The recreational cannabis industry is still in its infancy. With billions of dollars in revenue already generated, it has become increasingly lucrative to own and operate a cannabis business. While many funded startups have joined the game, we are seeing more diverse players attempting to capitalize on this unique opportunity. But the regulations can seem daunting to indie makers.
🌱 The current state of the cannabis industry
Canada recently became the first major world economy to legalize recreational cannabis. Adults can buy, use, possess, and grow cannabis under the new law.
In the US, recreational use is only legal in ten states: Alaska, Washington, Oregon, California, Nevada, Colorado, Michigan, Massachusetts, Vermont, and Maine. I am lucky to live in one of them, Oregon. The rest of the states have a combination of laws ranging anywhere from “decriminalized” to “fully illegal.”
Cannabis businesses are not a new concept, they have been around for quite some time. I was a kid when High Times, a monthly publication dedicated to cannabis, was already hitting the stands.
These types of publications seem to be popping up everywhere these days, and there are cannabis companies ranging from sizeable VC-backed startups to small one-person businesses.
💰 What VC-backed companies look like
People finally figured out that cannabis is a very lucrative business. As such, there are lots of startups jockeying for venture capital money.
It is not about who has the best High Times centerfold either. There are companies that specialize in delivery and e-commerce solutions, brand management, payment, compliance, tracking, data analytics, and more.
Venture capital firms and private equity funds including Privateer Holdings (backed by Peter Thiel’s Founder’s Fund), Tuatara Capital, and Casa Verde (backed by Snoop Dogg), just to name a few, have raised hundreds of millions of dollars to invest in a plethora of different cannabis companies. Some of the more notable investments include Eaze, Baker Technologies and LeafLink.
Not every cannabis startup is vying for this kind of money though. There are plenty of small companies and indie makers grinding it out every day while managing to be wildly successful.
🛠️ Indie products in the cannabis industry
Smaller, independent cannabis companies do exist, but you probably won’t find them on some TechCrunch list.
Companies like Sweet Grass Kitchen and CO2 Dynamics tend to focus on “small batch” or “craft” products, while other companies like Cannabispages and my own company Inweed are providing access to services and jobs.
Being an indie maker in the cannabis space means competing against big VC money. You have to wear your marketing hat, your customer service hat, your developer hat, just to name a few. And you have to hustle. Hard.
There are advantages to going the smaller, indie route. Firstly, you are in control of your own destiny. You do not have “decision by committee”, and the pressure of failure is not as great. In addition, working in the cannabis industry as an indie maker should make it easier to navigate the industry, without having to worry about the increased logistics that larger companies deal with.
But, despite the advantages that working in the cannabis industry as an indie maker provide, there are still some major challenges to overcome.
Cannabis is still a taboo subject, at least in the US. For example, Instagram recently made me remove the Inweed url from my personal account profile.
If your business plan involves touching the plant, there are lots of rules, regulations, permitting and approvals you will need to follow and obtain. In the US, they unfortunately vary state by state. If you are working alone, it can be a headache simply navigating the regulatory landscape.
Additionally, finding institutional financial support can be very difficult. To be blunt, most banks in the US will not touch you if you touch the plant.
Consider barrier to entry as well. I am lucky enough to have a green thumb, and I studied agriculture in college and have been growing cannabis for more than twenty years.
But for me to become a professional cannabis grower in Oregon, I would have to find a piece of real estate, which is a headache in itself due to zoning and available inventory, fill out all the paperwork, obtain an approved Oregon liquor control license, furnish the farm with thousands and thousands of dollars worth of lighting, ventilation and other grow equipment. At that point, you still have not sprouted a single seed, or obtained the thousands of cuttings needed to get started.
This industry is a modern day gold rush, ripe with opportunity. In the 1849 California gold rush, most of the people that made money were the ones selling shovels, jeans, tents, pickaxes and other supplies. In this so-called green rush, there are many ways to build a business without touching the plant. These are called ancillary businesses. You could sel accessories, build technology products to support other businesses, or even help cannabis aficionados connect and stay informed.
Find your niche, but do not pursue a career as a grower if you cannot keep a houseplant alive. The cannabis industry is young and still trying to figure out its pain points; there are plenty to solve.
I recently read a comment from a fellow redditor. He was expressing his desire to get a job in the cannabis industry, but had no idea how to grow cannabis. His exact words were “I wish my skill set was useful to the industry.” I asked him what his current skill set was and he replied with “Excel, data stuff and Python.” He didn’t realize his current skill set was already enough to get a foot in the door!
✨ Go for it
It doesn’t take a green thumb or a college degree to get into this industry. It does take hustle and determination. You need to be passionate about cannabis, because it is a daily grind and you will be living, breathing, and eating it. Not literally… Well, maybe.
These days everyone seems to be starting a cannabis company, but I firmly believe the cream will rise to the top. Be diligent in your pursuit, form meaningful relationships with your customers, and, most importantly, solve their problems. This is how as an indie maker you can compete against big VC-backed companies.