Cannabis dispensaries tend to be a very profitable business model with profit margins typically between 15% and 21%. Thus, it is not surprising that many intrepid entrepreneurs are asking how to start a marijuana business. Whether the goal is starting a CBD business, starting an edibles business, or a more general business that offers everything imaginable, there are definitely things to consider. In this helpful guide, we will cover the basics you need to know about how to start a marijuana business.
Determine What to Sell
There are many different types of cannabis-related businesses out there. Maybe you are wanting to focus on starting a CBD business as these tend to be quite popular stand alone shops in some areas, particularly areas with lots of legal requirements. Some people may focus on starting an edibles business as these products are trendy and often have a wider range of interested users.
Of course, others may want to focus on selling different strains of cannabis for smoking. There are many options for how to start a marijuana business. Think about things like your level of knowledge, what you are most passionate about, and what is easier to sell in your area. Consider doing some research into competition to find where the current market may be lacking in product types.
Create Your Brand
One of the things many people overlook when looking at how to start an edibles business or marijuana dispensary is the importance of branding. However, your brand provides a critical link with your customers.
I find that the best way to begin this process is to ask yourself, “how do I want customers to describe my business?” Write down a list and then start working on a brand that communicates these things. When starting a CBD business, you often want to project a feeling of calm and relaxation. When starting an edibles business or dispensary, you may want to project knowledge as well as a fun, laid back attitude.
Different colors, logos, fonts, and even the name you choose for your company are important for communicating different things. Think about this and consider hiring a freelance graphic designer to help capture your brand effectively.
Develop a Business Plan
An essential step in how to start a marijuana business is the business plan. This is where you will document your plan for success. For many people, this can be a bit of a tedious task. While having business training can help with this, you can write an effective business plan just by learning more about it online.
There tend to be several key components of a typical business plan:
- Executive Summary
- Company Description
- Market & Competitor Analysis
- Description of Management Structure
- Products & Marketing Plan
- Financial Projections
Other plans may have additional sections; however, these are the most important to cover when starting an edibles or CBD business. Refer to helpful sites online to learn more about the specifics of developing a business plan.
Register Your Business Name & Type
The next step in how to start a marijuana business involves officially registering your business. The major decision lies in determining what type of business model to use. The most common for dispensaries are either limited liability companies (LLCs) or corporations.
When starting an edibles business, LLCs are often popular because they provide the same protections as corporations with fewer steps to establish. They also allow business income and loss to be recorded on the business owner’s taxes. You can read more about these two types online.
The other step in this part of how to start an edibles business involves registering your business name. This will be different for each state but typically involves searching a state database to ensure your business name is not currently used. Next, you will typically fill out a form an pay a small fee to reserve the name.
Obtain Business Licenses & Permits
There are typically many permits to obtain for marijuana businesses. Again, this is something that will vary from one state to another. This is an important thing to research when you start learning how to start a marijuana business.
Getting the correct permits is imperative for being able to open. Research your state’s process as many states have a strong online presence with information and forms on how to start an edibles business. Others may require more digging and phone calls.
A helpful thing for many people to do is to contact a legal professional who can help guide them through this process. There are also many helpful tools online for people planning on starting a CBD business. For example, this site provides an overview of state by state requirements. Be sure to verify that your state’s laws have not changed since yet.
Get Funding for Your Business
The final – and an incredibly important – step in how to start your marijuana or edibles business involves accessing funding. As you likely know, businesses have startup costs. This is no different with opening a dispensary or starting a CBD business.
Depending on your plans, it is estimated within the industry that the cost of opening a new shop can range from $250,00 to $750,000. Major costs include capital purchases such as equipment and property, personnel, product, and marketing. While these are typically the most notable costs when starting an edibles business, they are by no means the only costs.
Fortunately, an important component of the business plan you’ve already authored is identifying your various expenses. Thus, you should have a reliable estimate of the amount of funds you’ll need to raise. There are a number of ways to fund your business. You can use your own savings or go into partnership with an investor.
However, the most common option is through taking out a business loan. Many people turn to us for cannabis loans as we have extensive knowledge and expertise in the industry. If you have done a good job of preparing the other steps in this checklist of how to start a marijuana business, you will likely be prepared to apply for a business loan.
Ready To Take the Next Step?
If you are ready to take the next steps in funding your cannabis business, contact one of our professional staff today who can guide you through the loan process. Whether starting a CBD business, edibles business, or more traditional dispensary, we understand your needs and can help you make your business become a reality.