When it comes to starting a cannabis business the rules and regulations differ from state to state. A qualified lawyer will help guide you through the legalities of setting up your cannabis company. Laws vary widely in many countries, with some prohibiting outright sales of cannabis or making financial investments that might involve the production or distribution of cannabis. Regardless, of which laws you live by, if you want to open a cannabis company there are some things you will need to do and be aware of.
Financing: Starting a cannabis business is not the simplest thing in the world, but it is definitely not impossible. The best way to start your business is to secure financing in advance. Typically entrepreneurs will seek venture capital financing (VCF) from a private funding source. However, obtaining a venture capital loan is not guaranteed, so entrepreneurs should consider all other options. Private investors, business credit cards, and bank loans may be some of the financing options that entrepreneurs are most often seeking.
Funding Methods: In some jurisdictions marijuana is completely legalized, but in five states this is not the case. Therefore, entrepreneurs will need to find a reliable funding source in each jurisdiction they desire to open their cannabis business in. Many entrepreneurs begin their search by looking online for “cannabis financing” or “cannabis startup companies” to find private investors and venture capital groups.
Angel Investors: Angel investors typically invest in start-up companies that have an attractive business plan and a promising future outlook. However, in certain regions and cities, there may not be many angel investors looking to finance marijuana businesses. Therefore, in many jurisdictions there may not be any qualified angel investors available. Many angel investors today understand the benefits of investing in start-ups and in plant-touching businesses. Therefore, they are willing to fund these types of businesses with a capital amount equal to the value of the company. However, investors must be careful to ensure that the business has a reasonable chance of being profitable.
Social Media Presence: Many cannabis businesses today have created strong social media presence to market to potential customers and clients. However, it’s important for entrepreneurs to understand that the cannabis industry is still evolving and there is a perception among some “legitimate” cannabis users that cannabis is illegal. Therefore, when making social media investments, entrepreneurs should understand this risk. Entrepreneurs should also understand that the most successful cannabis businesses often do not use traditional media such as TV or radio to advertise. Instead, they often rely on social media and the local news to gain local notoriety. In addition, many cannabis consumers are comfortable purchasing products over the internet, which makes local advertising difficult for local businesses.
Regardless of the type of cannabis business an entrepreneur is planning to start, it’s important for them to research the laws and regulations governing the cannabis industry in their city. Additionally, new entrepreneurs should do research on local business directories to find potential funding sources. Finally, it is important that investors research their accountant to ensure that all of their expenses and profits are recorded accurately. By following these three simple steps, anyone can find the best way to invest in the New Jersey cannabis industry.