Imagine while going for shopping one day you found that your credit card was terminated overnight. And the reason for this termination was not lack of payment and also not for involvement in any illegal activity, but it was done due to “unacceptable business practices”. This is a real fact facing by numerous business owners involved in medical marijuana dispensaries.
As we know that there are different challenges involved in all business types same is the case with the business owners of medical marijuana. Unlike more conventional foundations, these business owners manage greater challenges while handling negative public opinion and getting required business services.
Before starting any business it is necessary to get an idea about the business standards and requirements we have to complete. What are the risk factors? What is the rate of competition and who is your competitor? Also, you should know about earning potential and the source of earnings.
Let’s check out the things you need to keep into consideration before starting your own marijuana business:
- Limited finance options
The cost of executing a marijuana business is very high. Furthermore, to make this cost factor more difficult to bear, marijuana business might have a typical time getting small business loans in order to run business operations easily. Marijuana business is considered as an illegal business federally and this is the main reason behind the absence of such types of loans.
Many of the banks involved in providing small business loans are operated on a federal scale and follow all the federal banking rules that make it nearly impossible to get loans for marijuana business. No bank wants to take the risk of being captured as supporting activities that are not legal under federal laws.
Although, some credit unions and small banks have started lending cash advances and smaller loans for marijuana business. So, before starting this business, you need to be assured of your funding and financing options.
- No breaks on your taxes
Since cannabis business as of yet is illegal at the federal level, marijuana has a bizarre tax status. Business owners of marijuana have to file federal income tax returns but cannot take regular deductions of tax including payroll, advertising and the cost of rent. You will have to reduce the cost of growing your product, but that is a little amount of allowances made by you. So, if you are thinking to start marijuana business, it is a smart thought to have a required amount of financial cushion in a manner to save yourself becoming red by taxes.
- It can be highly time-consuming in regulation compliance
It is necessary to run a business under the regulations. Cannabis or Marijuana business is no special case—and their regulatory load is typical than most. We should also keep in mind that it is not a legal business under federal laws, but it is legal under state and local laws. But since federal jurisdiction concedes to state jurisdiction in accordance with the sale and cultivation of marijuana, cannabis organizations can get a green card without typical federal prosecution by following state and local laws carefully.
One more thing we need to consider is that this business is legal on a state-by-state premise, the documentation and licensing required will vary in every state.
So, if you are interested to start a marijuana business, then it is necessary to know about regulatory bodies, licensing and documentation required for starting and operating your business. The best method to save time is to consult an expert lawyer who has experience in the same field.
- You should be very careful with marketing
It is one of the most important factors we need to consider before starting any new business. Market analysis is very necessary in order to sell your products. Without a market, there is no mean to make the products. There are some laws also available that are required to be followed by the business person. You can check sister industries such as liquor to get a better idea and guidance as many rules are identical in both the industries.
Some of the other things that we need to consider are who will be the partners and investors for your business, what should be the right time to launch your product in the market and also we have to select our consumers.