Minimizing Industry Risk & Maximizing Success
Just over a couple of decades ago, cannabis was completely illegal across the United States. Today, the plant is legally permitted for medicinal purposes in 36 states and fully legal in 15, including Arizona. Of course, it’s still illegal on a federal level, so it creates a number of issues for everyone involved.
Statewide, following the November 2020 election, many existing medical license holders jumped at the opportunity to apply for dual licensing as other eligible applicants secured any licenses remaining.
Fast-forward to Friday, January 22, 2021. The Arizona Health Services Department announced approval of 86 licenses in nine of the state’s 15 counties. Under the cannabis legalization measure’s provisions, legal recreational marijuana sales have officially launched.
Whether it’s a seasoned entrepreneur or new entry into the industry, the recreational cannabis market is foreign territory and evolving more rapidly now than ever, so it’s imperative for all business owners alike to set the focus of marijuana and money aside, and instead, in these beginning stages, determine best practices for minimizing industry risk and maximizing success for the long term.
1. Establish a Plan
For those wondering, “how do dispensaries make money?” Look no further than this first point.
Establishing a business plan early on builds a foundation, which is especially important within the ever-changing cannabis industry. A good plan helps business owners focus on the specific steps necessary to make their overarching business successful, but it also helps them to establish and ultimately achieve both short- and long-term objectives. Business plans are effective for many reasons, such as raising money, making sound decisions, identifying strengths and weaknesses, and helping to clearly communicate ideas with stakeholders.
Before writing down your plan, consider two things:
- Who is your desired audience?
- How do we want them to respond?
For instance, if you are interested in raising money, investors are likely your target audience. If you’re looking to form partnerships, your target audience is potential business partners. Focus on the key message.
2. Follow the Plan
Although recreational cannabis is legal in many states, it remains illegal at the federal level, which means there is more industry risk within the cannabis market. Risks in banking and finance activity, placement of cannabis insurance, payment of taxes, supply chain management, and more, so it’s essential as a business owner that you consider all facets of the business in planning.
Even though it feels like you’re going 100 MPH in an attempt to keep up with the industry, you must take a moment to ensure you’ve finalized the details and secured all the right contracts and agreements. Take a moment to close these tasks before running toward the next one. This not only helps keep your foundation in place, but it ensures that you are building off of that foundation and growing your business with it in mind.
3. Find the Right Team
A team isn’t about everyone being as great as you are at doing the things you do well. A team is much stronger when its members all have diverse skills and expertise that align with their individual roles. A broken or missing spoke in a wheel can impair operations or derail them entirely!
The first step in establishing the right team and getting the right people is to recognize there are things you do well and there are things that others do better. Determine what those things are so you understand where your team’s strengths and weaknesses lie, including your own. From there, you can add new team members or revise existing roles.
4. Take Your Time
It’s essential that you take the time to fully vet deals, making careful and critical examinations of each that crosses your path.
Be confident enough to say, “I need time to make sure I process this wholly and to ensure I’m making this decision thoughtfully.” Don’t get so wrapped up in the excitement of this new endeavor that you become blind to smoke and mirrors. Remember, act with your foundation in mind and determine through due diligence whether a potential deal is complementary or incompatible with your end goal.
5. Keep Moving Forward
It’s so important to not only think things through but think things forward and consistently question, “what’s going to happen next?” Ask yourself how your business is different from others, what makes it unique, and never stop brainstorming ways to improve..
Once you establish a plan and set your cannabusiness on the right path, marijuana and money will go hand-in-hand. Your strong foundation will create a safety net for industry risk, so instead of asking, “how do dispensaries make money?” you’ll be questioning what to do with all of your success.
“If you fail to plan, you are planning to fail!” – Benjamin Franklin.