Welcome to our educational series on how to start a weed business. This is a practical guide on the most common ways that people consider when launching their weed brand, entering the weed industry, etc.
We’ll provide a high-level overview of the top 4 considerations weed businesses consider in starting their own weed business and brand. If you want to learn more, you can do a deep dive into each route here:
Reframing How to Start a Weed 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 weed 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 Weed Business
With this perspective in mind, if you have done any research on how to start a weed business, you have probably discovered these options:
- Type S Shared-Weed Manufacturing
- Applying for your own weed license (the “Traditional Weed License”)
- Weed co-location
- Weed contract manufacturing
- Weed 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 weed manufacturing license and immediately realize it is far superior when starting a weed business.
How do I Start a Weed Business with a
Traditional Weed License?
This is the hardest path in getting a weed license in the entire industry.
Minimum Starting Capital: $1,000,000+ to start your weed business, usually a lot more.
Time to Receive License: 12 to 24+ months
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 weed manufacturing license can do.
Pitfalls: In general, getting a traditional weed 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 Weed Business with Weed Co-Location?
This is similar to getting your own Type S weed manufacturing license, except a lot more expensive.
Minimum Starting Capital: $1,000,000+ to start your weed 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 Weed Co-Location?
How do I Start a Weed Business with Weed White Labeling?
Like the Type S weed manufacturing license, this is also a very fast way to launch a weed 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 Weed Business with Weed Co-Manufacturing?
This is a good way to grow or expand in the weed 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 weed co-manufacturing, you are asking another company to use your own formulation to create a weed 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 Weed Business with a Type S Weed Manufacturing License?
This is the best way to start a weed business and/or expand into the California weed market.
Minimum Starting Capital: $50,000 for licensing, the remainder for production, marketing, and sales.
Time to Receive License: 2 months
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 Weed manufacturing license to any qualified weed business owner, provide flexible memberships, fully equipped spaces for production, and state-wide weed distribution.
Pitfalls: You’ll face the same challenges as owning your weed 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 Weed Industry?
It’s important to note that as of 2022, California’s weed 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.
- 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 weed industry.
- Secondly, the incorrect assumption by most people is that only the first 4 ways on how to start your weed business exist – traditional license, co-location, white labeling, or manufacturing.
- Thirdly, the Type S weed Manufacturing License is a hidden gem. It is basically unheard of that it is possible to get a California weed 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 weed 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.
Weed infused moon cakes, baklava, or dulce de leche? THC infused skin-care products? What about THC infused binaca sprays or take-home cookie mixes? Weed infused gift sets?
Right now, California’s weed market is primed for the weed consumer to start wanting higher quality, cultural weed products, or convenience and novelty weed 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 Weed 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 weed industry today.
For purposes of comparison. We’ll make the following assumptions about available capital.
- Small Business/Entrepreneurs - $100,000
- Mid-Size Company - $1,000,000
- Enterprise - $100,000,000
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 weed entrepreneurs as it provides a unique opportunity to launch new, unique weed products and gain market share efficiently with less risk.
If you have $1,000,000+ and looking to create first weed 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 Weed Business?
It is clear that the Type S Weed 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 weed business with a type-s license, please contact a community curator today.
