How to Start a Cannabis Business

How to Start a Cannabis Business

Welcome to our educational series on how to start a cannabis business. This is a practical guide on the most common ways that people consider when launching their cannabis brand, entering the cannabis industry, etc.

We’ll provide a high-level overview of the top 5 considerations cannabis businesses consider in starting their own cannabis business and brand. If you want to learn more, you can do a deep dive into each route here:

3

What is Cannabis Co-Location?

4

What is Cannabis Contract Manufacturing?

5

What is Cannabis White Labeling?

Let's Get Started.

Reframing How to Start a Cannabis Business

To reframe your perspective, you should think first about what path is best suited for your particular situation at the current time.

While it is incredibly important to understand how the big operators managed to scale their business, and make millions and billions of dollars – the story of their beginnings is usually overlooked.

Having $100,000 vs $1,000,000 vs $100,000,000 provides a very different framework to work with. How to start a cannabis business with the money you have right now in today’s industry is the better question to ask yourself.

What are the 5 Ways on How to Start a Cannabis Business

With this perspective in mind, if you have done any research on how to start a cannabis business, you have probably discovered these options:

  1. Type S Shared-Cannabis Manufacturing
  2. Applying for your own cannabis license (the “Traditional Cannabis License”)
  3. Cannabis co-location
  4. Cannabis contract manufacturing
  5. Cannabis white labeling

The first option is a secret advantage which optimizes the power of shared-economy. People who have really done their homework discover the Type S cannabis manufacturing license and immediately realize it is far superior when starting a cannabis business.

How do I Start a Cannabis Business with a Traditional Cannabis License? 

This is the hardest path in getting a cannabis license in the entire industry.

Minimum Starting Capital: $1,000,000+ to start your cannabis business, usually a lot more.

Time to Receive License: 12 to 24+ months

Cannabis Licensing with My Green Network

Time Until Production: 13 to 25+ months

Personal Time Expenditure for Licensing: 100% involvement. You will need to roll up your sleeves and be ready to dive into every aspect for licensing and coordinate your own team of lawyers, architects, general contractors, sub-contractors, city inspection, state licensing, and more.

Benefits: As the most expensive path, it also yieldsthe highestrewards - complete control over your production, ability to scale according to your facility capacity, freedom to do anything your specific cannabis manufacturing license can do.

Pitfalls: In general, getting a traditional cannabis license is the most expensive, time consuming, and longest burn until you can produce a product. It also comes with the biggest risks– the what ifs.What if you don’t get your license? What if your product needs adjustments and doesn’t do well? What if you can’t cover your overhead? How many months can you survive for?

For an in-depth understanding of licensing for this route,read The Traditional Route to get a Cannabis License.

How do I start a Cannabis Business with Cannabis Co-Location?

This is similar to getting your own Type S cannabis manufacturing license, except a lot more expensive.

Minimum Starting Capital: $1,000,000+ to start your cannabis business, usually a lot more.

Time to Receive License:6+ Months

Time Until Production: 6+ Months

Personal Time Expenditure for Licensing: 100% involvement. Usually, you are buying a pre-existing license which you will need to “complete build-out” and pass final inspections and licensing.

Benefits: While expensive, it does give the same freedom as getting a traditional license with about 50% of the work and more security then applying from scratch.

Pitfalls: The same operational concerns with owning your own license. A few added considerations are what if you want to make changes? What if purchasing the license isn’t as easy what the other party says? What if the deal falls through?

For an in-depth understanding of licensing for this route, read What is Cannabis Co-Location?

Infused Cannabis Chocolate Machine

How do I Start a Cannabis Business with Cannabis White Labeling?

Like the Type S cannabis manufacturing license, this is also a very fast way to launch a cannabis product.

Minimum Starting Capital: $200,000+ for production and a lot more on marketing and sales.

Time to Receive License: You will not get a license.

Time Until Production: 2+ Months

Personal Time Expenditure for Licensing: Not applicable

Benefits: Time and speed. With white labeling, you are asking another company to use their current formulations to produce their existing products with a blank “white label” – then put your brand onto the label. Also, you generally don’t need to worry about production.

Pitfalls: Like the traditional license, you do have to consider the same issues operationally but you will not have to apply for a license. Additional considerations are that you have to worry about your white label partner too. Again, the what ifs. What if they discontinue the line and ask for more money (because they can)?Also, because you don’t have a license – you are always reliant on someone else for any new product line, distribution, or sales. The biggest issue is you are literally trying to sell a pre-existing product under your brand – which means you have to out-market your competitors.

For an in-depth understanding of this route, read “What Is Cannabis White Labeling”

How do I Start a Cannabis Business with Cannabis Co-Manufacturing?

This is a good way to grow or expand in the cannabis industry for existing businesses.

Minimum Starting Capital: $250,000+ for production, formulation, and a lot more on marketing and sales.

Time to Receive License: You will not get a license.

Time Until Production: 3-6+ Months

Personal Time Expenditure for Licensing: Not applicable.

Benefits: Speed and your own product formulation. With cannabis co manufacturing, you are asking another company to use your own formulation to create a cannabis product. Like white labeling, you don’t produce yourself.

Pitfalls:The same issues as white labeling. Additional considerations will be – can someone produce your formulation to your standard? Is there a risk of intellectual property theft?

For an in-depth understanding of this route, read “What is Cannabis Co-Manufacturing?”

How do I Start a Cannabis Business with a Type S Cannabis Manufacturing License?

This is the best way to start a cannabis business and/or expand into the California cannabis market.

Minimum Starting Capital: $50,000 for licensing, the remainder for production, marketing, and sales.

Time to Receive License: 2 months

Cannabis Co-Manufacturing

Time Until Production: 2.5 months

Personal Time Expenditure for Licensing: Minimal with My Green Network, we prepare, submit, and get your licenses for you.

Benefits:Cost, control, speed, license ownership. Basically, the combined benefits of traditional licensing, the convenience of co-location, the speed of white labeling, while keeping full control. Also, at My Green Network we guarantee the Type S cannabis manufacturing license to any qualified cannabis business owner, provide flexible memberships, fully equipped spaces for production, and state-wide cannabis distribution.

Pitfalls: You’ll face the same challenges as owning your cannabis license on a smaller scale. If you do start earning $1,000,000 a year in revenue – you will need to get another Type S License or buy your own traditional license.

For an in-depth understanding of this route, read “What is a Type S License?

What is the Current State of California’s Cannabis Industry?

It’s important to note that as of 2022, California’s cannabis industry is currently in a pivotal state of evolution. If you’ve spoken to a lot of people, you might hear “oh the California market is saturated” or “isn’t it hard to succeed in the California industry?”

That’s because of a few factors.

  1. First, these people are looking for low-hanging fruit – they want to invest in a basic product like flower, a gummy, or something standard to make a return. These are not people looking at the evolution of the cannabis industry.
  2. Secondly, the incorrect assumption by most people is that only the first 4 ways on how to start your cannabis business exist – traditional license, co-location, white labeling, or manufacturing.
  3. Thirdly, the Type S Cannabis Manufacturing License is a hidden gem. It is basically unheard of that it is possible to get a California cannabis manufacturing license for less than $50,000.

Yes, it is true that flower brands are a dime a dozen. That the latest “cool” innovation in pre-rolls is a 0.35g dog-walker, that every gummy tastes the same – just with different cannabis infusions. However, because of the fact the California market is “stagnant”, we’re in an incredibly opportune time for unique and interesting products to hit the market and completely blow people’s minds.

Cannabis infused moon cakes, baklava, or dulce de leche? THC infused skin-care products? What about THC infused binaca sprays or take-home cookie mixes? Cannabis infused gift sets?

Right now, California’s cannabis market is primed for the cannabis consumer to start wanting higher quality, cultural cannabis products, or convenience and novelty cannabis products. The fact that the consumer is tired of the same products in today’s market means niche and quality products will soon come to market and start dominating and taking market share.

Which Route is Best to Start Your Cannabis Business?

While these questions are relevant to all businesses – remember how we reframed our perspective.

If you have $100,000, $1,000,000, or $100,000,000 your path should reflect what is the most effective for your specific need right now to lay the foundation for your future.

When thinking of any route, you should consider not just the licensing time frame, but also operations, marketing, sales, and how long you can keep your business running with your remaining cash in California’s cannabis industry today. 

For purposes of comparison. We’ll make the following assumptions about available capital.

  1. Small Business/Entrepreneurs - $100,000
  2. Mid-Size Company - $1,000,000
  3. Enterprise - $100,000,000
Start Up Business Comparisons

If you have $100,000 or less than $1,000,000, the Type S License is the best license for you.  The Type S license is particularly important for small business and cannabis entrepreneurs as it provides a unique opportunity to launch new, unique cannabis products and gain market share efficiently with less risk.

If you have $1,000,000+ and looking to create first cannabis product you should probably test the market and reduce your risk by launching with a Type S license. Otherwise, you can use one of the other 3 routes but getting a traditional license is very risky.

If you have $100,000,000+, the world is your oyster. Using a white labeler to create your first product line in California may not be the most effective use of your funds. You might want to consider getting your own license first either as a Type S or a traditional license or use a co manufacturer.

What is the Best Route for New Businesses on How to Start a Cannabis Business?

It is clear that the Type S Cannabis Manufacturing License is the best option for these types of businesses. It provides the most control, the least risk, the lowest cost, and in the fastest, most effective route possible.

If you fit into this category, it just makes sense. It’s why we say “start smart”. After all – why would you pay $1,000,000 for the same benefits you could pay less than $50,000 for?

If you are interested in learning more about how to start your cannabis business with a type-s license, please contact a community curator today.

  1. The MyGN Type S License
  2. The Traditional Route to get a Cannabis License
  3. What is Cannabis Co-location?
  4. What is Cannabis Contract Manufacturing?
  5. What is Cannabis White Labeling?