The cannabis industry is booming worldwide. Every year more States legalize both medicinal and recreational cannabis, while countries like Canada recently fully legalized the use of marijuana. Investors pocketbooks are beginning to loosen up, and more and more business professionals are joining the ‘Green Rush’ of legalized cannabis.
It’s an exciting time with incredible entrepreneurial opportunity. Besides the financial considerations of getting into the cannabis industry (it will come with a hefty financial investment from your pocket or that of an investor) you will want to be prepared for some of the unique challenges that come with opening a business in this industry. Here are ten tips to get you ready for this industry.
1. Be mentally prepared and passionate
This industry is a roller coaster. Between the hoops you will jump through to secure your licensing, to the rules and regulations which sometimes are confusing and which are always changing, to the daily operational challenges which come with managing complex inventories as well as staff, running a cannabis operation is no joke. If you’re getting into the industry just to make money, you might as well quit before you begin. Sure, there is plenty of money to be made, but there are incredible challenges to overcome as well. If you don’t have the passion for the plant, the patients, the community and the industry, the margins you see will not make up for the challenges you will need to overcome.
2. Surround yourself with people who know more than you
Cannabis operations are complex. It is crucial to partner with people who know what they are doing. If you are growing cannabis, find a Master Grower with a solid track record from a reputable grow. If you plan on operating a retail store, hire a manager who has experience in managing retail employees, inventory and customers. Get yourself a CPA to handle your books and more importantly, pay the proper amount of taxes. Always have legal representation ready to help keep your business and license safe. And finally, I always recommend partnering with a reliable cannabis operations and compliance consultant for guidance on the ever-changing regulations, best operational practices, employee training, and more. Be sure to vet consultants for someone with real experience from mature cannabis markets like Colorado, Washington, and Oregon.
3. Do Your Research and Ask Questions
Many States like Colorado and Washington have had legal cannabis in place for many years. Learn from the businesses who have already weathered the early storms of legalization. Many of the grows, and shops in mature markets have already solved the riddles which weigh heavy on the minds of budding entrepreneurs. Pick up the phone and dial some shops in Colorado, Oregon, and Washington (not during busy hours), ask for a manager, and politely ask if you may pick their brain a bit. Question them about the challenges they’ve had with software providers, lighting systems, staffing, compliance, etc. Believe it or not, many people in this industry love to talk shop, and maybe you’ll make a new friend.
4. Follow the Rules
Compliance is king in legal cannabis. For the industry to grow legitimately every business must adhere to the rules laid out by the States where they operate. Not following compliance rules and regulations has resulted in thousands of dollars in fines, extensive inventory audits and license seizures. Getting a legal cannabis business off the ground is a monumental undertaking. Building a successful cannabis brand takes a massive amount of time and money. Keep your business and your license safe by staying up to date on your State’s compliance regulations. Bring on a Compliance Manager to monitor any changes to the State Regulations, and to keep your staff educated. Be a stickler for compliance details; your business entirely depends on it.
5. Choose the right software
Software is integral to operating a legal cannabis business. Knowing what software you need can be a challenge. Navigating through all of the various platforms, hardware, and integrations can be confusing. Choosing the right software for your business will lead to increased efficiency, employee happiness, and customer satisfaction. Software can help you manage inventory, finances, market to your customers, and even automate State compliance. Never purchase software based off of the price. As they say, you will get what you pay for. Do your due diligence, do your research, rely on experts. Software will be one of your most substantial expenses, and if you make the wrong choice initially, it can and will cost you tens of thousands of dollars.
6. Get out there and build your brand!
The cannabis community is an inclusive one. Going back to the days of ‘puff, puff, pass,’ this community has always been about getting together, sharing and getting along. There is no shortage of cannabis-related events popping up in communities all across legalized States. These events are full of brands and consumers looking for new products, ideas, innovations, and network connections. Getting out there and mingling will open more doors for your business than any sign twirler or billboard ever will. Learn what your consumers want and create the network to get it to them. Plus, you may find some smoking buddies!
7. Understand your customers, delight them, and keep them coming back
Your customers are the lifeline to your business. You want them to shop frequently and tell their friends about you. Greet your customers with a smile at the door, and train your staff to keep customers delighted throughout their time in the store. Develop a loyalty program; many POS and CRM software solutions have built-in loyalty programs designed to give customers loyalty points for visits or dollars spent automatically. Customers can redeem points for discounts on product, merchandise, or accessories. Another easy way to win over your community is to offer small “neighbors discount” for anyone living within a certain radius of the shop. Make your customers feel unique and those customers will not only keep coming back, but they will tell their friends.
8. Stay informed
Staying abreast of accurate news and information on your industry will allow you to make wise business decisions. A challenge in this industry is finding reliable sources of news, information, and educational resources. It is essential to keep a close eye on what is happening in your city, your State, and on a national level so that your business is prepared for any turbulence. There are many online cannabis news and information websites; I suggest bookmarking those with daily updates. Subscribe to industry-focused podcasts, and follow your favorite cannabis journalists on Twitter. The more you know, the better! Plus, all this knowledge is great to break out at parties.
9. Hire, train, and retain good employees
One of the most significant hidden expenses in running any business is replacing a good employee, followed closely by replacing a bad hire. Finding, screening and hiring good employees is essential. Equally as important is giving new employees the training and tools to excel at their work and delight your customers. Providing your staff with software solutions which will automate many of the tedious daily tasks like inventory intake and reporting sales to the State will not only delight your employees but will also save you money in labor costs.
10. Have fun!
There is so much work that goes into operating a cannabis business; sometimes it’s easy to forget how much fun this industry can be! Celebrate with your staff and your customers. Have random dance-offs in the store, host a potluck, raffle off a bong or two. We can all get stressed out and wound up because it’s business. But sometimes it’s best to chill out, man.