By Darren Weiss
An extremely important component of establishing any business is the creation of a compelling and robust business plan. This is no less true in the cannabis industry. In fact, many states require such a plan as a condition precedent to obtaining a license or permit. Of course, potential investors and financial backers are also going to rely on your business plan in deciding whether to invest in your business or your competitor’s. As such, a robust business plan is essential to your company’s success.
Despite what many cannabis consultants will tell you, drafting a cannabusiness plan is not necessarily that complex or unique. You do not need an advanced business, finance, or horticultural degree or experience in the retail industry to lay out the foundation of your business (although there are portions of your business plan for which an experienced advisor is essential). You do, however, need to have an appreciation of the nuances of operating a cannabusiness. The following is not exhaustive: it is not a list of every component of your business plan. Rather it is a starting point, a guidepost you can use in laying out how you intend to get started.
Step One: Articulate a Mission
As the cannabis industry grows, and as regulators in competitive licensing and permitting states look to find the best candidates for operators, it is increasingly important to craft a well-defined and important mission. Who are you looking to serve? Why? How is your business going to be distinct? How is your business going to serve the greater good? How is your business going to make money? No high-cost cannabis consultant can do this for you; you need to be able to articulate your goals, your drive, and the reason why an investor or regulator should place trust in you and your business.
Step Two: Define Your Marketplace
Although a well-defined mission is essential, investors, partners, and regulators want to make sure that your business can succeed financially. Your business plan needs to explain who your business will cater to, what qualifying conditions you intend to focus on (in a medical market), your anticipated customer base, and your expected revenue. This is not a time for guessing; make sure you do your research to understand the industry, the laws and regulations in your jurisdiction, and the impact of those laws and regulations on your ability to run a profitable business.
Step Three: Organize and Outline Your Team
No woman or man is an island. If you are going to be successful in your cannabusiness, you need an experienced, competent team of professionals on your side. Your business plan should make this clear; regulators and investors are not interested if you are trying to go at it alone. Although every cannabusiness is different, at the very least you will need to have an executive staff, operations managers, security specialists, marketers and community liaisons, professional service advisers (lawyers and accountants), compliance/quality control staff, and a controller or CFO. Cultivators will need trimmers, harvesters, transportation staff, and mechanics. Dispensaries will need retail staff and health professionals. Understanding the makeup of your team and the relative strengths that each team member brings to the table is a key aspect of your business plan.
Step Four: Understand the Physical Layout
Ultimately your goal is to operate a physical, brick-and-mortar business. As such, putting pen to paper is in itself insufficient; you need to understand how your plan will translate into the physical world. If you are applying for a cultivation or combined cultivation/processor license, you need to appreciate how your facility will be laid out: Where is your water supply? How is your ventilation system constructed? How is robust security going to be worked into your plan? How will you implement inventory control and seed-to-sale tracking? For dispensaries the issues are slightly less complex but still vital: Where will you store and display product? Where will you provide counseling and ancillary services? Where and how will your cash be secured? How will you limit access to restricted areas? This part of the plan is technical and multifaceted, but it is also one of the most important. Make sure that you have highly-skilled team members in your corner who can help you understand how to put this part of your plan together.
Step Five: Develop a Marketing Strategy
Businesses rely on customers, and customers need to know about your business and product offerings if you want them to purchase your products and services. Although marketing strategies for cannabusinesses are in many ways the same as those for outside of the industry, there are some unique challenges. Access to social media and some other traditional media outlets may be unavailable for cannabusinesses, and there are often limitations on logos, designs, color schemes, and branding insofar as the same may be viewed as attractive to children. As such, you may need to develop an outside-the-box approach for successfully marketing your business. You need to understand how you will create product awareness, the extent to which you will rely on traditional or new media, how you will attract and retain customers, and how you will create and maintain a pristine relationship in your larger community.
Although the above is not itself a business plan, these steps are intended to motivate you to start asking the right questions, and to start looking for the right team of advisors, so that you can get your cannabusiness funded, licensed, and into the black.