5 Challenges You Will Face When Starting a Cannabis Business

Challenges you face in the cannabis industry is a huge topic at the moment. Maybe you’re thinking about starting a business in the cannabis industry. It makes sense. Cannabis is an amazing plant, and the industry seems to be growing with no end in sight.

What makes this industry so exciting and attractive is also what makes it challenging.

The industry is still in its infancy in many ways. Cannabis is not legal in several states in the USA, and where it is legal, legislation can change from one day to the next. This can make running a cannabis business quite tricky.

In this article, we point out five big challenges you might need to overcome in order to have a successful business in this exciting yet demanding industry.

CHALLENGE #1 – Having a Good Idea

The first challenge you face in the cannabis industry is having a good idea.

Ask yourself this question now to make sure you’re not going to need a reality check later.

For example, many people would love to grow cannabis and own a cultivation facility. However, if the state you want to operate in only gives out 15
growing licenses, costing $100,000 each, you will either have to be well connected, have very deep pockets, or move to another state.

Let’s stick to growing for a moment. If you don’t have the funds to set up your own growing facility but have many years of growing experience, then perhaps setting up a consulting company is the way to go? Helping other facilities with their growing operation is a service that will most likely grow in demand and offer less risk with more reward.

Find out what you’re good at, what it is about the cannabis industry you particularly like, what is realistic, and if there’s real potential. Always be prepared to go back to the drawing board if necessary.

CHALLENGE #2 – Understanding the Legal Situation

The second, and probably biggest, is the challenge you face in the industry involving legalities. Now that you have a good idea, you must understand the legal requirements in the state (or states) you want to operate in. This can be quite a headache. Laws and regulations often change, and they tend to vary greatly from state to state.

Whether you want to grow hemp, own a chain of
dispensaries, create a CBD brand, or provide a service in this growing market, you must first make sure it is legally possible to do so. For example, if you want to open a dispensary, it can come with a long list of legal requirements. In addition, just applying for the seller’s permit can be an issue, depending on the state.

Therefore it is crucial to do your homework and, if possible, get legal advice. It might feel like an expensive start-up cost, but in the long run, it will almost certainly save you time and money.

Once you have all your legal ducks in a row, you can get started. Well, almost.

CHALLENGE #3 – Banking and Insurance (aka the Fun Stuff)

If you have a strong idea and this promising idea has legal grounds, you can get busy building your empire. But first, you need to find a way to fund this empire. And that’s hardly ever easy!

Rome wasn’t built in a day, and neither will your cannabis business be.

Where’s the Money, (Lebowski)?

If you’re setting up a service-based business where the service you provide is your expertise, then perhaps your start-up costs will remain low.

But any other business might require a substantial initial cost to set up, run, and grow your business.

In most cases, you will need to have your own capital to start, find investors, or get a bank loan.

The latter can be complicated as
many banks in the US do not want to be associated with cannabis. For that reason, it might be easier to use the resources you have available.

Remember, cannabis is still federally classified as a schedule I controlled substance, which unfortunately scares off most major banks and financial institutions. This is, however, slowly changing as activist groups, politicians, and lobbyists are currently pushing for better legislation.

More alternative options are becoming available, such as some small banks offering loans, online marketplaces offering financial solutions, private lenders, and Kickstarter campaigns.

Get Insured!

Getting insurance should not be overlooked, no matter how boring it may be.

It’s easier for a
cannabis business to get insured than it is to get a bank loan. However, getting insurance does come with its own set of challenges.

There are many different types of insurance, and it is essential you know which ones you might need. For example, healthcare, travel, vehicle, life, and liability insurance, to name a few.

Fortunately, unlike banks, there are
quite a few cannabis specific insurance companies to choose from, which will cover anyone from growers to retailers and anything in between.

The challenge is not to get insurance but to get the right one!

CHALLENGE #4 – Finding the Right Team

As the cannabis industry is still very young, sourcing highly skilled, trained or experienced staff can be tricky.

There are far and few between, and those available get snapped up quickly, as they are highly sought after.

Train Yourself

Suppose you can set up a one-person business that doesn’t involve hiring anyone else, then great. But better make sure you are well trained, highly skilled, or have good knowledge of whatever you are about to start.

If you know what you’re getting yourself into, you will have a much better chance of running a successful business. You will also be better equipped to train any future staff you might hire.

Find Others

Fortunately, as the cannabis industry continues to grow, so do the number of services helping you find the right people for the right jobs.

More and more
cannabis job portals are popping up, making it easier than ever to find suitable candidates. They are the perfect place to advertise any job opportunities you might have to offer.

Certain social media platforms have also recently started allowing cannabis job ads. You can even find social media platforms that have been created explicitly for the cannabis industry. A great starting point for your headhunter.

And if you find the perfect person with the right attitude and business experience, but lacking in cannabis knowledge, worry not. There are plenty of cannabis schools offering various cannabis courses, such as Budtending Certification Programs, Cannabis Business Programs, and even Horticulture Programs.

Finding reliable, highly skilled and experienced staff will become easier as time goes on. But that doesn’t mean it’s easy at the moment.

CHALLENGE #5 – Advertising

The last challenge you may face in the cannabis industry is marketing. And a big one it is!

You might have a great product or service, great branding, or even great distribution channels, but it will not succeed if no one knows your business even exists.

That’s quite obvious.

What is not so obvious is that cannabis has a lot of the same advertising restrictions, if not more, as alcohol, tobacco, or gambling. In addition, social media platforms, such as Facebook and Instagram, also have their own set of limitations and restrictions.

For these reasons, successful
cannabis companies need to come up with out-of-ordinary marketing strategies to be able to advertise their business.

A perfect example of this is cannabis retailers who, instead of advertising their products on the building, hire local artists to create murals on their properties or paint their retail spaces in funky colors. That way, people can associate the cannabis businesses with the art on its walls.

This is just one outside-of-the-box idea that helps create awareness when working within a set of restrictions.

If you have a creative mind, then don’t be shy. Use it!

Remember, these restrictions may vary significantly from state to state, or depending on what service or product you provide. So make sure you understand what you can and can not advertise in the state you’re running your business in.


Many challenges and traps await anyone dreaming of starting a cannabis business. But with the right mindset, planning, and determination, it can be done.

Make sure you are well organized, do your research, know what is (and isn’t) legal, and are prepared to think outside the box or pivot at a moment’s notice. The cannabis industry is growing, but with that growth, uncertainty and surprises await behind any corner.

But don’t get discouraged. After running a successful cannabis dispensary for a while, we can assure you that it is, indeed, totally worth it! If you are looking for a dispensary in San Luis Obispo – The Source SLO is your one-stop shop.