CASHING IN ON CANNABIS: SELLING TO THE CANNABIS INDUSTRY
May 31, 2018
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In fact, it’s America’s fastest-growing industry, with over $7 billion in sales last year, and projected to climb to over $21 billion by 2021, according to Arcview Market Research. In January, California became the latest of 30 states, plus Washington D.C., to legalize medical cannabis, while recreational cannabis is legal in eight of those states, plus D.C.
And now, in what may become the most important development in the history of legal cannabis, President Trump appears ready to support legislation to reform federal marijuana prohibition. If that comes to pass, it would significantly ease the regulatory uncertainty that is among the biggest issues for legal, “plant-touching” growers, processors and retailers. Should the fear of a federal crackdown on their business be lifted, cannabis license holders will immediately become even more bullish on their future prospects.
This is all great news for “non-plant-touching” ancillary business owners, who could offer security, lighting, technology solutions, lab testing, marketing services, paraphernalia, legal/accounting advisors, or hundreds of other products and services to cannabis license holders operating with a positive outlook.
“Regardless of what comes of the current Administration’s plans, the sky is the limit for ancillary businesses looking to enter the cannabis market,” said Ean Seeb, founder of a leading cannabis industry consulting firm Denver Relief Consulting.
“As with any industry, but particularly one like cannabis that touches agriculture, processing and consumer consumption, there are literally hundreds of vendors, advisors and partners that license holders need to identify and work with long-term.”
So, the opportunity to cash in on the “green rush” is real and it’s only going to get bigger. That said, Seeb points to two key challenges an ancillary business owner must address before attempting to sell their product or service to a license holder:
THE TRUST GAP: According to Seeb, there is a ever-widening trust-gap issue between license holders and those selling to them. “For better or worse, the cannabis industry has experienced its fair share of less-than-professional entrepreneurs looking to make a fast buck,” he said. “That’s resulted in a very real issue of license holders not knowing with whom they can trust to conduct business.” Seeb suggests ancillary business owners find ways to communicate that they have a history of operating ethically and with integrity.
KNOWLEDGE: The cannabis industry is a very different animal than most American industries. According to Seeb, it’s important for anyone entering the space to prepare effectively for the sale to and service of a licensed cannabis business. While President Trump’s potential easing of federal prohibition would make things better for license holders, says Seeb, “There is still regulatory uncertainty [license holders] face every day that translates to serious banking, tax and general commerce implications.” Seeb says virtually every license holder he knows would expect any potential business partner to recognize and adapt as necessary for these challenges.
There are billions of cannabis-related dollars up for grabs in the coming years, and now is the time to enter the industry. "As the market matures," Seeb warns, "it will become increasingly more difficult and costly to do so."
The National Association of Cannabis Businesses is the first and only self-regulatory organization (SRO) in U.S. cannabis. Our members function as a self-governing community, focused on differentiating themselves to regulators, the public and others as the most legitimate, professional and trustworthy businesses in the industry.
The National Association of Cannabis Businesses is the first and only self-regulatory organization (SRO) for U.S. cannabis, dedicated to helping its members achieve success in an ever-changing regulatory landscape by promoting compliance, transparency, record-keeping and responsible business practices.