As the world becomes more informed about the benefits of medical and recreational marijuana, we are seeing an increase in the number of legal cannabis businesses. Whilst the business opportunities are immense, it can also be challenging, however, for those who are leading the way in such a new market.
It is, of course, exciting to be spearheading such a newly legalized industry, but with that comes a number of unforeseen challenges. So, what is it really like to run a business in the legal cannabis space, what challenges are there, and how can they be overcome?
Rules and Laws
It is important that you are aware of the specific rules and laws in your state with regards to what you are and are not allowed to do. Depending on your type of business, you need to understand licensing requirements, marijuana dispensary marketing, and marijuana types and quantities, for example, to ensure that you are within the law.
Funding and Finances
One major difficulty that cannabis businesses have is in the funding and finances of their company. Often banks and other financial institutions are not willing to invest in the marijuana industry, leaving businesses with some major difficulties obtaining capital.
You can try to get investment yourself from private investors, as Dr Andrew Kerklaan (Dr. Kerklaan Therapeutics) who supplies medicinal marijuana products suggests – “The days of bootstrapping a start-up in the cannabis industry are quickly coming to an end, if not already over. My advice is to raise smart money with investors who can bring experience and expertise from other industries to the table. Raise enough capital to quickly be able to compete.”
Although it’s legal to run a cannabis business in certain states, the industry is still unregulated in a number of ways. This means that banks and other financial institutions are reluctant to work with marijuana businesses – which is a big problem when it comes to taking and processing payments. Therefore, many cannabis businesses are forced to accept cash payments only, which can negatively impact sales, rule out online selling and put shop security at risk.
It is possible to find financial institutions who can help you to process payments, deposit cash, and implement payroll, but they are few and far between. It’s easiest to find these cannabis friends banks and credit unions by talking to other local businesses in the same industry. Cannabis business are forced to get increasingly creative when finding ways of accepting other forms of payment besides cash, like debit cards, cashless ATM transactions, and echecks. Because of the run-around this causes business owners, industry leaders are putting increased amounts of pressure on the government to change rules and make it easier for banks to offer their services to legal marijuana dispensaries, or marijuana businesses in general.
Many owners of legal cannabis businesses describe their experience as having all of the trials and tribulations of running a `normal` business, but with serious extra weight added to their feet. The contradictory nature of marijuana’s legal status at the federal and state levels has resulted in business infrastructure that is poorly equipped to handle the additional issues faced with the legalization of medicinal and recreational marijuana. However, things are changing slowly, and these challenges are becoming increasingly easier to conquer.