It is imperative that you have a business plan for your cannabis business. The benefits of a business plan are twofold: it will make your company more attractive to business partners and investors, and it will help you clarify your ideas and set concrete goals. You may already have a complete idea of what your cannabis business will look like, and think that you don’t need a business plan. But in the process of writing marijuana business plans, you will likely have new insights or uncover unforeseen challenges that will need to be addressed.
Whether you’re planning to open a cannabis retail, manufacturing, cultivation, testing, or distribution business, a California marijuana business lawyer can help. You may not be able to obtain a license for your business until early 2018, but you should begin preparing now. Not only is a business plan essential to your business’s success, it can also strengthen your license application. If you want to open a recreational cannabis business, call McElfresh Law today at (858) 756-7107 for a consultation.
What Should My Cannabis Business Plan Look Like?
After reading your business plan, someone who doesn’t know you or your business idea should fully understand and trust in the success of your proposed cannabis business. In a clear and compelling manner, you need to convey everything you know about your business and demonstrate that it will succeed based on thorough research of your market and the regulatory landscape it will operate in.
If you and your partners aren’t good writers, you should hire one to write your business plan. If you’re not good with numbers, you should have an accountant or an experienced business person help you tease out the financial specifics of your company. The importance of making a good impression cannot be overstated, especially for cannabis businesses. Many people still apply the “stoner” stereotype to people associated with cannabis, and your business plan can and should reverse this impression.
A good business plan may take on different forms, but it should include the following sections:
- Your business in a nutshell- The business plan should start with a short and convincing pitch of your business and why it matters. You need to be able to explain in a few sentences what your value proposition is. Do you offer the fastest delivery service in the county? The most carefully grown heirloom varieties? The safest, most reliable, and most discreet vaping devices? You must emphasize whatever sets your business apart here. Additionally, you should state your business’s short-term and long-term goals.
- Your team- A business is nothing without good people behind it. Investors will want to know who will be handling their money. In this section, you should do your best to counter stereotypes about cannabis, and show how everyone in your team brings the background and experience necessary for your venture to succeed. It can also help to retain a respected business person or member of your company to serve as an advisor to your business, who should be listed in this section.
- Your Market- You will need to demonstrate that you have a deep understanding of the market conditions in which your business will thrive. This means thoroughly researching your competitors and showing how your business may be able to outmaneuver them. Why should people invest in your company as opposed to your competitors? You also need to know who your customers are, and how you will reach them. Here, you need to demonstrate that you understand the basics of marketing as well as the unique challenges facing cannabis businesses.
- Financial Projections- According to the market research firm ArcView, the national cannabis market will reach over $20 billion in annual sales before 2020. You need to show how your business and your investors will get a portion of that amount. Based on your ]research, you should be able to draw up a projection of your sales. You will need to contrast this with all of your costs, from rent and insurance to employee wages and licensing fees.
- Financing Needs- Until your sales catch up with your costs, you will need financing to keep your business afloat. Your business plan will need to detail how much capital you need upfront, and where it will come from. If you seriously approach your financial projections, you should be in a position to determine just how much financing your business needs.
- Corporate Structure- The appropriate corporate structure of your business will depend on your investors and business partners. It may be best for your business to be a corporation, a sole proprietorship, a limited partnership (LP), a general partnership (GP), or a limited liability partnership (LLP). The goal is to streamline your company’s decision making and shield you and your partner’ personal assets from liability. You should demonstrate an understanding of different corporate forms and how they can influence the financing of your business and the distribution of its profits.
- Regulatory and Legal Compliance- No one will invest in your business if it is likely to run into trouble with the authorities. You need to demonstrate that you understand legal challenges you might face from state, local, and federal authorities. Your business plan should lay out which state license(s) you will apply for, and how you will obtain permission to operate from your local government. Finally, you need to provide assurance that your business will continue to comply with laws and regulations even after you are up and running. You should consult a knowledgeable California marijuana business attorney before writing this essential section of your business plan.
How McElfresh Law Can Help
The goal at McElfresh Law is to help San Diego area cannabis businesses reach their goals by overcoming the legal hurdles they might face at the administrative and civil levels. With 2018 quickly approaching, it’s time to start planning if you intend to apply for an adult use cannabis business license.
A San Diego marijuana business lawyer can help you understand the regulations that will apply to your business. Jessica McElfresh will assist you in conceiving a business model that can succeed in a complex and changing regulatory environment. If you’re ready to get serious about opening your cannabis business, call McElfresh Law today at (858) 756-7107 to schedule a consultation.