Starting a Commercial Cannabis Farm – Part 2

This is the second installment of our 2-Part series that offers a basic guide on what’s involved with starting a commercial cannabis grow operation.

Cannabis entrepreneurs are harnessing the growing opportunities in the Green Rush and while sales in the cannabis industry are increasing, so too is the competition. Research, planning, and executing a good business strategy is the foundation of success that paves the way to achieving revenue targets, and sustainability in new and established markets.

Choosing Your Cannabis Product

Before deciding on the cannabis strains you intend to grow, research is key in knowing what’s already on the market and how your particular products will compare. Take the time to find unique strains that you can include in your operation as it will help make your product offer more diverse and increase your potential in the market.

Whether you want to supply popular strains or target a niche market, sourcing the best quality seeds can make or break the business. Alternatively, you can clone female plants to speed up the growing process or have a combination of growing from seed and using clones. Either way, you’re going to need an expert cultivator or acquire sufficient knowledge to do the job yourself.

Using feminized seeds or cloned females is a safer bet than using regular seeds because of the guarantee of getting females plants. Having a male plant pop up can devastate your crop and result in a time-consuming and expensive exercise. Buying female clones that have already been propagated is an easier option to shorten the time to harvest but they can be susceptible to shock, pests, and mold.

Financing a Commercial Cannabis Venture

Even though interest in the cannabis industry is increasing, it’s not a simple process convincing major financial institutions to lend you money to grow marijuana. The FDIC insures banks but they have strict regulations where they won’t protect a bank that takes existential risks or invests in companies that violate federal law. However, not all is lost, the tide is slowly changing as more investments are resulting in lucrative ventures that involve cannabis companies. But if you hit a wall getting a bank to finance your operation, you can look for private investors.

With a bit of research, you will find venture capitalists, private equity funders, private lenders, and angel investors willing to invest in a new cannabis enterprise that has a solid business plan and strategy. Presenting a well-thought-out idea adds confidence to those considering investing in your business. They need to feel it has great potential and that you are a reliable and astute businessperson who can pull it off.

If building a commercial cannabis operation from the ground up seems to be out of your league, you can also look to invest in or acquire existing cannabis businesses that are struggling. Just because someone wants to grow cannabis commercially does not mean they will be good at running it. When the cannabis industry started to take off, a lot of people wanted to get in on the action. They started out with the best of intentions, had the financing and enthusiasm but were lacking in business acumen. Or they found out the hard way that it’s not an easy, cheap business to get into, especially with all the regulations, compliance, and competitive market conditions. Network in the industry and look for opportunities that have potential.

States and Licenses

Once you have decided on the state where you are going to legally set up your operation, you will then need to go through a lengthy administrative process to get a license. Application fees and processes will vary from state to state.

States, where cannabis cultivation is legal, present their own challenges such as entering an established market with more competition. However, on the upside, states like Washington and Colorado have consumers who are more mature and the demand for new cannabis products continues to grow.

With new states that are legalizing cannabis and states that are still considering it, the adoption by residents takes some time to evolve and grow. But there is typically less competition in these markets. Do your homework to assess which will be the most lucrative region for your business.

Take it Seriously

The long-standing image that cannabis is grown by disheveled hippies has disappeared. With legalization growing, it is becoming a budding industry with high consumer standards and stringent regulatory requirements. If done properly and done well, you have a great opportunity to build a sustainable and booming business.