The Farm Bill of 2018 created exciting opportunities for many entrepreneurs to enter the cannabis sector. Having seen the boom, many of us are excited to dip our toes in it too. Entering a competitive market with such a great opportunity for growth is a challenge of its own. Although regulations and policies aim to support the growth of the cannabis market, governments are establishing strict policies to ensure that the segment is highly regulated.
There is a wide potential for business in the cannabis sector in legalized regions, such as opening an online dispensary, Canada. The first barrier to cross to launch a successful business directly dealing with cannabis is to acquire a license. And unlike most licenses, this could be a tricky one to get. Here are five amazing tips that can help you through the licensing process.
1. Draft a Business Plan
The current developments in the cannabis market indicate that companies that do not have a proper business plan are highly unlikely to secure a cannabis license. A well-written business plan lays out the requirements, timelines, objectives, and deliverables of the business in the next few years and reflects the vision of the company. A well-prepared business plan makes it easy for the authorities, as well as funding agencies, to understand how the business will evolve and it’s potential for growth.
The business plan should embrace the existing laws of your state as well as establish contingency plans to accommodate changes expected in the future. It shows that your business is not volatile to changing laws and reflects a strong foundation. A good business plan can help you score a license as it is easy to convince the authorities about the purpose of the license and how it will contribute to society and the economy.
2. Draft a Procedure Sheet
Analyze where you fit in the logistic chain when you establish your business. Now explore every step before and after your business in the supply chain to understand all the processes or procedures that you need to account for. For example, if you are planning to open a business that manufactures CBD oil, you need to plan everything from sourcing from the right regions and companies that comply with state regulations, to the logistics of delivering your product either directly to customers, dispensaries, or other companies. Each of these processes requires a proper establishment of procedures such as record keeping, inventory, shipping, payment systems, accounting, and security.
Understanding these procedures helps you draft a proper SOP, or Standard of Procedures, which should be attached to your license application. Employ an expert who has experience working in the same or similar domain to ensure you account for everything. Clarify every detail in your application to earn the trust of the authorities reviewing your application.
3. Sort out your finances
A critical criterion in delivering a convincing application for a license is to show you have proper budgeting as well as funds to hand. Cannabis businesses are a challenging domain to gather investors. Although more companies and venture capitalists are looking into cannabis investments, uncertainties such as changing laws seem to create reservations. Most of them are waiting for the right opportunity to place their bids, and banks are not yet an option for acquiring funding for this sector. Sorting out your financial needs is an important step to adding weight to your application.
Plan your budget for the next 3-5 years and place double the usual overruns to keep a generous contingency plan. In most regions, including California, cannabis is a high-barrier entry enterprise. So, you will have to keep enough money for investing in acquiring licenses also. For showing real potential for growth, you will need to consider heavy overheads such as for marketing. Your financial projections should cover all these aspects with good margins. Once your finances are sorted, it is slightly easy to justify your application to the state authorities for approval.
4. Gather your team
Cannabis is a new avenue to venture into business. With so much shaky ground, it is important to build a strong team to support the vision of your company as it strengthens your application. From managers to horticulture experts, you might need a diverse team. Some companies feel that it is too early to build a large team. But some essential positions like for safe weed delivery and for procuring a broad range of seeds for various cultivation methods, you need capable employees and partners to strengthen your business.
Experienced leaders and partners will give you higher chances of success. Understanding what skill sets are missing from your current team allows you to hunt for the right people not just with the skills, but also comprehending your vision well. Understand your partners well and analyze if they comply with the state laws before you go ahead and sing them.
5. Buy or Rent Properly
Your real estate is a crucial aspect of your application. Any place you rent or buy for the cannabis business needs to meet all the zoning requirements that comply with local and state jurisdictions and should be compatible with your operations at the same time. Discuss the business with the owner of the space and understand their willingness to provide it to you. Chart an agreement to rent or lease the space on a contingency to improve your application. While some jurisdictions may easily give you permits to encourage the inflow of taxes, you might find difficulty in some locations. Plan accordingly to have a proper real estate for your license application.
These simple steps can help to prepare a strong application and will improve the chances of securing a license from the authorities. Try to know the local authorities responsible for approving the license and connect with them to know any other requirements that will make your application stronger. The first step in acquiring a license for your cannabis business might be challenging. But getting through the challenge will give you the confidence to bring an amazing venture into operation.
