Home » How to Start an American Cannabis Company in 2019


How to Start an American Cannabis Company in 2019

Cannabis Basic Training

The legal marijuana business in the United States is quickly becoming quite a lucrative enterprise.

In 2018, the industry’s net worth ballooned to about $10.4 billion. Perhaps what’s even more fascinating is that experts predict the profitable business arena will grow to be worth about $16 billion by the end of 2019.

That’s a lot of money to be made, and we haven’t even touched on the amount of money that can be earned on marijuana’s close sister: hemp. The hemp business earns about $700 million annually.  Now that hemp has recently been legalized on a federal level in the US, the financial market is excited with the possibilities.

With all these market expectations, it’s only natural that many people, such as yourself, are trying to figure out how to get a piece of the cannabis pie. Keep reading and we’ll answer many of your questions on how to start an American cannabis company.

Narrow the Focus of Your American Cannabis Company

It’s not just enough to know you want to get in on the cannabis profits. You also have to know what part of the industry you’re ready to take on.

Growing Cannabis

If you’re interested in cultivating cannabis, and you’ve located a state where it’s legal to do so, then your next step is going to be applying for a cultivation license, if the state is currently allowing applications. And depending on the state, the application process may be quite rigorous and even pricey. Many states have an application period when the cannabis program beings, but stop accepting applications after that point. If this is the case, the only way to get in would be to buy an existing cultivation license in that state.

Take for example New Mexico. To be a marijuana grower in the state, you have to earn a non-profit status and have a licensed medical professional on board with your business. You must also be a New Mexico resident with a valid state or federal identification.

There’s also a hefty licensing fee in most states. Licensing fees can range from $30,000 to $250,000. Did we forget to mention the yearly background checks on those associated with the growing operation?

While licensing requirements and fees will differ from state to state, it’s crucial you take a look at those if you have marijuana cultivation aspirations. (Hemp is something different as we discuss later.)

Besides the rules and regulations of it all, it’s also essential to research how you’ll want to grow your product, and which type of grow is best where you want to cultivate.

Owning a Dispensary

Similarly, becoming an owner of a dispensary is also a process, and differs from state to state. Let’s take Colorado, for example, this go-around.

To obtain a dispensary license in Colorado, you have to be at least 21, have been a resident of the state for at least two years, and must not have any controlled substance convictions on your record within the last ten years. Also, you have to have a “clean moral history”, and not be employed by local or State Licensing Authority. (These rules apply to you and any partner or any employee you may have.)

There are also fees associated with the application in Colorado, like every other state that allows marijuana dispensaries. However, these fees tend to be a lot lower than the cultivation fees. Some states have only vertical licenses – like Florida. Which means, you can not get a dispensary or processing license on its own – the processing and dispensing of cannabis is done by the company that holds the cultivation license. In states like this it is very difficult to obtain a license without spending millions of dollars.

Hemp Business Ventures

If you don’t have any interest in the marijuana business, but would rather deal in the hemp industry, there are many lucrative opportunities to do so. You can grow hemp and/or develop products using it.

For example, as more people pay attention to what they’re putting into their bodies, hemp cooking oil is growing in popularity. If hemp oil is not your thing, hemp lotions, hemp paper, and hemp clothing are also increasing in reputation on the market.

Many people would rather deal with hemp because there is arguably less complexity with the laws governing this form of cannabis, especially now that hemp has been made Federally Legal by the Farm Bill. Not to mention that hemp uses less water and less pesticide than cotton.

Know What’s Legal

As profitable as the cannabis industry is in the United States, the fact remains the laws surrounding these plants are quite complicated.

In terms of marijuana, this particular cannabis plant (with THC) is entirely illegal in 18 states, only approved for medicinal use in 22 states, and approved for medicinal and recreational use in  10 states and the District of Columbia. And of the states where it may be legal to possess marijuana in some capacity, only 15 states allow you to grow the product in some way or fashion.

To add a layer of complexity to all of this, marijuana is still technically an illegal substance on the federal level. It’s still classified as a Schedule I drug. For those that aren’t familiar, Schedule I drugs are considered the most dangerous in the country, and marijuana on a federal level is still classified to be as dangerous as LSD and heroin.

Switching gears for a second to talk about hemp, this form of cannabis became legalized on a federal level in the United States via the Hemp Farming Act of 2018. The bill essentially allowed farmers to grow hemp and allows individual states to regulate the cultivation, processing, and sale of it.

While most states have some form of state regulation on the hemp industry, there are states like Idaho that still outlaw all forms of cannabis, including hemp. So, growing and selling hemp gets extremely tricky in such states.

If all of this seems a bit complicated, it’s because it is to an extent. But don’t let the legal complexity deter you from entering into this multi-billion-dollar industry. Just stay abreast on the continually evolving cannabis laws.

Deciding What Business Venture Is Best for You

If you haven’t already put your hat in the cannabis ring, you have to ask yourself what you’re waiting on.

The business continues to grow and become a force to be reckoned with among agricultural products. Should you still be a little hesitant on farming or dispensing, you can always invest in an American cannabis company already on the market as another option to get your piece of the cannabis industry.

If you have any more questions about investing in marijuana or hemp, be sure to contact us.