Cannabis has become a booming "sister industry" in recent years to wine, which is my home base as an entrepreneur.
That familial relationship is partly because the largest quantities of the two crops grow in many of the same locations in the western U.S., from Northern California up to Washington. Partly it's a love-hate relationship in the typical familial ways, as cannabis growers threaten to poach vineyard workers from already-strapped wineries, offering better wages and relatively easier labor.
And the cannabis and wine industries share important similarities, namely their offer of recreational intoxicants. That's especially true since voters in California passed Proposition 64 in November 2016, which legalized recreational marijuana in that state and shot it to the top of the list as the country's largest legal pot market.
Yet launching a cannabis business--despite its novelty, potential profits, and general lifestyle appeal--is often more challenging than launching a business in wine. Wine has long been considered one of the most difficult-to-navigate industries because of the multi-tiered governmental regulations that differ from state to state and even from county to county, but cannabis gives it a run for its money.
That's because cannabis leaders and entrepreneurs face similar regulatory challenges as wine, with the fresh challenges of uncharted territory for another controlled substance layered on top. This is particularly true as it concerns local ordinances and compliance issues. In addition, public opinion about cannabis ranges from enthusiastic to skeptical to oppositional, with every gradation in between.
Sounds tough, right? It is. But here are three ways to know if you have what it takes to succeed in a particularly turbulent industry.
You are fascinated by ordinances, public safety, and compliance issues.
Every cannabis entrepreneur I've interviewed these past few years prioritizes regulatory compliance as their No. 1 concern. It has to do with strengthening the brand but, even more so, it's about demonstrating to local stakeholders what's required for a new business to succeed in their community.
For Erin Gore, founder and CEO of The Garden Society (a medical cannabis confectionary company based in Sonoma, California), that meant networking throughout Sonoma County in order to understand how each municipality was handling compliance issues related to the legalization of marijuana, both recreational and medicinal.
"That allowed us to find a town that would let us help write the cannabis ordinance itself," Gore says, "highlighting public safety while allowing our business to be economically viable and shaping civic response to this industry."
Writing local ordinances may not be something you expected to do as an entrepreneur. But sometimes it's what it takes to get your business off the ground.
You can convince investors to provide stability for the bumpy ride.
Maybe, like Gore, you believe so deeply in your mission and your product that you pony up your own capital at the start. Maybe, like The Garden Society, you're happily surprised at how strongly your business resonates with your target demographic. And maybe that response is so powerful that the business grows much more quickly than you anticipated.
That means it's time to fundraise, especially if you're in an industry with mostly cash-driven needs, even if you didn't think you were ready for it.
What do you do now?
Do your due diligence, particularly with a strong advisory team in place, Gore advises. Do you homework with investors, and design your communication plan with the story front and center. And ideally, demonstrate a multi-faceted approach to revenue where you reach customers through multiple channels in the supply chain.
That's what makes you attractive to investors who provide stability as a turbulent industry evolves.
You're willing to ask for help.
It's true that, with a startup, you have to be willing to do everything, from managing trash pickup to networking with multimillion-dollar investors. But remember to add "Find the right advisors" to your list of things to do.
It comes down to time management, in a way, which most entrepreneurs struggle to do well. Which is all the more reason to identify the people who can (and will) tell you what you should be doing yourself, and what you should be outsourcing to others.
The end result? Having the best people on the job, at any given time, where they're best suited to succeed. That's a recipe for lasting success, even in the most turbulent of industries.