Navigating the pitfalls of the marijuana industry gets exhausting. But it’s not something that you can ignore if you are in the business of marijuana. So whether you are new to the industry, or a seasoned professional, here are 10 things to look out for and to not do – and if you can steer clear of these, then you just might establish a thriving marijuana business.
1. Rush In Without Asking Questions
Like the “gold-rush” mentality, anyone that runs into the marijuana industry, expecting to get rich quick is sadly mistaken. While there is tremendous room for opportunity in this budding and growing industry, there are many things working against you too (note this entire list). Furthermore, cannabis businesses are increasingly behaving and being treated much like any other business venture – thus any new entrant or even industry veteran needs to constantly be examining their bottom-line, their financial strategy, their ability to market, their market share and how to compete. The concept of the “Green Rush” is slowly fading along with the opportunists with no real industry plans or sustainability.
2. Ignore Local Laws
Far too many marijuana businesses seem to have tunnel vision when it comes to knowing and navigating local marijuana laws. Cannabis businesses easily forget that though their state is the arbiter of their operational license, their city and/or county also has plenty of say in whether they actually get to operate. Failing to abide by local laws usually results in costly disputes in which the marijuana businesses are on the losing end. Local laws can include: land use, zoning, additional permitting or licensing, or time, place, and manner restrictions.
3. Rush Your Due Diligence
Marijuana entrepreneurs are notorious for jumping into bed together without having performed any due diligence regarding their putative partner company and its members. But because the cannabis industry is a new industry, you should be extra careful with who you do business with. On top of this, because the laws relevant to the cannabis industry are changing so frequently and because the regulatory stakes are so high, no business deal should be rushed. You do not want to enter into a deal only to find out that for whatever reason your new partner or the deal itself is illegal because of some new law. The faster you go the more susceptible you are to these sorts of mistakes.
4. Do Business On a Handshake
The companies in the marijuana industry facing the biggest challenges are those with nothing in writing. No documentation. No evidence. Though the legal enforceability of marijuana contracts from state to state is going to vary, all marijuana lawyers will highly advise any and all marijuana businesses to memorialize all of their deals and transactions – in a written contract. Certain transactions can only be enforced if they are in writing. You are a real business now and real businesses have written contracts.
5. Not Plan An Exit Strategy
Unfortunately, the failure rate in the marijuana industry is, and will continue to be high. Because of the lack of banking in the industry, it is far too easy to lose track of costs. But even if you are financially stable and successful, laws are constantly tinkering, and an unknowingly lack of compliance could lead to your fate.
Think you can just file for bankruptcy? Think again, because bankruptcy probably isn’t an option.
If you’re feeling pretty down after reading all this, lift your spirits with the Key To Success In The Cannabis Industry.