Opening your own marijuana shop
If you want to open your own marijuana shop and wondering how much does it cost to open a cannabis shop and start selling it legally you will have to go through several considerations.
Needless to say that business like this need a very thorough regulation inspections as well as a great deal of networking, not only for the sake of figuring out how to set up a cannabis shop, but also in order to know how much does such a place make a day, a month or a year.
In order to get information you need to find answers to the following questions: who are my competitors? What is the income flow potential in cannabis business? What legal problems I might have if I run a marijuana shop? And, finally, how do I open a marijuana business?
First thing to assess is the level of demand for the product and then go on a deep research about any possible competitors in the area. You need to find out how exactly such business is organized, what is needed to open up a marijuana shop. But, most importantly, you have to understand what can make your place more appealing than your competitors.
Devise your business plan for the marijuana shop
After first considerations and a thorough research on starting up a cannabis business, you have to work on an unshakable business plan that will guarantee your professional approach to the matter.
So the first step to start your cannabis business is to define what niche you want to occupy in the industry.
There are three major segments in cannabis industry: dispensary, growing and delivery.
You can pick just one segment and develop your business towards its mastering, for example, set a growing farm, or open up a distribution point.
But if you are confident and ambitious you can work in all of these segments generating a good share of profit annually.
It is also known that the cannabis industry business plan requires more detail and a close look at the state and local legal system as if compared to any other local business. At this point you might need some legal help or just a thorough interview with the owners of already opened cannabis businesses in the area. The last option is ideal, because it can give you a great insight on the real problems marijuana farmers and providers are facing on a daily basis.
In the end before opening your own cannabis farm, shop or retail center you need to draw up a solid business plan that will include the next:
- step-by-step business plan with profit return projection;
- competitors analysis;
- your customer attraction plan;
- your business operation place;
- define your suppliers;
- legal counseling expenses;
- accountancy expenses;
- rent or loan forecast.
One of the main challenges of the cannabis industry is the immensity of laws and regulations that are constantly being issued in this kind of business. The problem itself is not only how strict are the laws toward the marijuana business, the real hurdle is to keep up with all the changes that are introduced almost on a monthly basis affecting directly on how much a cannabis business can make a day.
First of all, licensing for the cannabis business is heavily regulated, apart from the fact that it changes depending on the segment of your activity, whether it is retail or farming. Plus, each state or county has different laws and requirements to open up a marijuana business.
The truth is that apart from the basic set of requirements to start up any business such as:
- tax ID number;
- general business license;
- and local or state permits to run a business.
Secondly, you will need a specific pile of documents regarding your business activity and personal background (for example, convictions, felonies, etc.) that are needed to certify your cannabis business legally.
You have to run an exhaustive inquiry into all the state and local institutions and organisms that are directly or indirectly involved into setting up your cannabis business, because they vary greatly from one place to the other. They might be local licensing agencies, federal bureaus, tax department and other organizations involved.
Finally, in order to define what do you need to open your business you have to niche it down and pick up a particular business model, which will affect your licensing requirements. For example, regulations vary depending on the activity of your business, whether it is just cultivation or retail, if you produce edibles with cannabis, or you sell it for medical purposes.
Apart from business itself specific state and local regulation are also applied to the employees of cannabis business industry, whether they are support or key employees, which can imply more steps to open marijuana business.
Strict regulations are also spread out to the supply chain in the cannabis business, as retail and farming are subjected to different regulations in different areas. Dispensaries and marijuana coffee shop owners have to look for rather twisted ways to get their product on the shelves.
Find your financial support
Starting up a business is already challenging itself, take away the fact that you are starting it in the cannabis industry, which exposes you to have more initial expenses than a regular local business. Take away the fact that few traditional banks would answer to your loan requests just for the nature of your business and all the legal hardship it implies.
The reason for the high initial capital for opening your own cannabis business is that in most places you have to pay a high licensing fee, which is non-refundable. Added to the equipment, taxes and rental cost these amounts can be unsurmountable for a starting business. It is essential for you to find out how much does it cost to run a marijuana business before you get into the sauce, because taxes for this branch of trade are higher than other market segments.
The fact that marijuana is also consider as an illegal drug in many states, your business model is more likely to be a small scale business with no access to federal or general licensing or liable to any monetary subsidies, tax credits or deductions from the central state as the rest of local businesses.
All these heighten the stakes at how much does it take to start a business in the cannabis industry, as well as narrows your possibilities to get regular and stable financing from a local bank, because most of them operate nationally or internationally and do not want to see themselves involved in business that is considered illegal overseas.
So if you are looking for starting up a marijuana shop or a farm, you need to be aware that you will have to rely most probably on local loan agencies, which will try to take advantage of your restricted options situation.
How to control your cannabis business finances
One of the most significant reasons for the cannabis business to keep their balance spreadsheet up to date and under a thorough control is that in many places all the transactions done inside it are made in cash.
As marijuana is considered illegal in many places or many national banks do not want to be involved in such kind of businesses, all the client and commerce transactions must be done in cash. It interferes with the way of accountancy in these type of business, as every operation has to be manually registered and an error is more likely to occur than when you pay with a credit card.
This difficulty makes a finance software a necessity in cannabis business in order to detail every monetary transaction and keep track of all operations. But having an efficient data system software that can assist you at any moment can make the difference when it comes to your budget monitoring.
Many cannabis business owners try to keep their finances up to date by themselves, but the margin of error is very high. Besides, some consultancies might find it particularly difficult to take up a business like this and are not willing to collaborate for moral or other reasons.
Which leaves cannabis industry workers out of the whole finance and budget system and forces them to look for alternative solutions to run their businesses finances.