7 Cannabis Business Ideas for 2020

American perceptions of cannabis are changing—and quickly. An increasing number of states are adopting recreational cannabis regulations, and even more have made marijuana use legal for qualifying medical conditions. This is welcome news for those who partake for fun, pain management, or even entrepreneurs looking for the next big business idea.

So, if you’re considering starting a marijuana or cannabis-based business, here you’ll find seven of the top cannabis business ideas for 2020, each covering a different element of the industry based on your existing skill-set and the amount of capital needed to start a small business.

Top Cannabis Business Ideas

There are tons of paths one can take when thinking of cannabis or marijuana business ideas, whether you’re looking to start a venture in a recreational state or a medical state. Growing or operating a dispensary is just the tip of the iceberg, in fact.

New businesses in the space need the same services as just about any other kind of business: They need to market and advertise themselves, get help with website and graphic design, and industrial supplies. The tricky balance between federal prohibition and state-level legality even opens up compliance-related job opportunities as well.

With this overview in mind, let’s look at some of the best cannabis business ideas for aspiring entrepreneurs:

1. Open a Cannabis Dispensary

This one might sound like a no-brainer. Opening a cannabis dispensary—whether you’re in a recreational or medical state—is one of the most obvious cannabis business ideas. When you own and run a dispensary, you’re on the front lines of helping an engaged and willing customer base get a product they’re happy to buy.

Getting a cannabis dispensary off the ground requires a ton of work and capital—much more so than other similar businesses, like opening a bar or a liquor store. Expect to spend anywhere from $250,000 to $750,000[1] to get your dispensary off the ground.

States, on average, charge $5,000 for licensure. Many, such as California and Oregon[2], even charge fees based on how dispensaries grow plants and other considerations. Some states, like Washington, require new dispensaries to purchase licenses from existing holders and do not offer new licenses to sell.[3] This can cost upwards of $25,000, including legal fees.

These expenditures are only the beginning. Many states also require dispensary owners to demonstrate that they have a sufficient amount of capital in hand to operate the business. Expect to have $150,000 to $200,000 in reserves in states that mandate capital requirements for cannabis dispensaries.[4]

2. Start a Cannabis Marketing Company

The cannabis industry is competitive, especially as dispensaries, delivery services, and manufacturers try to build their brand presence. This means that the demand for cannabis-related marketing is at an all-time high.

If you run a marketing agency already, now might be the right time to branch out into marketing for cannabis-related businesses and services. That means understanding the industry in your state (or the states in which you plan to look for clients), observing current marketing efforts to see how most incumbents in the space are coming up with campaigns, and providing services that offer a unique advantage versus existing competitors.

One thing to consider about marketing within the cannabis and marijuana industry is compliance-related restrictions. Most states have strict rules about how companies can operate in this space, and advertising is no exception.

For example, billboards and print advertisements are allowed in most states, but the use of Google Ads and promoted social media posts are not. If you want to dive into the world of cannabis marketing, be prepared to do your homework.

3. Sell Cultivating and Growing Supplies

Hydroponic and indoor gardening stores existed long before marijuana legalization was even thought possible. Now, they’re an essential part of any grower’s supply chain. Both commercial and personal-use growers need very specific equipment if they are to grow indoors. Many opt for hydroponic gardening for space and cultivation benefits, and others that opt to grow with soil will want specific kinds of fertilizers and minerals to keep plants healthy.

Opening a store that sells gardening supplies is somewhat secondary to the cannabis industry, as you’re not necessarily selling goods that are only used by cannabis growers. Many gardeners opt to grow fruits and vegetables hydroponically or through indoor greenhouses. This provides distance from the cannabis industry and gives you a wider customer base as well.

If you are looking beyond selling to individuals who want to grow in their own homes, you may need to consider the financial implications of becoming a wholesaler in order to work with dispensaries and larger operations. This means venturing into the world of B2B sales, determining price points for bulk orders, and more. The potential to make more money from fewer individual orders is higher from a wholesale point of view, but also takes a considerable amount of capital to get started.

4. Become a Cannabis Consultant

The cannabis industry is complicated at best, and a tangle of federal, state, and local laws at worst. Plus, laws are always changing. Reading through all of the literature and legal statutes in a state can be a full-time job. If this sounds like it’s engaging, rather than burdensome, then starting a consulting agency might be the best cannabis business idea for you.

Cannabis consulting is a burgeoning field designed to help growers, sellers, and dispensaries open up shop and stay in business while remaining on the right side of state and local laws. Experience as a lawyer, paralegal, or cannabis professional goes a long way toward finding success in this field. 

If you know about the typical cannabis supply chain, the requirements around state certification, and the challenges of finding a business bank for cannabis companies, then becoming a consultant might be a great way to turn your experience into a flourishing business venture.

5. Make and Sell Edibles

If you’ve always had a certain savvy in the kitchen, making edibles could be an option for you. So long as you’re well-versed in the legalities of cooking with cannabis or marijuana, as well as the rules about selling cannabis in your state, you can take your knack for baking mouth-watering treats into a new and lucrative direction.

The days of smoking marijuana as the primary way to consume are long gone. That, and the bygone era of “magic brownies” being the other alternative, is also in the rear-view mirror. Now, edibles come in all shapes and sizes—there are even cannabis-infused beers and sodas on the market, meaning you can pursue just about any kind of culinary passion with a cannabis twist.

Be sure that you have all the licenses and permits you need in order to legally sell cannabis-infused goods in your state before you begin. You may find that your venture is subject to many of the same legal requirements as dispensaries if you’re selling directly to individuals. If you plan to sell to retailers, your requirements may vary.

6. Sell Cannabis-Related Accessories

As cannabis consumption becomes more accepted in mainstream culture, you might think about selling different kinds of accessories as a worthwhile marijuana business idea. Legalized states have seen a flourishing market for marijuana-related products, be they vaporizers, pipes, or other accoutrement typically associated with cannabis culture.

In reality, states with differing legal statuses for cannabis consumption can still accommodate businesses that may have a connection to marijuana. Accessory sales are still strong in states that only legalized medical marijuana; states with no permitted marijuana use also have plenty of stores that sell items that—on paper—could be used for a variety of purposes. Where there’s a need, there’s a market.

Cannabis ecommerce shops are also a lucrative option to consider. So long as you aren’t selling marijuana online, or shipping to states where it is illegal to possess marijuana, you can set up and operate a cannabis-related ecommerce store from just about anywhere. 

Consider your language carefully when describing products, however, and consult local and federal law to ensure you’re in compliance with how (and what) you sell.

7. Open a Cannabis-Friendly Bed and Breakfast

Most states with legal recreational cannabis prohibit public consumption. That may make it tough for out-of-towners to find a legal way to enjoy what they’ve purchased.

Plus, the cannabis-related tourism sector is booming as an increasing number of states adopt laws that loosen existing prohibitions. This means that turning a spare bedroom or a property you own into a marijuana-friendly bed and breakfast, in a state where consumption is legal, can turn into a great cannabis business idea.

Some of the larger home-sharing businesses do not have official policies regarding cannabis consumption at accommodations listed on their sites. That means permitting guests to do so is ultimately your decision (in legal states, of course). There’s even a service aimed specifically at listing cannabis-friendly hotels and accommodations, which can be a great inspiration point for those who want to open up their own cozy, cannabis-friendly cottage for rent.

In fact, some providers actively mention their easygoing attitude toward cannabis in their listings. There are roundups of the best cannabis-friendly Airbnb listings on popular blogs as well, meaning you could position your Airbnb listing in an overt way to try to attract those who wish to partake while staying at your place. 

The Final Word

The opportunities for cannabis business ideas are vast. Whether you’re in a recreational or medical state, you can enjoy a much wider array of business opportunities than ever seen before. And, if you’re in a state where cannabis and marijuana laws have not yet changed, you may still be able to benefit from legal changes elsewhere, so long as you’re abiding by all local and state laws.

Either way, the world of marijuana sales and consumption are changing—and as people come out of the woodwork and enjoy cannabis on their own terms, there’s an opportunity out there to start a business of your own.

Article Sources:

  1. TheCannabisIndustry.org. “How Much Does it Actually Cost to Open a Dispensary?”
  2. CannabisBusinessTimes.com. “Your State-by-State Guide to Cannabis Cultivation Business Application and Licensing Fees
  3. LCB.WA.gov. “Marijuana Licensing
  4. Forbes.com. “The Hidden Costs of the Cannabis Business

Brian O'Connor

Brian O’Connor is a small business owner and contributing writer for JustBusiness.

Brian is the former director of digital strategy at Morgan Stanley, has worked at Foreign Affairs magazine, Student Loan Hero, and is a partner of a small consulting firm. Combined, these experiences allow him to offer a unique perspective on the challenges small business owners face. Brian writes about finance, business strategy, and digital marketing for JustBusiness.

Read Full Author Bio
Disclaimer
JustBusiness strives to keep information up-to-date but, at times, information may be different on a product or service provider’s website. Additionally, while we are compensated by some marketing partners, these partnerships do not influence our opinions of the products and services available to small businesses. All partner products and services are provided without warranty from JustBusiness. Please review a product or service provider’s terms and conditions when evaluating such products and services.