Thanks to the wave of cannabis legalization in the United States, cannabis businesses are popping up everywhere. Each type of cannabis business has its advantages and disadvantages. Some have a steeper learning curve while others require more initial investment. Before you rush out and apply for a New York cannabis license, take time to understand the different types of businesses and choose the one which is the best fit for you.
Common Types of Cannabis Businesses
Grow Operations
Growing is a great way to get into the industry if you are interested in horticulture. You can easily start a small grow operation at home with tabletop systems and hydroponics. However, growing cannabis plants on a large scale is time-consuming and labor-intensive. Make sure you consider the amount of time it will take you to grow your plants and the costs involved in setting up and maintaining a proper growing environment.
Processing Labs
Cannabis processors transform raw plant material into finished products such as concentrates, edibles, and topical creams that are ready to be sold at dispensaries or online stores. They also prepare extracts for medical use and manufacture various cannabis-derived products that are used for medical research. Starting a processing lab requires a lot of upfront capital as it can be costly to purchase the necessary equipment and hire qualified workers to perform the various stages of the production cycle.
Flower Shops
Flower shops make up a relatively small segment of the market that specializes in serving customers looking to smoke or vaporize cannabis buds. Some flower shops sell products in addition to flowers, such as concentrates and edibles. These stores enjoy a lot of flexibility in terms of the strains they offer and the inventory they stock. The biggest disadvantage to running a flower shop is the reduced growth potential since the market for these products is fairly limited.
Dispensaries
Dispensaries are retail outlets where customers can purchase a wide variety of cannabis products including dried flowers, oils, and edibles. Their inventory typically appeals to a wide range of customers. Dispensaries serve an important role in educating the public about the different cannabis products available so that they can make informed choices. Opening a dispensary can be a very lucrative business if you have the right location and a good marketing strategy in place.
Delivery Services
The delivery business is one of the fastest-growing segments of the cannabis market. Many customers rely on delivery services to bring cannabis products to their doorstep. Delivering products can also be a lot cheaper than opening a physical store and hiring a retail staff. That said, there are many regulations surrounding deliveries. Some states limit the type of cannabis products that can be delivered or the distance that delivery drivers can travel.
Considerations for Starting a Cannabis Business
Aside from the type of business that you want to own, there are many other practical issues that you have to consider.
Physical vs. Online
One of the main considerations when planning your cannabis business is whether you want to own and operate a storefront or operate online only. If you plan to run a storefront, you will need to secure a suitable location for your shop and hire staff to run it. If you choose to run your business online only, you will need to have a solid online platform where you market and sell your products. You will also need to consider logistics when it comes to shipping your products and handling returns.
Licensing Requirements
Every state has its regulations regarding the types of businesses that are allowed to operate in its territory. In some states, you can only operate a dispensary if you are licensed to sell medical and recreational cannabis products. In other states, you can start an online cannabis store without any licenses as long as you do not sell any product to people in your state. The requirements for obtaining a license differ from state to state so you must do your research to find out how to comply with your local licenses.
Funding Sources
Cannabis businesses can have trouble sourcing funding because banks and financial institutions are not interested in providing loans to businesses in the cannabis industry. However, there are many alternative financing options available. Private lenders and venture capitalists who specialize in the cannabis industry can provide business owners with financing that they can use to start or expand their operations. Entrepreneurs can also take out a loan against the value of their property to finance their business.
Marketing Plan
Marketing is an essential part of any business because it allows you to reach your target audience and sell your products to them. There are certain regulations that you must follow when marketing your cannabis products. In some states, your advertising must come with health warnings. In others, you may not depict recreational use. Due to strict federal restrictions on cannabis, many websites and social media sites do not accept cannabis advertisements.
Starting a cannabis business can be an exciting and rewarding venture for entrepreneurs. Be sure to choose the right type of business for your skills and knowledge and familiarize yourself with the regulations of your state. With careful planning and hard work, you can make a name for yourself in the cannabis industry and enjoy great profits in the process.
