Marijuana has, for a long time, been outlawed and even considered as a hard drug. The system punished those found growing it or in possession of marijuana. However, the second half of the past decade has been characterized by a wave of cannabis legalization, especially in North America.
Canada has legalized cannabis for both recreational and medicinal use. Meanwhile, across the border in the U.S., about 38 states have legalized cannabis either for medicinal or recreational purposes. Quite a number of states have legalized controlled use of cannabis for both recreational and medicinal use. One of the positive side effects of cannabis legalization is the business opportunities that have resulted from it.
The wave of marijuana legalization in North America led to a 30 percent increase in marijuana sales in 2016. Analysts expect the market to reach $20.2 billion in marijuana sales by 2021. These figures plus the rapidly massive market resulting from the legalization means that there are a lot of business opportunities out there.
The Different Steps You Should Follow
The cannabis legalization opens up the business scope as far as the marijuana industry is concerned. For example, legalization paves the way for the existence of different segments that span from production to the distribution network that allows the product to reach the end-user eventually. In other words, you would have to operate a cannabis business in a similar fashion as you would operate any other legal business. Below are some of the factors that you can consider.
1. Choose your segment
This is the first step you should consider if you want to venture into the marijuana industry. Maybe you would like to contribute to the marijuana industry as one of the growers. Alternatively, you may opt to have your business in the cannabis distribution segment of the industry, especially the cannabis delivery aspect, or maybe you might be interested in opening a cannabis dispensary. Regardless of the option that you choose, you should make sure that you know what the law stipulates regarding marijuana businesses, especially if you are from the U.S, where the law may be different from one state to another. Also, consider the tax implications.
2. Create a well-structured business plan
Once you are sure of which segment you want to be in, then you should focus on creating an elaborate business plan that will help you achieve success in your cannabis business. You will not only have to consider the marijuana laws in your area in this stage but also the area laws that govern business operations. In this stage, you should also consider the following factors.
· Operating costs in the interest of being profitable.
· How you plan to appeal to the market.
· Your competition and how to compete effectively.
· Where to source your supplies.
· A legal team.
3. Go through the business registration process.
Since you want to run your business within the legal boundaries, you will have to have the business registered. At this stage, you should focus on selecting a business entity that suits your business needs, especially with regard to the type of risk exposure and taxes that you will encounter. Your business will need a name that is unique to your area of operation.
A focus on a limited liability company would be a good idea so that the business will exist as a separate entity from the owner. This means that you can be protected from personal liability in case anything bad happens to the business.
4. Secure the required operating license for your business
You will be required to apply for permits if you want your business to operate in a specific area. Permits play an important role in matters regarding business operations. For example, you can secure a permit for your business once the premises have been inspected, and the business operation is given the green light to commence operations. This also applies to marijuana businesses, but the license requirements might differ from one state to another. An example of a license you would need to acquire is a license to run a medical marijuana dispensary.
5. Register your business as a tax contributor
Once you have successfully completed the previous steps, you can apply for a business tax number. This will allow your business to be right with the taxman, assuming that you file the taxes. You can register with a relevant tax authority such as the IRS in the U.S.
6. Secure funding for your marijuana business
Your marijuana business will require finances for it to stand a chance of success in the market. The funds will help the business to cover its operating expenses and also the purchase of any resources that can help the business develop into a profitable entity.
Running a marijuana business is similar to running any other type of business, but it does have technicalities here and there, especially with the different opinions on legalization issues moving forward. Nevertheless, the industry is currently enjoying strong momentum, and this means that any business with a solid plan and immaculate execution can enjoy the benefits of that market growth.
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