With marijuana moving from back-alley and basement deals to prime real estate storefronts, the cannabis industry is starting to resemble a typical retail marketplace. This means cannabis entrepreneurs and businesses are facing the same struggles fledgling clothing designers and craft brewers are facing. The basic building blocks of a business include brand development, supply-chain logistics, quality assurance, and streamlining sales efforts. However, cannabis businesses have the additional burden of operating under mercurial regulations that affect each of the basic building blocks. So, how does a new entrepreneur navigate this regulatory minefield and get their products on the shelves?
First, the product itself must comply with the regulations of the sales region. The recent changes in California’s Medical Marijuana laws are a great example of how far state governments have progressed in normalizing rules across the state. However, with laws changing, it is imperative that any cannabis business owner understands and fully complies with existing laws while also preparing for the day when new rules go into effect. This means checking the facts and combing through, potentially, hundreds of pages of legislation. How much active THC can be in an edible? Is the packaging compliant? What is the maximum weight of marijuana that can be sold at one time to one individual? How does a store track inventory? Will all these rules change if the product is moving across county lines?
Next, generate a marketing plan. Most entrepreneurs don’t start off as industry leaders with experienced teams at their disposal. This means building from the ground up and generating brand awareness and a sales network from scratch. For sales, this means long hours of cold calling, networking events, hitting the pavement, talking to budtenders/retailers, and following up with more calls. Plus, to turn this hard work and data into dollar signs, a business must track, report, and review all this information periodically. This can be an overwhelming task for one person, or even a small team, to handle alone, but devoting the time, energy, and resources to a sales plan is of paramount importance for success.
Finally, build brand awareness and customer loyalty. One of the problems plaguing the cannabis industry is lack of education and clarity regarding the products themselves, as well as their intended uses and benefits. For medical marijuana, this means knowing exactly what ailments a particular strain or product will alleviate, the recommended dosage, the best delivery method, and the potential side effects. Since medicinal users compose the bulk of long-term, recurring sales, a good plan devotes resources to targeting these users. One way to reach this demographic is to host or sponsor patient awareness nights at a local retailer. These events go a long way toward educating consumers and building the steady, long-term sales base every business needs. Another tactic is the trade show circuit. Participation here is a must. Thousands of people attend these events, all with the hope of breaking into the industry. In order to profitably exploit any opportunity, it is crucial to gather market and competitive intelligence.
There is enormous opportunity to create long-lasting and very profitable businesses in the cannabis space. A tidal wave is coming, with legalization moving forward all across the country. Like any emerging industry, there will be plenty of success stories and more than a few failures. The key is identifying a market, creating a quality product or service, and advertising to consumers. In other words, behaving exactly like any other industry.
