The cannabis industry is one of the fastest-growing industries in the world. As of 2021, the market had a value of $28.266 billion. Come 2028, experts predict the market to reach a value of around $200 billion. That’s a CAGR of 32.04% between 2021 and 2028. This is why many people consider doing business in this field as an opportunity for investment and profit. Notably, 70% of Americans use cannabis to feel relief/pain-free and relaxed, emphasizing the widespread appeal and potential market demand for cannabis-related products.
However, it’s also important to know what you’re getting into before you dive into an all-consuming industry like cannabis.
Here are a few things you must remember before entering the cannabis business.
As you venture into the cannabis industry, strategic investments are paramount. Thorough market research and adherence to regulations should lay the groundwork for a robust business plan. rom selecting an optimal location and payment solutions to diversifying product offerings, each step should align with your vision. High-quality machinery aids in operational efficiency while a skilled team and a compelling brand enhance your market presence. Investing in high-quality machinery might seem like a significant upfront cost, but it will undoubtedly yield substantial returns in the long run.
For example, considering cannabis packaging supplies and machines as essential investments might appear unconventional, yet they have the potential to save you a significant amount of time and resources. Remaining adaptable to industry shifts and fostering innovation will ensure your business thrives in this dynamic landscape.
Know Your Laws
If you don’t know the legal status of cannabis in your state, it can be easy to get caught up in the excitement of launching a new business and forget that there are numerous laws governing this industry. In most places, it is legal and potent for adults over 21 years old to purchase and possess cannabis, but there are still many restrictions on how much product each person can carry at once.
Always check the laws before selling any cannabis products. After all, you don’t want to get caught up in a web of legal troubles for selling in the wrong state or to the wrong customers.
Know Your Customers
The first thing you need to do is understand who your customers are and what they want from your product. You can’t make money in this business if no one buys your products. For that to happen, you need to know who your audience is and whether or not they’re looking for cannabis. You must also know how they consume it, as well as where they buy their products from.
Know Your Customer (KYC) is another area you have to look into when entering the cannabis market, but it has nothing to do with knowing your potential customers. It has more to do with you and is an entirely different concept. Therefore, don’t confuse the two phrases.
KYC falls under AML (Anti-Money Laundering) regulations which are used to identify people participating in illegal activities. It’s related mostly to financial institutions. However, given that you’re entering a rather peculiar business, you too might have to deal with it. Know that KYC and AML are two different things.
If you want to learn more about it, you can find it here. The need to know about KYC and AML regulations stems from the fact that it’s very easy to use cannabis businesses as a way to fund illegal activities, including money laundering and corruption.
This is truer in the case of cannabis businesses that operate illegally. Understanding these terms helps prevent such financial crimes, which is why financial institutions expect you to be aware of KYC and AML regulations and the differences between them.
Cannabis is a Profitable Business
The cannabis industry has grown exponentially in the last decade, making it a great investment opportunity. Many people are getting into the business, and their investments have paid off handsomely.
In fact, according to Forbes’ list of America’s fastest-growing industries from 2017 through 2021, cannabis is projected to be one of the top five fastest-growing industries during this period. This means that if you want your company or product on that list, now is an opportune time to get started in this market.
It is also a Risky Business
Cannabis is a risky business. Like any other business, you’re taking a risk by entering the cannabis industry. You can lose your license and business and even face jail time if you’re not careful. As such, it’s important to remember these things before jumping into this lucrative market.
Be prepared for potential legal consequences of operating in the cannabis industry. As with any other type of business, there are financial risks involved when starting up a cannabis-related operation. However, certain legal risks come along with it as well. These could include losing your license or facing arrest and imprisonment if you break federal law.
However, as long as you’re doing it legally, you don’t have to worry about facing charges.
Know the Differences Between Recreational and Medical Cannabis
There is a lot of confusion regarding the difference between recreational and medical cannabis. The confusion stems from the fact that both types of cannabis are legal in many states but are regulated differently.
Recreational cannabis is used for pleasure and can be consumed in various ways, including smoking, vaping, eating, or drinking it in food or beverages.
Medical cannabis, on the other hand, is used to treat medical conditions such as chronic pain, insomnia, and more. When you purchase recreational cannabis, you do not need a doctor’s recommendation for your purchase as long as you meet all legal requirements set by your state government agency overseeing marijuana sales.
In 2021, CBD products accounted for 65% of revenue share, which is one of the largest ever recorded. A prime reason for such growth is the acceptance of cannabis by different communities, including scientific ones. CBD is slowly entering mainstream markets and gaining popularity.
The FDA is currently establishing guidelines and policies that will further legalize cannabis usage in many areas and also help regulate it. In doing so, the production and distribution of cannabis and cannabis products are expected to see significant growth. Slowly but surely, the cannabis market will expand, opening new opportunities for those who want to invest in it.
Cannabis is a profitable business. It is also a risky business. When you enter this market, it’s vital to be aware of what you are getting into. Therefore, always remember these vital points before entering this business.