Some states require what is known as vertical integration, in which the cultivation, processing and dispensary businesses are all managed by one company. Other states instead employ a system of specialization, in which licenses for each type of operation are kept separate and are often awarded to different companies.
While many people are excited about the prospects of starting a plant-touching cannabis business, ancillary businesses arguably offer a lower barrier to entry. Ancillary businesses still face significant regulation compared with many non-cannabis businesses, but they don't have to vie for a license through a complex and costly application process.
Plant-touching cannabis businesses
The market value of the U.S. cannabis industry is projected to reach $30 billion annually by 2025, according to industry research group New Frontier Data. This projection comes at a time when cannabis remains federally illegal despite the legalization of medical marijuana by 33 states and Washington, D.C., and the legalization of adult-use cannabis (sometimes called recreational use) programs by 11 states and Washington, D.C.
"The best way to do it right now is hiring a consultant who can help develop your plans with you," Rudder told Business News Daily. "You need to develop partnerships and relationships across the country to give your team a competitive advantage – the right processes, the right SOPs [standard operating procedures], the right security plan. Get the right local attorney and local CPA … with experience in cannabis."
Ancillary cannabis businesses
Key takeaway: The cannabis industry is diverse and comprises a wide range of businesses. Consider your existing skill set and how you can enter the cannabis industry with expertise under your belt.
Smaller producers in rainy climates such as Oregon and Washington are investing in rainwater collection and storage capabilities to save on irrigation costs. Because a single cannabis plant can use as much as 22.7 liters of water per day and many cannabis outdoor growing seasons conflict with periods of low-precipitation, outdoor growers and those who rely on rainwater capture without long-term storage solutions won’t find much benefit in a recyclable water investment.
Solar energy is becoming increasingly affordable – especially at larger and more significant scales. Colorado, presumably spurred by the initial successes and yet substantial energy costs of its early recreational cannabis industry, more than tripled its renewable energy since 2010, now generating more than 30 percent of its electricity from reusable and renewable sources as of 2020.
In 2021, the difference between many strains of the same name may be night and day. Recent reports post-legalization in Washington, Oregon, and Colorado have shone a brighter light on the actual genealogy – and even the classification between indica and sativa products – that may be entirely mislabeled or incorrect at the outset.
Indoor Growing Facilities
Running a successful commercial cannabis grow operation is an expensive challenge. While growers can maintain a higher level of control over humidity, available light, and pests in an indoor environment, maintaining proper light levels and staying as energy-efficient as possible are top priorities for commercial cannabis production operations.
That said, no forward-thinking cannabis entrepreneur should overlook energy-efficiency standards in initial constructions. An estimated 4% of Denver’s annual energy usage went toward cannabis production facilities in 2020; projections for energy usage among states nearing legalization (including California, Nevada, and Maine) are unquestionably unsustainable.
Creating a Cannabis Business Plan
Indoor cannabis grow facilities must be in an enclosed and secured facility with functional windows, doors, rigid or semi-rigid walls and a roof.
According to Confluence Denver, producers who opt for an energy efficient greenhouse facility pay about half the costs of those who grow in a warehouse. The importance in selecting a functional, sustainable grow facility early in the life of your recreational or medical cannabis business is monumental. Recent investigations show a direct correlation between sustainable building and operations standard and profit margins on large-scale facilities, meaning larger producers and distributors may be in a more strategically beneficial market position should federal legalization occur.