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Want to Start a Canna-Business? Some Ideas & Risks to Avoid

Jackie Tortello

March 2nd, 2017

News

Entrepreneurs everywhere have established successful cannabis startups that not only serve customers, but act as business models for those who hope to own a cannabis company someday. While the potential for growth in this market is attractive, new companies must be mindful of legal regulations and the inherent risks associated with producing and selling marijuana on a commercial scale.

According to a new research report from Marijuana Business Daily, the US Marijuana Industry’s impact is projected to hit $44 billion by 2020. The report contributes mainstream marijuana use and the way the industry has created a variety of jobs as two major contributing factors to the sharp increase of production and consumption.

“We’re witnessing the emergence of a business that is about to become a massive economic force,” said Chris Walsh, the managing editor of Marijuana Business Daily in a statement. “These figures, which we deem conservative, show not only how important the industry already is to the U.S. economy at large, but also how much more important it is about to become.”

The estimates released by Marijuana Business Daily include revenues generated by cannabis startups, the cost of licensing fees and taxes to marijuana tourism, employee spending, job creation and the impact on real estate prices the industry has on states that sell marijuana.

Walsh highlighted that the election of an anti-marijuana president could hamper the market’s growth by creating legislation designed to prevent marijuana transactions in states that have already legalized it. Despite this, the mainstream acceptance and use of the plant will create a serious challenge for any politicians threatening to imposee a ban or statewide limitations.

Pop culture icon Snoop Dogg has even supported cannabis startups by raising over $25 million in April 2015. Before Snoop Dogg, the main investors in the marijuana industry came from the public market. According to Marijuana Stock Universe, there are over 225 privately owned cannabis companies and that does not include startups.

In Nov. 2016, Privateer Holdings, a Seattle-based private equity firm focused on cannabis industry investments became the first company to raise $100 million for the marijuana industry. A report from fortune.com says that the firm’s portfolio includes the cannabis brand Marley Natural, Canadian medical cannabis cultivator and distributor Tilray, and Leafly, a website and mobile app that acts as the Yelp of the marijuana industry.

While the industry has received much support from customers and the tech industry, there are still a number of risks prospective start up owners must face if they hope to open and maintain a successful  cannabis company. Since federal law prohibits banks from taking marijuana or drug related money, that makes it hard for owners to operate a bank account, receive loans and requires customers to pay in cash. Additionally, cannabis companies must pay higher taxes than other companies that do not work with cannabis. They must also comply with local jurisdictions that vary state to state.

It’s clear that starting a cannabis company can attract high profile investors, bring in huge profits and create products that serve the public. However, the industry does come with inherent risks. If you are looking to start up a cannabis company, make sure to protect yourself and to learn more about cannabis startups, sign-up for our free newsletter using the form to the right.

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

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CFN Enterprises Inc. (OTCQB: CNFN) owns and operates CFN Media Group, the premier agency and financial media network reaching executives, entrepreneurs and consumers worldwide. Through its proprietary content creation, video library, and distribution via www.CannabisFN.com, CFN has built an extensive database of cannabis interest, assisting many of the world’s largest cannabis firms and CBD brands to build awareness and thrive. For more information, please visit www.cfnenterprisesinc.com.

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