by Ellie Herring, Marketing Director of Dime Bags, a subsidiary company of Head Choice Inc.
Advice from Dime Bags, a leader in the hemp space that’s been in the industry for over a decade.
Business is booming for those who are successful in the cannabis industry. With over $9 billion in sales reported for the marijuana industry in 2017, it’s no surprise entrepreneurs are looking to fill the needs of millions of new customers that join the market each year. While the cannabis industry may look like a fail-safe investment to some, those who’ve successfully established themselves in the market know that starting a cannabusiness is nothing short of an enormously challenging feat. Regulatory laws, unforeseen roadblocks with city stipulations and auxiliary businesses, and an oversaturation of the market are some of the many challenges new cannabis business owners face.
With over a decade of first-hand knowledge in the industry, Dime Bags has experienced the many ups and downs of starting and successfully running a business in the hemp market. To save new cannabusinesses the trouble of making these mistakes on their own, we’ve compiled a list of the top five mistakes new cannabis businesses make (and how to avoid them).
Creating Unrealistic Expectations
Inexperienced entrepreneurs look at the cannabis industry and assume that because the marketing is booming and continuing to grow, it’s a fail-safe investment. This couldn’t be further from the truth. Penetrating a saturated market takes substantial dedication to the product or business and a wealth of knowledge of both the industry and regulations. What may look like a fool-proof business plan could completely dissolve with one legality mishap. In addition, a business plan with no passion or knowledge of the industry can easily fall behind in the saturated market of cannabis aficionados who quite literally eat, sleep, and breathe cannabis.
Be passionate about the business you’re starting or investing in and set realistic expectations for growth. While the cannabis industry has plenty of potential for successful ventures, they don’t come without their fair share of complications.
Assuming Other Businesses Are Willing to Work with You
Even in recreationally legal states, cannabis-related products and businesses still constantly face roadblocks in every operational endeavor. Dime Bags creates protective bags for glass transportation and uses hemp to make the fabric of our products. The bags arrive at our warehouse in Colorado Springs already constructed. There is no raw hemp at our building and certainly no cannabis on the premises, yet we’ve faced backlash and pushback from many companies. We’ve been turned down by insurance companies, faced difficulties finding a bank, and even experienced direct pushback from the surrounded storefronts for the product we make and market. Even if you’re starting a business in a recreationally legal state, do not expect others to always welcome you with open arms.
Properly research banks, accounting firms, lawyers, insurance companies, the location of your business and every other possible partnership beforehand to find those who support and are willing to work with cannabis businesses. As long as cannabis remains federally illegal in the United States, cannabusinesses will experience some pushback from other industries who are unwilling to take the risk. However, as public perception shifts and more states become legal, there’s been a noticeable increase in cannabis-friendly ancillary businesses and finding the right partnership is no longer completely impossible.
As with starting any business, not being adaptable will cause your business to fail. In an industry where everyone’s trying to get in while it’s on the rise — the effects are tenfold. The cannabis industry is constantly changing with the growing market and if you’re not fully committed to adapting with the industry, your business will fail. As the cannabis industry is still so new and not yet worldwide, changes in behavior, attitudes, interests, and trends are moving at a rapid rate.
Stay up-to-date on the latest discoveries in the industry so you can be ahead of the curve for the “next big thing.” Having a solid understanding of the plant itself and the interests of consumers will allow you to recognize trends before they take off. While Dime Bags originally only made bags with hemp, we adapted to expand our line to include smell-proof technology as we recognized the demand from consumers. While it’s important to have a vision and roadmap for your brand, be open to changes in the market and stay on top of trends so you can execute changes before the rest of the industry.
Breaking the Law
While acute knowledge of state and federal regulations is a critical part of any cannabusiness, breaking the law goes beyond the day-to-day operations. Be especially mindful of how your employees and company conduct themselves. While your business may operate according to state laws, that doesn’t always protect you from random searches or anonymous tips given to regulatory officers. If your business hosts a launch party or industry event, ask yourself if on-site consumption is worth losing your business over. That’s not to say that it can’t be done according to the laws for your state, but one underage person caught smoking or someone enjoying a joint outside the front door of your shop could spell serious trouble for you.
Clearly outline your expectations for your employees including how they should conduct themselves at industry events and define the laws and regulations for everyone so there’s a solid understanding of what is legal.
No Back Up-Plan
As Benjamin Franklin famously quoted, “by failing to prepare, you are preparing to fail.” Part of working in the cannabis industry is constantly preparing for the worst. Always have a back-up plan when executing your strategy. The city may revoke a permit for an event you sponsored due to public concern, your packaging may not hold up to new regulatory laws, the possibilities are endless.
While it’s impossible to predict every issue that may arise, have enough capital to handle sticky situations and plan for alternatives before it’s too late. As a general rule of thumb, have at least three months worth operating expenses saved to account for unexpected situations.
The cannabis industry is an exciting and lucrative field for those who prepare and fully dedicate themselves to learning the ins and outs. With national (and hopefully worldwide) legalization on the horizon, it’s set to be one of fastest growing industries over the next decade. By following the advice of those who’ve paved the way, we hope your business has a successful launch in one of the most exciting times for the industry.
Ellie Herring is the Marketing Director for Dime Bags, a Colorado Springs-based but globally recognized glass protection brand that specializes in hemp fabric, smell-proof carbon filtered technology, and everyday accessories for hemp and cannabis enthusiasts alike. Dime Bags is a subsidiary company of Head Choice Inc. For more information about Dime Bags, please visit DimeBags.com.