You’ve decided to start your own cannabis business. Good for you. Not only is the cannabis industry relatively new, making it a great option for new business owners, but it’s also a valuable resource for its customers. Owning your own business is far better than working for someone else any day so be proud of yourself for taking a big step towards a bright future. With that in mind, make sure that the first step is a solid one because, as with any business, there are many steps ahead — and how you start can determine not only your overall enjoyment of the process but your inevitable success. Crucial step? You have to fill out your cannabis business license application and get the process started.
Here are a few things to help you plan ahead for a successful start.
Consider Your Business Location
Compliance requirements for cannabis businesses vary not only from state to state but often from city to city or county to county. Educate yourself about the rules, regulations, and requirements of the area in which you are doing business. If you’ve done your research well, the process of applying for your cannabis business license should be smooth sailing.
Note: There’s lots of information available for free on the internet – but make sure it’s current. Consult a legal expert if needed. It requires a great deal of knowledge, preparation, and planning to understand and follow all the legal requirements expected of a new cannabis business, but it is possible. You’ve just got to do your homework.
Looking for updated information in your area? Check out the following:
Choose your Cannabis Business Category
Regulation varies depending on your category of business and it’s important to know which one you fall into. Some main categories include:
- Cultivating: Growing cannabis.
- Selling: Retailing cannabis to the customer.
- Manufacturing: Creating cannabis products.
Of course, there are many other ancillary businesses involved in the cannabis industry, so if you don’t want to handle the product directly, you may want to broaden your research. Either way, don’t go in blind – knowing which category your business falls into before you start your paperwork will save you time and money.
Cover Your Legal Bases
No matter which type of business you choose, there are basic legal requirements. Again, these will vary based on your location, but some to consider will include:
- Incorporating your business or forming an LLC
- Obtaining a Federal Tax Identification Number, also known as an EIN (Employee Identification Number)
- Obtaining a General Business License in your state
- Filing for a DBA (doing business as) if you will be doing business using a different name than the one in your incorporation papers
- Obtaining a sales tax permit
Create a Plan Ahead of Time
Pursuing a business license shouldn’t be your first step. Put together a business plan ahead of time. By doing so, you’ll be more likely to be taken seriously when you seek funding. Additionally, it will be crucial when it comes to applying for your license.
Consider the following when outlining your business plan.
Develop Your Standard Operating Procedures (SOPs)
You will need to address areas of your cannabis business including shipping, distribution, payment processing, recordkeeping, compliance, accounting, and security.
Create a Budget with Financial Projections
It’s important to be honest about the money needed not only to start your business but to keep it up and running until profits are generated.
Outline How You Will Obtain Funding
As cannabis is still illegal at the federal level, traditional financial institutions may be wary of loaning money. If you can make use of your personal savings, fantastic. If not, you need to acquire investments from family and friends or angel investors. Show those potential investors that you are prepared within your business plan.
Consider How You Will Build a Team
This is an important part of your cannabis business plan for many reasons. It may be necessary to bring on employees or partners. Not only can doing so help to generate funding for your cannabis business, but it’s important to note that all partners may need to pass background checks and/or meet certain qualifications in order for your application to be approved. Consider employees and partners with legal expertise, medical training, growing and cultivation experience, or a proven successful business track record. Leaders with skills and expertise will increase the chance of your business’ success.
Plan for a Secure Property
Many states require that applicants already have real estate before their cannabis business license is approved. You need to know ahead of time if your state falls into that category. If leasing, you will need approval from your landlord to use the property for a cannabis business, and possibly from the municipality where the property is located.
Don’t forget to Breathe
Putting together your cannabis business application may seem difficult and overwhelming. This is a pivotal time as cannabis and cannabis-related industries crossover into mainstream businesses. It makes sense that the process is competitive and complex. Follow the instructions. Pay attention to detail. But don’t forget why you started all this in the first place. It’s not impossible and there are people out there that need you.
And finally …
Learn from the Experts
The best way to learn about how to successfully file and receive your cannabis business license? Talk to those who already have! CannaCon is a great resource for that and we have a show in your area. Meet other business owners. Attend seminars. Find equipment, legal advice, and business experts. Get inspired to file your own cannabis business license application by joining us for CannaCon Northeast Aug. 23-24, 2019. You can also check more details on how to get an Ein Number at LLC Formations.