It’s official, the Cannabis industry is one of the fastest growing global industries. Today the industry is worth a shade over $9bn and it is expected to be worth over $75bn in revenue by 2030.
As a result, there has literally never been a better time to start a marijuana business.
However, there are still challenges. For the most part, across the western world, recreational cannabis remains illegal. Even in America, despite being legal in many states, cannabis remains illegal on a national federal level.
As a result, it can be difficult for a cannabis-based business to access the same resources that other early start-ups often have access too.
I own my own cannabis hardware store so thought it may be useful to share my experiences!
Problem 1 – Accessing start-up capital
All business requires some form of start-up capital to either start their business or grow an already existing start-up
Unfortunately, finance is typically a path that is closed to businesses involved with cannabis.
Banks and finance companies often have tight regulations. This can make starting or even growing a business quite difficult for a cannabis entrepreneur.
Solution: Look for a business loan provider that caters specifically to cannabis companies. They are slightly harder to find but if you know where to look you will find them.
In the past, I have worked with Cannabis Credit Lines and Cannabis Start-Up loans. Both of these actually specialise in the marijuana industry rather than tacking on the service. As a result, not only will they offer finance but they can offer knowledge and expertise too.
Furthermore, as long as you have a good personal credit score they do not require any proof of income or any collateral. They’re really quick too. Assuming your paperwork is all correct, they’ll wire you your funds so you can get back to growing your business as soon as possible
Problem 2 – Finding a payment processor
With the rise in technology, cash is very quickly becoming obsolete. People are increasingly expecting a plethora of payment options including debit cards, mobile phones, credit cards and even cryptocurrencies.
In 2019, Whether you’re business is a traditional brick and motor or online business you will likely require a merchant bank and payment processor to handle electronic transactions and have the funds sent to your own bank account.
Similar to the difficulties with having access to start-up capital, the banking industry largely deems the cannabis industry to represent too much of a risk to handle their money. My online shop was even blocked from having access to Shopify payments despite Shopify being a Canadian company and it being fully legal there.
Similarly, popular payment processor Paypal is also reluctant to work with all but the largest cannabis companies.
l Solution: Unlike the advice I gave for start-up loan providers I would actually advise not going with a specialist cannabis payment processor. Typically because of the increased risk, cannabis specialists are forced to pass the high insurance costs down to the business which means they’ll often siphon off a high % of your revenue for each transaction they handle.
The solution I offer is very time-consuming will save you a lot of money in the long run. Most companies, KYC ( Know your customers) process isn’t consistent. At the end of the day, it is people on the other end of the phone who are approving
Find 20 traditional, low-cost payment processors. Work your way through each and every application. Hopefully, you should be accepted by two or three which will then allow you to choose the best on that works for you
Problem 3 – Marketing your business
Once you’ve spent your startup loan on the capital or services you plan to sell, and have a payment processor so you can accept money from your customers, it is time to open up shop and start selling.
Waiting for that sale can often be soul destroying for a new business. You can have the nicest looking store and the best pricing but if no one knows you are you will not be selling anything!
Solution: Do not give up! This is perhaps the hardest part. Believe it or not, it took me 3 months to get my first sale in 2017. Fast forward 18 months and I’m on track to do $1m in sales throughout 2019 so my first piece of advice is: do not give up. It is worth repeating this; do not give up!
Now that’s covered, let’s look at some more practical advice.
Despite positioning themselves as progressively liberal, the big tech companies, just like the finance world, will not work with companies who have anything to do with cannabis products or services.
This means no Google Search Ads, No promoted Instagram posts or paying to share your Facebook business page with the entire country. This is a major bummer for cannabis entrepreneurs because these are quick, easy and proven ways to get your first customer.
However, do not fret! We’ll have to work smarter than traditional businesses and whilst this may take us longer to get our first sale it’ll make us better business people in the long run.
My first piece of practical advice is to build your own email list. You can do this by placing a pop-up on your webpage if you sell online or collect emails with a paper and pen of everyone who walks into your online shop. You can boost your sign up rate by offering a small discount on your products and services perhaps.
Once you’ve built up a list, these customers are yours to market to as little or often as you wish. You can send the promotions, blog posts or even content they can share with their friends. In two years I’ve grown my list to 20,000 cannabis enthusiasts and every email I send now generates sales. The main advantage of lists is this data belongs to you!