But, while there is money to be made in the market, it’s important to realize that this growth also comes with a competition increase.
The medicinal use of the plant is still a great entry point for new entrepreneurs who are eager to learn the ins and outs of the business.
However, if you plan on starting a medical marijuana business, then you must educate yourself on these points. Luckily, we’ve compiled a quick crash course to help you decide whether it’s a good time to open a new shop. Let’s get started!
The Medical Marijuana Business: What You Need to Know
Starting a business is a complicated process — especially when it deals with a federally illegal substance.
Luckily, we’ve condensed all the need-to-know information advice about becoming an entrepreneur in the rising industry into these three helpful points.
1) The Taxation Rates are High
Cannabis businesses face incredibly high taxation rates compared to other types of businesses.
Because federally illegal rules like the IRS’s Section 280E make it impossible for marijuana businesses to deduct expenses from their tax bills. The result is an average tax rate of 55% on most cannabis companies — so be prepared to pay up.
2) You Will Require Licenses and Permits
If you come in physical contact with the marijuana plant, then your business will need a lot of licenses and permits.
The specific amount depends entirely on the state you live in, so make sure you check the laws currently in a place where you plan on opening.
Typically you will be required to describe your operation in depth for various officials. Unfortunately, the application process for their licenses and permits isn’t cheap — you can expect it to cost around $150,000 or more.
3) Create a Business Plan and Stick With It
A solid business plan can help you secure potential investors and ensure that your company takes off once it opens.
Your business plan should include things like the rough overhead costs, how you plan to get customers/turn a profit, and what will set your shop apart from the competition.
You should also consider things like location, suppliers, and potential legal aid. If you want a more detailed step-by-step guide to execute your plan and market your business, then check out this resource on how to start a marijuana dispensary.
Is a Marijuana Business Right for You?
We hope this article helped you learn more about the medical marijuana business. So is it a good time to start a new business? Ultimately the answer to that question comes down to you.
The industry is indeed in a state of flux at the moment — with new states legalizing or decriminalizing the substance every day.
However, business-savvy individuals can navigate these complex laws and high taxation rates to create a truly successful business. If you think you have what it takes, then get started on your business plan today