulations and laws. As a result, there is a high need for contractors who are experienced in creating these facilities.
Since the cannabis sector depends on security for legal and practical commercial reasons, security equipment and camera surveillance systems are frequently required. Regulators frequently mandate that specified sections in production and dispensary operations must be visible by security cameras; they may also need specialized lighting and monitoring systems.
Some cannabis businesses forcibly deal with cash due to numerous financial restrictions imposed by the cannabis’ prolonged federal restrictions. This makes the business a prime target for robbery.
As cannabis firms are mainly ineligible for traditional financing, private investors such as angel investors and venture capitalists have entered the market to supply funds.
While numerous individuals are thrilled about beginning a cannabis-related business, supplementary firms may have less of an obstacle to entry. When compared with several non-cannabis firms, ancillary businesses face extensive regulation, but they do not have to compete for a license through a rigorous and costly application procedure.
Hence, to be interested in establishing an ancillary firm, make sure you think of the long term too, that is, your brand promotion and marketing with the help of a cannabis marketing agency Los Angeles.
Now, let’s see what is the growth potential of these cannabis businesses.
Cannabis Businesses- Growth Potential
Cannabis entrepreneurs encounter more obstacles than startups in other sectors. Navigating these hurdles in the early stages of your firm and laying the groundwork for future growth and adaptation as rules change will be critical to your success in the cannabis market.
Following are the primary challenges any new cannabis business faces, which you have to be prepared for.
- Building effective partnerships
Going it alone in the cannabis sector is difficult, if not unattainable. The early alliances you form may make or ruin your nascent cannabis firm.
- Consistent regulation changes
The restrictions that relate to your marijuana company are also expected to alter, since the sector is young and expanding, and public officials are always striving to rebuild and rewrite laws and regulations.
- Challenges concerning banks, finances, and insurance
This is a big headache for the cannabis businesses, especially, when the company name is related to the industry. It’s because the federal government still thinks of cannabis as an illegal, Schedule I drug under the CSA. Several banks are hesitant to shake hands with the cannabis industry to avoid losing their status as FDIC or prevent being charged with the accusation of money laundering concerning drug trafficking, even though, cannabis is legalized in numerous US states.
- Marketing, advertising, or promotional restrictions
State legislation and private corporate policies restrict cannabis enterprises’ ability to promote. Cannabis advertising on television, radio, or billboards is frequently prohibited, and several local marketing or social platforms make it difficult by forbidding the acquisition of sponsored content for marijuana enterprises.
- Cannabis stigmatization
Cannabis is still stigmatized as being connected with stoner culture. Cannabis patients and users, on the other hand, come from a diverse spectrum of backgrounds. Avoid perpetuating cannabis preconceptions, such as the head-shop atmosphere or the subterranean connections associated with over a century of prohibition.
These are some of the challenges that you might have to face when starting a new cannabis business and to overcome these you have to look for the correct solution. Here, for the cannabis industry and cannabis-related issues, the best way to fight through it is to hire an experienced cannabis marketing agency Los Angeles.
Yes, they being in the industry for several years have witnessed various changes in the rules and regulations of the industry.
Moreover, they are cannabis research enthusiasts, which imply that they are well-equipped with recent research and well-accustomed to the regular updates of the cannabis market. So, it is advisable to consult one such agency for the best results. Therefore, if you are looking for a competent cannabis marketing agency, look no further than TopIT Cannabis. We offer customized marketing strategy that solely focuses on your brand promotion and recognition.