Did you know legal marijuana sales hit $6.7 billion in 2016, a 30 percent increase from 2015?
Since Colorado and Washington legalized recreational use of marijuana in 2012, the industry has grown by leaps and bounds. Several states have legalized the drug for medical and recreational use, and 64 percent of Americans support the move.
The new industry has created diverse business opportunities, from cannabis dispensaries to cannabis oil distilling and industry consulting. As an aspiring entrepreneur looking to venture into this industry, there are lessons to learn from successful marijuana companies before you make the move.
Let’s dig into these lessons. Shall we?
1. Legal Changes Can Make or Break an Industry
Governments have a role to create an enabling regulatory environment for businesses.
The federal, state and local governments set the requirements for opening and running businesses in various industries. As such, a single regulatory change can significantly affect how businesses operate.
Marijuana has always been an illegal drug in the U.S. Despite research proving the drug’s medicinal benefits, lawmakers were not, until recently, interested in passing laws to make it legal.
Nonetheless, you can only hold a contrary opinion to science for so long. In 2012, Colorado legalized marijuana, and since then marijuana sales have topped $1 billion!
The lesson here is; before venturing into any industry, analyze the regulatory environment. Is the government likely to make laws or regulations that will negatively affect businesses? Will new laws lead to the creation of a whole new industry?
Once you have the information, you’ll be able to make sound business decisions.
2. Don’t Be Afraid to Make Risky Bets
Even after the marijuana legalization wave hit the states, not many entrepreneurs were confident enough to invest big bucks in the industry. They wore a wait-and-see attitude.
However, the ones who took the risk are today enjoying higher bank balances!
According to Bloomberg, many of the most successful marijuana companies today, including Arena Pharmaceuticals and Cara Therapeutics, Inc., didn’t begin on a solid footing. In the early days of business, these companies were trading for as little $0.10 a share. Presently, the two companies have market capitalizations of $1 billion and $300 million respectively!
Even though the market is still shaky and shares often experience wild fluctuations, the industry is still an attractive investment prospect.
What we learn here is bold entrepreneurs are not afraid to take make risky bets. If you see an opportunity with good growth potential, don’t hesitate to invest.
3. Product Quality Matters
It’s a no-brainer; quality products fly off the shelves.
But how true is this in the marijuana industry? We ask this because marijuana is no ordinary product. There still is huge social stigma on cannabis users, so you could assume many consumers don’t really bother to inspect product quality before making a purchase. They just want to rush through the purchase process and go.
This assumption is incorrect. The most successful marijuana companies are those that cultivate or sell high-grade cannabis or cannabis products.
As a prospective marijuana entrepreneur, there are several opportunities to invest in. You could grow the plant, become a licensed distributor, start a delivery service or trade in edibles such as weed cakes and weed sauce.
Regardless of what you want to do, don’t try to take shortcuts by selling cheap, low-quality products for a quick profit. You’ll surely tarnish your reputation, and in no time you’ll be out of business. Focus on offering high-quality products that will keep your customers happy and coming back for more.
Even if you offer a digital service like LeafBuyer which enables consumers to find the nearest cannabis dispensaries, provide great customer experience.
4. Dress the Part
The word weed dealer evokes visual images of a shady-looking person with dreadlocks, baggy t-shirts, ripped jeans and sneakers.
We see such figures in movies all the time, so it perhaps is an actual representation of weed dealers before the legalization wave.
What we do know for certain, though, is successful marijuana companies are owned by entrepreneurs who dress the part. They wear expensive suits and show up at conferences and trade shows ready to hand out business cards.
To succeed in this industry, you have to abandon the outdated weed dealer stereotypes. Dress up like a person looking to score some serious deals! This way, your brand will easily attract the modern pot consumers who prefer shopping from brands that reflect their style.
5. Think Beyond Bank Loans
Although successful marijuana companies are making a killing, commercial banks have not fully embraced the industry. They often play hardball with marijuana entrepreneurs seeking loans to start or grow businesses in the industry.
The good news is a number of private firms are establishing funds targeting marijuana entrepreneurs and businesses. High Times Magazine, for instance, started a private equity growth fund in 2014. Through such funds, owners of marijuana companies are able to access capital without exposing themselves to individual risk.
If you think the marijuana industry is attractive but you lack the capital to start a business, think beyond bank loans. There are investment funds designed for marijuana entrepreneurs. Go for them.
Follow the Blueprint of Successful Marijuana Companies
As things stand, only one word can be used to describe the marijuana industry: high!
As the number of states legalizing marijuana increases, there will be more and more business opportunities. Part of what you need to succeed is to follow the blueprint of success marijuana companies.
What’re your thoughts on the marijuana industry? Do you think legalization will shape tomorrow’s entrepreneur? Share with us in the comments section below.