By now everyone is well aware of the cannabis industry in America, whether it is for medical or recreational purposes. Others know of the industry as possibly the next big investment sector. Regardless of your affiliation, the question remains as to whether there is money to be made by starting a cannabis small business.
This entrepreneurial idea is not for the faint of heart, as it is littered with a minefield of obstacles that need to be addressed. Things like banking, which by the way, you can’t do in the U.S., as cannabis is illegal at the federal level. So who is your target market? Baby Boomers are turning to cannabis for pain relief, affluent families are using it to ease tension and stress, and women are driving the growth of the CBD wellness product market, to mention a few.
The largest segment of users in legal states is Baby Boomers. However, with the plethora of products available, there can often be confusion and hesitation to visit retail cannabis shops. As such, an entire cottage industry is developing online around cannabis to educate users before they make their retail journey. Even better perhaps is online ordering and delivery. For example, Sava Company, which helps people use cannabis for wellness and pleasure, delivers in the San Francisco Bay area. Octavia Wellness of California focuses solely on seniors.
A USA Today Network survey showed that usage among women grew by 38% last year, especially the usage of CBD and more wellness-oriented products. Magazines such as Sweet Jane have cropped up to offer advice to women on the use of cannabis.
It has thus been established that there is, in fact, a market for recreational and medical cannabis. As you can see in the graphic above, a majority of states are involved with cannabis use. Like any other business, one must decide if it is something that can be profitable, and also perhaps your passion.
As a nation, Canada has taken the lead in legalizing marijuana. In fact, a Canadian university’s online course for prospective cannabis professionals offers key advice for success in the newly legal business. The Kwantlen Polytechnic University in Vancouver has added an intriguing alternative course this September; selling pot. The niche course focuses on looking at the business in an agricultural way, running the gambit from marijuana production and sales, and educating prospective growers in everything from irrigation to marketing.
Large businesses in the U.S. are slowly making entrails into the cannabis world. One would venture that this multi-billion dollar market will eventually attract bigger players once the legislation is right.
If you begin a start-up in this niche, look to create an exit plan that would incorporate selling your small business at a premium once acquisitions in the industry begin. Referring again to the USA Today survey, it infers that starting a cannabis business has many of the same attributes as other start-ups. The study found that customers base their purchases on a store’s location, prices it offers, product selection and friendliness of staff. The report advises stores to tightly integrate all facets of their customer experience, including advertising, online presence, staff engagement, and products around a central consistent story.
Editor’s note: I have some ethical problems with encouraging the use of an addictive drug (which this certainly is) or starting a business who success coincides with greater addiction rates. I opposed making it legal, and still believe its a bad idea.
However there is no doubt that businesses that cater to people’s addictions (nicotine, caffeine, alcohol, etc.) are lucrative money making machines, and some very successful businessmen have focused exclusively in these areas.