Top 10 Secrets You Need to Know Before Starting a Cannabiz

Even the “Experts” don’t understand some of these important truths!

You’ve been successful in business and created revenue for yourself and your family, why not do that in cannabis with so much growth and opportunity?

Haven’t you heard? Just take what you do and do it in cannabis.

It sounds idyllic until you start encountering the many roadblocks that have been strategically placed along your path. It took me eleven years on the inside to understand them, but here are the top 10 secrets you need to know before starting a cannabiz.

1. Unrealistic Expectations:

Many folks seem to think that having a cannabis business means cannabis consumption all the time. It can, when it’s your business, but if you aren’t intentional with how you apply cannabis in your life, it can also be a hindrance. There are also a lot of folks (like those you may hire in the future) who think it might be okay to be high all the time when “working in cannabis”. We already know it’s not all smoking weed and eating Cheetos on the couch, but a poorly placed linalool dose in the middle of the day can dampen a productive afternoon. If cannabis is important to you, you can incorporate it mindfully into any type of business you have. You don’t have to have a cannabis business.

2. If it’s not working out of Cannabis, it won’t work in:

If you have an insurance, tax, Hr, bookkeeping, skincare, beverage, or consulting company right now and it’s not working well for some reason, switching to Cannabis will NOT solve your problems.  It will more likely multiply them. In addition to it probably being a core issue with your business model, product, or marketing, adding cannabis will make it tougher to navigate, not easier. Keep the cannabis in your personal life until you’re sure you want to go that route and read to the end if you don’t know how it gets tougher.

3. Banking:

As long as cannabis is a schedule 1 drug (which it should not be, but that’s for another post) to the federal government, there are bountiful issues. They start with banking. Cannabis businesses cannot be insured by the FDIC, so they cannot legally have bank accounts. There are a lot of workarounds folks use, but at the core, they are all federally illegal still and come with huge risks.  One of my clients had over $10K taken by a payment processor because they decided it was an illegal business.  They were hosting legal events in a legal state. 

4. Advertising:

Advertising in its many forms, from magazines to tv, radio, and the internet are heavily regulated by the FCC, a Federal body. Therefore, you run into rules that block you from advertising marijuana, cannabis, or any related products.  Yes, there are ways to work around it, that’s part of what I help clients do, but it can be costly and requires a commitment to meeting the culture (that I’ll talk more about in a few paragraphs) where they are with what they need most. 

5. Federal Benefits:

Since the sale of the plant and any ancillary businesses are generally illegal at the federal level, businesses in this space don’t have the same legal protections at the federal level.  For example, dispensaries and many cannabis companies were not eligible for PPP loans. They are also not able to write off normal business expenses the way typical businesses are and they are often given additional local and state taxes to pay on their sales. Also, contracts you make with cannabis-touching businesses (like dispensaries) may not hold up in a court of law if they end up defaulting. Beyond the State level or when talking about federal breaches, the federal court has to excuse itself because the whole transaction is illegal in their eyes. This leads to my next point.

6. BIG Money and political power involved:

When you realize the value of each dispensary license across the nation and world, you understand the raw attraction of big money to control the market and make sure legislation is created that will favor their objectives. Yes, there are a lot of obstacles right now, but the biggest money can bleed until everyone else has bled dry and then scoop up all the remains and emerge as the victor. If you don’t have the finances to compete with the big money in the current legal structure, consider whether you are ready to lose everything for this dream. When I say big money, think the biggest money piles in the world like big pharma, international shipping,  big real estate, and the prison industrial complex. Plan accordingly.

7. The Green Tax:

I’ve alluded to it before, but it has a name.  The “green tax” is the extra fees cannabis-related businesses pay all around to be and stay in business. From the literal IRS tax implications of 280E to the added state, county, and city taxes that can be tacked on, there are also exorbitant licensing fees, incredible requirements for cash reserves, and line items added on for everyone along the way that provides a service that would otherwise be difficult or illegal to access due to federal law. It’s designed to keep you out unless you have immense wealth and resources.

8. Censorship:

Every platform can make its own rules of engagement. Many of them censor content related to marijuana and cannabis simply because they don’t want to deal with the consequences the FCC might impose. If you don’t know the specific rules about what is and is not okay to post on each platform, you can quickly be de-platformed and lose followers, online stores, blog content, and more. Usually, there’s no recovering what’s been lost on other platforms.

9. Culture Clash:

The “cannabis culture” is a subgroup of society that remains hidden from a lot of typical environments. While many are beginning to open up about their cannabis use, it’s still not accepted in public places and can result in arrest in many locations still, especially for Black, Indigenous, Brown, and poor people.  Parents still have to be careful about when and how they use cannabis products for fear of being reported and penalized by outdated laws and societal stigmas. Add this to a highly publicized and seemingly profitable legalization effort and the cannabis community feels the pain every day. As a community, they have been punished for so long and not given the respect or recognition they deserve because they’ve had to stay hidden to stay safe. Then cannabis “bros” who have never suffered any of those consequences flood in and try to gouge the market. In a nutshell, if you’re not ready to meet the cannabis culture where they are, prepare to die out in a “blaze of glory”.

10. Go Hemp:

Now that I’ve properly scared you out of going into the “Cannabis” business, let me tell you what WILL work if you’ve decided it’s still for you. HEMP. Now, I won’t go into the nuts and bolts of the differences between Hemp and Cannabis (because they are the same plant), but I can tell you that by simply changing the word you use and using a plant with less than .3% THC, you will suddenly face far fewer obstacles.  See, the 2018 Farm Bill legalized Hemp and Hemp-derived CBD products federally. That means the products can be shipped across most of the United States, they can have banking, and they can be sold online or in person wherever you live. If you wanted to be an accountant for Hemp companies, you can do that niching more easily than for cannabis companies. One word of caution though: if you plan to get into beverages, topicals, edibles, or anything people will ingest or use, make sure you consider how the FDA is regulating those items.  While they may not currently be FDA regulated, they likely will soon and your company will need to be able to adapt fully and quickly.

Are you stuck? I can help you, not only with operations; but with HR, marketing, web development and more. Let’s chat. 

I’ve included a link below to my framework, The Hart Habits, which can help you work through some of these things for yourself or if you still have more questions than answers, let’s set up a quick call to talk about your vision and how to get there. I can’t wait to chat!