Marijuana Is Booming But It’s No Pot of Gold
No doubt the marijuana industry has exploded all over the country in the last decade or so. In fact, it is a global phenomenon at this point. As Business News Daily staff writer Adam Uzialko pointed out in a recent analysis, the legal marijuana industry is only expected to keep growing throughout 2023 and beyond. But know this: marijuana is no pot of gold.
As so many former players in the CBD market can tell you, making good money in marijuana requires a ton of hard work, sufficient capital to get you started, a competitive edge, and a bit of luck. Successful marijuana businesses are not built overnight. Successful entrepreneurs do not retire in their mid-twenties.
Two Big Hurdles
To run a successful marijuana business of any type, you have to overcome two big hurdles: regulation and financial constraints. Simply put, there are plenty of regulatory hoops to jump through in order to maintain a successful business that, while perhaps legal at the state level, is still illegal at the federal level. That’s not so easy to do and remain above board.
As far as financial constraints are concerned, it goes without saying that starting a marijuana business is very expensive. Whether you want to be a grower, processor, or retail seller, you need sufficient capital to get started. You are not going anywhere with a few thousand dollars in the bank. That amount might not even cover your license.
The Regulatory Problem
The regulatory problem is easily the more serious of the two. It is rooted in the fact that federal and state law still conflict. Marijuana remains an illegal substance under federal law. The only reason there is a legal marijuana market in more than three dozen states is because Washington has chosen to turn a blind eye.
At the state level, regulations vary. Take Utah, where Salt Lake City’s Beehive Farmacy says that only medical cannabis is allowed. All medical cannabis sold in the state must be cultivated and processed in the state as well. So what does that do for global brands like Cookies? Beehive Farmacy sells the Cookies brand, by the way.
In order for Cookies to sell to Beehive and its competitors in the state, they must have some sort of presence there. It is not clear how they meet their regulatory obligations, but they clearly do.
The Money Problem
State regulations are easy enough to navigate if you have the help of a good attorney who understands the law. As for the money problem, there is no getting away from the fact that you need lots of it. Just to get started, you will probably have to spend thousands of dollars on a license. Utah issues four types: cultivation, processing, testing, and retail.
Other states have their licenses as well. In some states, a license is fairly ‘cheap’ at a few thousand dollars. But it is not unheard of for states to charge $10,000 or more depending on the type of license a business wants. And remember that all those licenses must be renewed periodically. They are not permanent.
An entrepreneur looking to get into cultivation needs to spend a ton of money on equipment. Processors need to purchase even more expensive equipment. Retailers are saddled with a ton of overhead in retail space, stock, etc.
It is possible to make good money in marijuana. Plenty of companies are doing it. But the marijuana industry is not a pot of gold waiting to be picked up by anyone. Succeeding requires hard work, access to capital, and a competitive edge over the competition.
