Cannabis legalization is picking up steam throughout the United States. The industry is already booming, and it’s set to grow over the next decade, prompting investors and entrepreneurs everywhere to jump on the bandwagon to try to cash in.
There will certainly be some impressive entrepreneurial and investment opportunities in the near future, but before you make any big financial decisions (or take any big business risks), there are some things you should know.
Regulations Can Be Messy
Just because cannabis has been legalized for recreational or medical use in your state doesn’t mean you can grow and sell cannabis however you want. There are strict regulations in the cannabis industry you’ll need to consider, from how you can grow and sell cannabis to how to handle cannabis waste. For example, in California alone, there are three different cannabis agencies, each with their own waste handling regulations.
This is extremely tricky for several reasons:
- Federal, state, and local rules. For starters, remember that cannabis is still illegal at the federal level. Additionally, state-level laws and regulations vary wildly, and local laws and regulations may vary even further. There are multiple levels of laws to consider, and many of them will come into conflict with one another.
- Changing laws and regulations. On top of that, laws and regulations are almost constantly changing. For the most part, regulations are easing; it’s becoming easier to open and manage a cannabis business, and business owners are getting more flexibility. However, it’s still important to remain aware of new laws and regulations as they emerge.
- Opaque rules. To a newcomer or someone not familiar with legal documents, cannabis regulations are often opaque and difficult to understand. Working with a lawyer can help clear things up, but this is an additional expense you’ll need to take on.
- Untested waters. There’s a lot of ambiguity in cannabis laws, and many scenarios that simply haven’t been tested; this could be a major vulnerability.
Competition Is Fierce
The legal U.S. marijuana industry was valued at $13.6 billion in 2019, supporting more than 340,000 jobs. That’s impressive, but remember, competition is fierce. Thousands of savvy business owners and investors have already flooded into the space, hoping to get an early piece of the pie. They’re more experienced than you are and much more familiar with the limitations of building a cannabis business from the ground up. If you’re going to stand a chance of success, you’ll need some way to differentiate yourself.
Published: July 21, 2020
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