Cannabis Business Types You Can Start

Investors and entrepreneurs are always asking us about potential business opportunities in the cannabis market. We’ve gotten questions about what type of businesses there are and how to get started. We’ve also received inquiries on what the future holds for potential cannabis entrepreneurs.

In this article, we’re going to do our best to answer all of your questions… and more!

Cannabis Market Potential

The cannabis industry has grown exponentially since California legalized the herb in 1996. In fact, U.S. legal cannabis sales were $6.9 billion in 2016, according to ArcView Market Research. This research firm forecasts that legal sales will grow to over $21.6 billion by 2021!

But Where to Begin?

The cannabis industry offers numerous opportunities for entrepreneurs willing to wade through the complex laws and challenges of the market. However, some may feel that unless you start a large business, it’s impossible for business owners to get involved.

Kristopher Fowlkes, the CEO of Pinnacle Consultation, begs to differ. She is the head of a Colorado based consulting firm for cannabis entrepreneurs.  “Small-business owners are can swoop in where the big guys won’t.,” she says. “The cannabis industry has created a wild type of entrepreneurship and we’re only just scratching the surface.” 

The Green Rush

It’s pretty rare in life to get in on the ground floor of a high growth industry. The “Green Rush” of the cannabis industry fits that description well.

“These are exciting times, where new millionaires are about to be made,” says Troy Dayton, the CEO of The ArcView Group. The different types of marijuana businesses can be broken into three general categories:

  • Cultivation
  • Infused Products
  • Retail Sales


Low-Cost Startup

According to the Marijuana Business Handbook, the cannabis landscape is ripe with opportunities. Most businesses report modest startup costs: one-third of cannabis wholesalers put in less than $50,000. About 14% spent from $50,000-$100,000, and 24% invested $100,000-$500,000. The remaining 29% spent $500,000 or more – with just 10% reporting an investment of over $1 million.

Cannabis Business Opportunities

For those that are considering the opportunity, we’ll explore some of the more established business ideas. We’ll also look at some of the pros and cons of each one: 

  • Dispensary and Grow Operations: This is the first thing a cannabis entrepreneur might consider. However, the tax burden on dispensaries is pretty hefty and the overhead cost is substantial.
  • Edibles: The market for edibles is similar to the natural food or craft beer industry. No one has established a dominant brand yet, which allows for potential large profit margins.
  • Processing Cannabis: Another aspect of the industry is the processing of cannabis. For example, products like rosin, a solvent-free extraction ideal for medical use, or the MagicalButter machine, which cooks a potent tincture.
  • Security and Other Services: The industry generates significant amounts of cash. Large amounts of cannabis are regularly transported. This is an excellent opportunity for a firm to create a secure distribution network.


Future Cannabis Business Opportunities

The cannabis industry is rife with opportunity. Cannabis entrepreneurs are legally growing, curing and dispensing in record numbers. As these numbers grow, so will the ancillary businesses: 

  • Cannabis Hospitality: Consider opening a hotel or lodging business where guests can consume cannabis products freely. Joel Schneider, a veteran lawyer and New York native, did just that when he opened Bud and Breakfast. Schneider says “The cannabis culture is very communal, our guests love to share. You don’t pass a cocktail around. You pass a joint. That’s what makes us unique.”
  • Cannabis Delivery Service: Transportation services such as Uber and Lyft were the inspiration for Keith McCarty, a former Microsoft executive. In July 2014, he launched Eaze, an app-driven medical pot dispensary-to-door service. The San Francisco based company raised $20 million in venture capital and regularly chauffeurs bud where it’s needed. McCarty says: “There’s a lot of room for innovation and differentiation with what we’re doing that doesn’t exist in other business categories within the cannabis industry.”
  • Dispensary Designer: How many architecture firm specialized in designing cannabis dispensaries? It turns out the answer is not enough. Megan Stone launched The High Road Design Studio to do just that. She seeks to elevate the cannabis industry through professional design. She states:  “I help them craft their brand, their logo, their style and tone, and then we weave all of that into what they’re trying to put out there as their image and into their dispensary space.” 
  • Event Planner: Consider the following: special events where the main feature is cannabis. These will need somebody to plan and properly strategize them.
  • Reviewer: Consumers also need access to information regarding the cannabis industry and the products available. By providing reviews and other pertinent information, you can help consumers make informed decisions.
  • Software Developer: Small businesses need specialized software for essential business functions. As a software developer, you could apply those skills to the cannabis industry.
  • Accessory Maker: There is a constantly growing market for accessories like glass vessels, papers and trays.


Start Up Challenges

Opening a cannabis business can be vastly more complicated than other kinds. The regulatory environment is uncertain and state laws tend to vary. Consider the following before you decide to jump into the cannabis industry:


  • Cost: Costs vary by location, state laws, and type of business.
  • Residency: The majority of marijuana business and investor licensees must be state residents.
  • Criminal Record: The majority of states prohibit felons with drug crime convictions to apply for a marijuana business license.
  • Risk: With the ever changing regulatory environment, there is a lot of risk.
  • Time: The process to get a license is a lengthy one. It can take anywhere between three and 18 months in most states.
  • Investors and Partners: Certain investors may be wary about a business that remains illegal under federal law.


Cannabis Marketing

The cannabis market is not a gold rush where you can expect to just find your fortune. It’s a highly competitive industry that needs a serious level of commitment. The rapid progression of medical and recreational laws throughout the country is a great opportunity for cannabis entrepreneurs.

But if you want to take advantage of it, you need to weed out your competition!

  • Analyze and Overcome – Real market data can help you understand cannabis consumer behavior and analyze the competitive landscape.
  • Branding Cannabis Business The attitudes and trends surrounding the cannabis industry have changed. Brands are an important aspect of society and culture. They are more than just a business; they are an experience.
  • Cannabis Strategy – To succeed in the industry, every business need a an effective strategy that works across packaging materials, business cards, flyers, banners and marketing brochures.


We hope you found this article useful. Did you know about all the potential business opportunities? Are there any that you need more information on? Let us know in the comments!

Oh, and don’t keep this information to yourself. Be sure to share this with your family and friends!

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