What is the Best Type of Cannabis Business to Start?
As the cannabis industry continues to gain traction, many entrepreneurs can’t help but wonder, “What is the best type of cannabis business to start?” While some people believe all of the opportunities have passed, this industry is just gaining momentum!
Last year, U.S. cannabis consumption reached $10 billion. But this spending is projected to grow to $23 billion by 2022. Thus, we now see more investments in cannabis than ever before.
Even with federal prohibition, the cannabis sector is still growing. At this point, we have 33 states with a legal medical cannabis program and 10 states (and D.C.) that have made adult-use cannabis legal. Federal legalization could happen over the next year or two.
But what’s the best type of cannabis business to start? The sector is ripe with opportunity, and if you’re considering starting a cannabis business, the following are some of the best options available.
Some of the Best Types of Cannabis Businesses to Start
Plant-Touching Cannabis Businesses vs. Ancillary Cannabis Businesses
Knowing the best type of cannabis business to start for you means understanding each type’s pros and cons. Simply put, plant-touching cannabis businesses handle cannabis plants either through cultivation, distribution, processing, or sales. These businesses must abide by the strictest regulations of the cannabis sector, meaning complicated licensing demands come before opening the doors.
Ancillary businesses support cannabis growth, processing, and sales. These businesses can include data platforms, POS systems, digital marketers, payment processors, accountants, attorneys, and more. While these businesses have some strict regulations, they bypass the most complicated rules and licensing.
Dispensary Cannabis Businesses
A dispensary is one of the best types of cannabis businesses to start if you have experience in the cannabis sector. Similar to cultivation facilities, these businesses have a thorough application process to get licensed by the state. These licenses are usually rather limited, meaning it can be competitive to get one.
While profitable, the main issue with starting a dispensary is the foundation you’ll need. To be successful, you’ll need capital, a network, and a plan. Since traditional banking services aren’t available to cannabis companies, these businesses can be challenging to manage, too.
Extraction Cannabis Businesses
Cannabis extraction can be extremely lucrative. But is it the best type of cannabis business to start? Well, that depends on your situation.
These businesses demand an up-front investment for the right equipment. You’ll also need to acquire intimate knowledge of cannabinoid extraction methods. If these are things you’re willing to do, it might be one of the best types of cannabis businesses for your situation.
Manufacturing Cannabis Businesses
Manufacturers transform cannabis flower and concentrate into other products. For instance, the edibles you’re buying from your local dispensary were probably made by a manufacturer.
Similar to extraction, you’ll need an up-front investment. Between the facilities and equipment, this can get pricey. You’ll also need to know state regulations and follow them closely to avoid infractions.
Breeding Cannabis Businesses
Thinking about getting involved in breeding cannabis plants? In this niche, you’ll develop cannabis seeds.
Cultivators and dispensaries demand high-quality cannabis strain seeds. This can involve experimenting with plant traits to create new strains. If you’re interested in learning about the effects of the strain, plant resilience, and increasing yields, this could be an ideal fit for you.
Cultivation Cannabis Businesses
Love cannabis? Become someone who grows it! While this sector is challenging to break into, it’s not impossible. The majority of state regulations demand indoor grows using specific circumstances. For example, most of the time, cultivators have to invest in a space and convert it to meet these demands to remain compliant.
Between grow lights, climate control systems, and security, cultivation requires a significant investment. Not to mention, every state has a licensure process cultivators must adhere to in order to start their grow. This usually involves a business plan, the floorplan of the facility, clear financials, and other specifics.
In some states, you’ll find cultivators must be vertically integrated with dispensaries. Thus, if you plan to cultivate, you might need to manage the entire operation, from growing the bud to selling it.
Thinking about starting a cannabis business? Comment the type of business you’re considering and what makes it appealing to you below!