Starting a Cannabis Facility: Your Five-Step Fast-Track Plan from Outlay to Cost-Recovery to Profit

Congratulations on getting your license! You want to start your business, but where should you begin? We have a few ideas that will help you get up and running while avoiding common hiccups that happen to all start-ups, and especially the ones in the cannabis industry.

Strategize your cannabis facility decisions

Believe it or not, your extraction method and solvents should be one of the first decisions you make. It will drive your location, equipment purchases, facility design, and start-up capital needs. There are more dependencies in starting your extraction business than are intuitive, and some dependencies don’t become clear until after-the-fact, unless you have started up another facility. In fact, as we tried to put together a cannabis Order of Operations for starting up, it became clear that there isn’t just one answer that fits all situations. We highly recommend that you consult with a trusted professional as you play Tetris with aspects of your business plan. Good planning and design saves time in the long run.

Cash-flow planning for a cannabis facility

Starting up a small business takes a lot of gumption and courage. It also takes a lot of cash. Many small businesses fail due to an unrealistic assessment of start-up costs and time to profitability. Make sure your feet are firmly planted in reality as you consider your budget for at least your first year. You can get free help from the Small Business Administration, a government run organization that offers a variety of resources essential to start-ups and new entrepreneurs. They can help you locate financing, create a solid business plan, and may even find you a mentor.

For mentors with specific industry experience, cannabis business accelerators (also known as incubators) may be helpful to you. Civilized has an article about accelerators and what they do for start-up cannabis enterprises.

Cannabis Permitting

Gaining building and operation permits can cause significant delays if not done correctly, and going through the process multiple times will eat up your cash at an alarming pace. Now that hemp is fully legal across the US, and more states are legalizing marijuana for both medical and recreational use, you may be in a jurisdiction that is new to permitting these extraction facilities. We’ve even heard about some jurisdictions that are against having perfectly legal marijuana businesses in their area and enforce this by never issuing a permit. There are many steps in this process where you can go wrong. Sounds scary, right? It doesn’t have to be. All this to say, you want to make sure you set yourself up for success in the permitting process.

Understanding Cannabis Permitting Requirements

Make sure you understand code as it is interpreted at your local jurisdiction. This may mean having a meeting with your local fire marshal and other code officials, talking to other processors, or attending professional groups. See if you’re unknowingly throwing up a red flag on your project.

Be aware of various codes that might impact you. You’ll probably be dealing with regulations regarding hazardous chemicals, location restrictions, industrial zoning, and of course, building codes. Many jurisdictions also have zoning specific regulation for where cannabis companies can operate, some with specific zones where development outside these zones is prohibited. Make sure your team has demonstrated expertise in each of these areas. Once again, the initial outlay is a bit greater, but you’ll get to production faster if you do your permitting right the first time.

Hiring for a new cannabis facility

You’re not the first person to start a cannabis business, and you can find people out there with a wealth of expertise. Trimmers, processors, and sales people may each fill important spaces as you begin your enterprise. While it sounds less expensive to do it all yourself, you’ll not only encounter burn-out, but you’ll likely make some mistakes that could have been easily avoided. Experience does come at a price, and we encourage you to pay competitive wages in order to get the best people.

Professional support to start a cannabis facility

We strongly encourage you to get to know and network with others in the business. We’ve found that many people are happy to mentor those newer to the industry. Going to conferences as an attendee is a great way to start building your network, and in a few years, one of those booth spaces could be advertising your products and services.

The cannabis industry has lawyers, accountants, architects and engineers who focus specifically on the business. They know the ins and outs, the pitfalls and methods for success in ways that even a great professional from another industry just won’t. Because legal cannabis is fairly new, the community of professionals is relatively small. Use your network to ask for referrals or ask for references from a prospective service provider. They should have at least several years of cannabis experience to truly understand the intricacies of your new venture.

So, to roll it all up into a nice, fat dutchie, follow these steps to get to that sweet point where your income is greater than your outgo. And remember, we’re here for you if you want some help – learn what services Cannabis Engineering and Compliance provides.