Marijuana was first legalized for medical use in the United States in 1996, however, the legalization of cannabis for recreational use is a new frontier. Many are calling it the “green rush” in states where recreational marijuana use has been legalized. According to a report from Arcview Market Research, legal marijuana sales are predicted to have year-over-year growth of 25% through the year 2021.
Analysts are likening legal marijuana growth to that of cable television in the 1990s and broadband Internet in the 2000s. With billions already being spent, more and more entrepreneurs are beginning to consider their opportunities in the marijuana industry.
Here are a few things that budding cannabis entrepreneurs should keep in mind to make it in the untested recreational marijuana industry.
Stand Out in an Industry That’s Already Competitive
How will you set your brand apart when new businesses are entering the marijuana industry every day? What do you bring to the industry that’s new and different? That differentiator is your business’s UVP – unique value proposition. Your UVP is the benefit that you offer customers. It’s the reason customers choose to do business with you.
Identify your business’s UVP, then use it to your advantage while building a strong and loyal customer base. To reach that customer base it’s essential to consider traditional as well as online cannabis marketing. If you need to maximize every advertising dollar, online marketing may be the better option. Agencies that specialize in online cannabis marketing can help you identify the most cost-effective channels and strategies to reach your audience.
The recreational marijuana industry may be relatively new, but the same branding standards apply. Your brand should reflect both the industry you work in and your UVP. It should also appeal to the people in your target market.
Understand Your Market in the Marijuana Industry
Like any business, marijuana distributors and product manufacturers have to identify their target market. That’s the only way to effectively advertise on a budget.
The first and easiest target market question to answer is, are you a business-to-customer (B2C) or business-to-business (B2B) company. There are plenty of business opportunities that are not directly involved in marijuana sales & distribution, but that provide services for businesses that are. B2B opportunities are already opening up for the medical marijuana space, and there may be more competition for the recreational industry. In order to identify your target market, drill deeper by addressing the following questions:
- Who is most likely to need your products or services?
- What are their key motivators?
- How much disposable income do they have to spend?
- Where and how do they spend their free time?
The better you understand who is your audience, the easier it will be to make meaningful connections with consumers in a market where many people are still leery. Keep in mind that marijuana use may still carry stigma for some people. Privacy is a big selling point for just about any target market in the industry.
Understand the Laws and Regulations Surrounding the Industry
Just because recreational marijuana is legal in your state, that doesn’t mean that anyone can start distributing and selling it for a profit. State lawmakers are keeping very tight reigns on the evolving marijuana industry. There is an extreme amount of oversight and dozens of regulations that must be followed.
In addition to state laws, cities and counties can also enact their own regulations and mandates. Violating any of the laws or regulations could quickly result in costly fines, or the revocation of permits or licenses to operate business. If you’re an entrepreneur that intends to get into the recreational marijuana industry, first find out:
- What licensing is required in your local jurisdiction?
- What does the licensing process entail and what documentation is needed?
- How long does the licensing and permitting process take?
- What is the likelihood of approval?
- Are there limitations on the number of businesses that can be approved?
- What are the upfront costs of obtaining the necessary permits and licenses?
- What are the renewal costs of maintaining the necessary permits and licenses?
Every location is unique in its marijuana industry regulations. For example, in San Diego, the city created special zoning rules and limited the number of dispensaries that could legally operate within each zone. The city also mandates that each dispensary have a certain level of security at all times. California as a state has also just changed its policies so that state and local police would not be required to assist federal enforcement of marijuana laws.