Why Starting a Marijuana Business is so Hard
As might be expected, starting a cannabis business is a tricky challenge. However, there is also a great demand for cannabis products for medical purposes and dietary needs. Starting your own marijuana business not only can take up to $1 million in startup capital to just get a license but also has lots of issues related to the industry that should be considered in advance.
However, when business owners play the game right, organizations will achieve great success and get well-deserved revenue. And the amount of money business owners can earn is the key factor why so many cannabis businesses have been opened during the last few years. To be more specific, the global cannabis market size was USD 20.47 billion in 2020.
When you run a business in a space that always changes due to regulations, it’s essential to know all potential challenges. This guide will explain key challenges that owners may face showing why starting this business is currently hard.
A History of Cannabis Regulation in America
The legal status of cannabis has long been the determining factor for its growth as a demanding industry in the US. Until a few recent years, cannabis has long been considered a drug and was prohibited in most states. The stigma around cannabis makes it hard for business owners to open the business even now. Even though marijuana was illegal to cultivate, purchase, and sell the plant because of its psychoactive properties, scientists found out that these effects may also deliver benefits for wellness and health in some cases.
That is why many regulations around the cannabis market have changed. While more and more countries legalize the medical use of cannabis and CBD supplements, the US is the key country allowing this cannabis use.
5 Reasons Why Starting Cannabis Business is Hard Facing
Stigma Around Cannabis
It is not a secret that more and more doctors consider specific strains of medical marijuana, like the Mendo Breath weed as a way to soothe and treat several health conditions. However, the stigma that has long been here still causes issues. That is why a great part of the general public still considers cannabis and medical marijuana as a drug and believe both products should be illegal. This stigma in the medical community still presents a challenge that every business owner in the cannabis industry should know. In addition, hospitals do not get federal funding if they promote cannabis use.
Fewer Banking Opportunities
The biggest challenges in marijuana businesses are issues caused by the media and government regulators. These obstacles for cannabis businesses become even more difficult thanks to specific regulations. A challenge that any cannabis business owner may face in 2022 is finding a banking opportunity that is allowed. This means that businesses operating in the cannabis industry are not able to partner with federally insured banks, which creates a solid barrier for smaller operations. As a result, private banking funding is dominating.
If you run a cannabis business, you will need to find customers using your products. That is why you must be well aware of any issues that can cause your product to be withheld from potential customers. The legal status of cannabis in public housing makes it really hard for potential buyers to buy or use the product. Since some states and people still consider cannabis solely as a drug, this barrier will be able to be reduced through time and increased use of cannabis for medical purposes.
Operating in Cash
The majority of businesses in the cannabis industry have to work with cash for most purchases, but using loans from banks and government financial institutions is a great challenge for owners. Since marijuana is on the list of drugs and prohibited substances in some states, most banks are not able to accept money or give loans as it would be listed as money laundering. To be more specific, business owners won’t be able to get loans from any bank that FDIC insures. However, the situation may change over time since how banks will work with the cannabis business will depend on federal regulations that seem to improve soon.
Effective Digital Marketing Strategy
As might be expected, the cannabis business also requires marketing campaigns and strategies to grow and develop. However, this could become a real challenge for companies as it could also be hard to even identify the perfect client, preferences, needs, behavior, and other factors of the ICP to achieve success. Many cannabis businesses find it really hard to deliver efficiently and effectively and measure the effect of marketing campaigns used like SEO, social media, and paid links. It can also be hard for these companies to develop a website and create a design and presentation of their brand. However, some companies still find this challenge as a place for business growth.