If you follow news headlines, you may be familiar with the variety of articles currently analyzing cannabis stocks leading the “green revolution.” Legal cannabis is worth $50 billion in the U.S. today and is expected to top $80 billion by 2030. Excitement about the legalization of hemp, CBD, and other strains that contain THC is real as states loosen regulations to allow residents to purchase medical or recreational cannabis safely and legally.
The frenzy surrounding cannabis has inspired many to investigate how they can get a piece of the green pie. While it might be a headline-catching industry with potentially high return on investment, opening a business in the space requires precise compliance procedures that must adhere to ever-changing regulations. Each state’s legal and regulatory structure contains nuances that can make applying for a cannabis license tricky if you don’t have these five areas buttoned-up tight before submitting your application.
States want to make sure you understand how seriously they take the application process, so they start with a wallop to your wallet. You must be flush to apply for a cannabis license, which alone can run north of $100,000. You also must be able to demonstrate financial backing, revenue, and projections that meet the state’s minimum threshold, which varies state by state. Though they may seem unduly onerous, these are good requirements, because the last thing anyone wants is a stain on the industry due to a few bad players. But expect delays receiving your permit, along with outside costs for consultants and industry experts to help grow your business. If you don’t have much capital beyond the application fee, don’t waste your time applying.
It is imperative to have your location selected and written consent from the landlord, which is proof of their willingness to lease to a cannabis organization. In some states, cannabis businesses are required to have blueprints of the build-out and zoning already approved. Without real estate confirmed, you have no business. Location details are 90 percent of the application process, so ensure the majority of your physical location plans are nailed down before applying.
The application consulting team should have “branches” consisting of architects, structural engineers, and at least one researcher. Give careful consideration to the most ideal candidates for compiling your information, which may consist of an assembled team that is hand-selected, big multi-state operators or a consulting firm.
A competent executive team is critical to securing an approved application. Make sure ownership is multidisciplinary. Consider notable experts like a medical director, business leader, and legal expert at a minimum. A cultivator who understands the specialized needs of the agricultural industry also may be needed if you plan to make your business stand out by using, as an example, locally sourced growers. Also think about adding a “chief educator” who will be your eyes and ears on the street, tasked with speaking to legislators and state officials about the industry—and your business, in particular. Make it a point to have team members who can help educate the community in which your business will be located. Proving how you will benefit the local area will help your application stand out from others.
Everyone on the team should have knowledge of local regulations and understand business operations. If the collective group doesn’t understand how your brand is different and what the competition offers, you are immediately behind on the first day of business. It’s also a good idea to know the cannabis voting record in the area(s) in which you plan to develop. Understanding how the community got to where it is today regarding cannabis will help you tell your story as a business owner and appear more relatable on your application.
If you have the finances, plan methodically, surround yourself with the right people, and possess a willingness to adapt to an ever-changing cannabis environment, the reward could be financially and personally gratifying.
Amanda Ostrowitz is founder and chief executive officer at CannaRegs, a web-based subscription service that provides cannabis-related rules and regulations from state, county, municipal, and federal sources. Previously, she was a regulatory attorney specializing in cannabis regulations and banking laws.