With the undisputed growth potential of the cannabis market, emerging opportunities for the savvy investor are abound. As much as traditional cannabis businesses can be lucrative, they are likely to be dominated by the big businesses with high-level automation already in place. At the moment, competition is stiff in the market and it only gets harder if you are cash strapped, or stuck in ideation.
If you are thinking of getting into the cannabis market you need to think hard and fast, and deliver a focused plan of action from inception to exit. However, you should not be discouraged from bootstrapping a startup in this market; All you need is to get acquainted with the "not-so-obvious" ancillary businesses that are becoming more prevalent and jump on them as fast as you can.
Let’s get started.
Traditional opportunities in the cannabis market can be broken down into three categories:
- Cannabis cultivation
- Manufacturing of cannabis-related products
- Retailing of cannabis products through dispensaries and other outlets
Apart from this, other opportunities that have arisen to support the core industries include:
- Cannabis delivery
- Cannabis breeding/genetics
- Cannabis education/budtender schools/doctoral studies
- Cannabis marketing
- Cannabis insurance and banking
There is a new market arising from the traditional opportunities, and in every industry they're called "ancillary" businesses, but they're especially strong in Cannabis. These businesses are beginning to support cannabis businesses without being directly involved in the direct cultivation, or handling of cannabis, often times relinquishing any need to possess a medical license, or recreational where permitted. For as long as the industry continues growing these businesses are likely to grow commensurately.
We therefore advise tapping into these opportunities before the market has reached the point of complete saturation.
Here it a rundown of some of these opportunities:
Offer Professional Services to Cannabis Businesses
The cannabis industry is just like any other in that it requires professional services such as accounting, legal, marketing, insurance, and administrative, among others. If you have the relevant skillset and certifications to offer these services, you should consider offering them to cannabis businesses. If you're working for a firm that doesn't offer these services to cannabis companies, consider first understanding the rules and regulations that govern the industry, before engaging in a conversation with management to head up this new "cannabis division" of the business you've dreamt up. With this you should be able to help canna-businesses navigate the tight legal framework and charge a premium for these services, and just maybe, begin to grow that dying services business you've operated for however long...
Offer Packaging Services
Cannabis packaging is an emerging opportunity with great potential. The laws in place that call for state and federal compliancy in all cannabis packaging can be difficult to maneuver. As a cannabis packager you must be adaptable to fluid regulations, be able to identify trends in shelf appeal, and acceptable branding nomenclature, and be able to stay ahead of all three, as key indicators that your services are necessary.
First, learn all the rules and regulations on cannabis packaging. Secondly, you have to ensure that the packaging you offer helps canna-businesses to remain compliant. Last, consider customer appeal. You want your packaging to grab the attention of potential buyers and not seem lost in the sea of lookalikes.
Offer Cannabis Equipment
Cannabis businesses need different kinds of equipment in all stages of product development. This includes cultivation, manufacturing, processing, and packaging...
Each of these processes is constantly changing, with the manufacturing automation being the most fluid in the current market. The more "hands off" a company can be after the cultivation process, the more likely they will be working under cGMP or Iso9001 certification, or that they're at least putting themselves in position to operate under those regulatory standards in the future.
Offer Real Estate
If you are in the real estate business you can consider renting out, or leasing to cannabis businesses. Several real estate owners will not consider offering occupation to operators in the cannabis industry. This happens due to the federal prohibition on cannabis, and consequently the stringent laws governing the industry in direct relation to banking. With this hurdle in place, it’s possible to charge more for your common rents for cannabis clients than you would other clients. To make the most of this opportunity you should get familiar with cannabis laws and ensure that you offer compliancy at all times.
Offer Security Services
Cannabis business are in particular need of security services, both for regulatory and practical purposes. The industry is largely unbanked, and consequently operated on a cash system. It is not unusual for cannabis dispensaries to have a high volume of dollars in their possession at any given time. With this insecurity, there is opportunity to offer security services at a premium rate; offering armed guard services, armored vehicles for transport, in-house safes and strong rooms for overnight storage to cannabis businesses is the next level in scalability for security companies.
Be an Angel Investor
If you want to benefit from this lucrative market without getting your beak wet, you should consider becoming an angel investor. This means giving up capital in exchange for equity in a cannabis business. We've offered some suggestions in this blog on where to find Angel Investors, but this is the first time we mentioned becoming one. Keep checking our blog for a detailed guide on how to become an angel investor in the cannabis sector.
Ancillary cannabis business have several advantages. Apart from not being so crowded they have less stringent legal restrictions and the barriers to entry are not as steep. Additionally, if you are already offering any of the services mentioned above it shouldn’t be too hard, or costly to expand into the cannabis space. If so, You're doing it wrong.
Meanwhile, Matthew Lee Morgan prepares to move into a new medicinal market and change your existing concept of the entire vertical. Disruption is on the horizon.