What is your experience with cannabis and what are you looking to accomplish from using cannabis? These are two fundamental questions to ask people who are new or unfamiliar with cannabis and are looking to consume. These are also two very similar items that someone looking to enter the cannabis industry should ask themselves when starting a business. They are the common “what are you doing and why are you doing it?” questions.
There really is no one right answer as every company is different with varying core competencies. However, just like any other industry, you need to be able to clearly define how you will drive value for the consumer. The cannabis industry is extremely tough. Therefore, analyzing the current and potential future resources available is extremely important. Does it make sense to be vertically integrated or is it more beneficial to focus on one component? What is the composition of your team and how do their skill sets apply? These are just some of the things to think about as you start your business.
Cannabis is a crowded space, so being able to differentiate yourself in a meaningful way is key to setting yourself up for success. Just because the potential market is seemingly unlimited (it isn’t!), does not guarantee that every business will last. Recently, The Business Roundtable, a group of chief executive officers of nearly 200 major U.S. corporations, redefined the “purpose of a corporation.” No longer are serving the shareholders and maximizing profits the key drivers. Rather the focus is now on employee investment, providing customer value, and supporting communities.
Countless studies show that keeping an existing customer is exponentially less expensive than acquiring a new one. The same goes for maintaining quality employees, where often times the switching costs between companies in the cannabis industry for lower level (and even more senior level) employees is relatively low.
Finally, supporting communities and being a good corporate citizen should be automatic. While there is generally widespread support for the legalization of cannabis, local residents often have concerns when it comes to a business setting up shop near them. In almost every state, having the ability to operate a cannabis business is truly a privilege, not a right. Working hard to make a positive impact for the people around you will only help your business and its reputation.
Cannabis and the industry itself is very complex. Do not try to make it even harder by coming at it without a clear and decisive plan. This will help ensure you provide value to your customers and allow you to be better positioned to pivot and adjust as things continue to change at a very rapid pace.