Want to start a legal marijuana business? Here’s what you need to know before you begin.
Now that a dozen marijuana dispensaries have been selling recreational cannabis for a week, can smaller businesses be far behind?
The New Jersey Cannabis Regulatory Commission has awarded more than 100 conditional licenses for the legal marijuana industry.
The NJCRC says that more than 12,000 people bought marijuana and marijuana products last Thursday on the first day of legal sales, for a total of almost $2 million.
Currently only medical dispensaries are selling recreational marijuana. But the application process for smaller entrepreneurs went live on March 15.
“This business isn't for everybody and there's a high level of risk connected to it and on the retail operation, I don't think it's any different,” says Charles Gormally, co-chair of Cannabis Industry Practice at Brach Eichler.
Gormally spoke about the steps small business owners should take when considering if they should open a marijuana business. He says the first thing they should do is visit as many shops as possible, especially in states that have had a legal marijuana industry for a while.
“It helps folks begin to focus on how they see their business in a particular community appearing,” he says.
Gormally says that deciding the locations for a business is important for applying for a license. About 70% of municipalities in New Jersey have opted out of having cannabis businesses in their towns.
“While the state manages the application process, they will defer to the locality to determine how many retail locations those particular municipalities want to have,” Gormally says.
One of the biggest challenges entrepreneurs are facing, is finding the financial backing to start a cannabusiness. It could start $200,000 because although marijuana is legal in New Jersey, it is still a Schedule 1 drug on the federal level. Entrepreneurs are likely having to raise the money through private financing.
“Cannabis businesses can't roll into a bank and get financing…You're going to look for and find a partner that might provide capital financing for you to do that,” Gormally says.
Another challenge entrepreneurs are facing is renting spaces from landlords who have provisions in their mortgages that only allow them to rent out the space for businesses that are considered legal under federal law.
Cannabis retail stores may open by the end of the year.