Starting your Cannabis Business
Cannabis Industry Startup
Our premier CPA firm provides expertise in a wide range of areas within the cannabis industry. We can help you make sure your cannabis business is set up to succeed from the get-go.
Advice & Consultation
We can provide consultation and advice in a variety of subjects:
- Regulatory Compliance Solutions
- Risk & Compliance Assessment & Analytical Services
- Digital Risk & Compliance Assistance
- Information Security Advice
- HIPPA Compliant Business Solutions
- Trust & Transparency
- Internal Audit, Compliance & Risk Management Solutions
- Financial Systems Design
- Finance Effectiveness
- Cash & Inventory Management
- Business Process Reengineering
- Internal Audit Solutions
- Supply Chain Management
- Strategic Planning
- Operational & Performance Assessments & Improvement Services
- Fraud Risk Assessments
- Training
- IT Assessments & Requirements Analysis
- Cybersecurity & Privacy
- IT Strategy
- Cloud Strategy
- Systems Selection & Implementation
- Change Management
- Digital Transformation
- IT Assessments & Requirements Analysis
- Cybersecurity & Privacy
- IT Strategy
- Cloud Strategy
- Systems Selection & Implementation
- Change Management
- Digital Transformation
We help build investor-ready business plans for cultivation facilities, manufacturers, dispensaries, testing facilities, and distributors. Our business plans are detail-oriented with solid financial analysis and based on our years of experience in the cannabis industry. GreenGrowth CPAs includes the following sections in our business plans.
A well-honed, detailed, and differentiated pitch about your specific cannabis venture. This may include:
- Mission statement
- Product or service offering
- Financial information
- High-level growth potential analysis
Investors will pay close attention to the potential for your business to grow. Depending on your state and local jurisdiction, our market research section is customized to cover the following details:
- Local cannabis industry outlook
- Market sizing and trends
- Competitive analysis
- Target market and key customer segmentation
How will you attract and retain customers? The cannabis industry is highly competitive. Though adult-use cannabis is projected to be a multi-billion-dollar market, your venture will need a strong sales and marketing strategy. Our experts can provide advice on:
- Building a marketing plan
- A recommended marketing budget
- Sales and marketing strategies
- Financial projections as they related to marketing ROI
Anyone making an investment in your business will want to see financial projections. Showcase how you will grow and thrive in the legal cannabis market with input from our analysts. We can help you build:
- Income and cash flow projections
- A five-year financial outlook model
- Quarterly (or monthly) financial projections
- Accounting systems
- Loan plans
- Tax budgets
The average cannabis company generates $250,000 to $350,000 in monthly sales. Our experts can help you project a timeline for how long it will take to reach profitability, among other key metrics.
- Cash flow projections
- Model balance sheets with COGS
- ROI projections for investors
- Sales growth models
Business Plans
Obtaining a Cannabis License
The process of obtaining proper licenses is a necessary evil when starting a cannabis business. To further complicate the process, each state law determines who may cultivate and sell marijuana. Although the sale and cultivation of cannabis is considered a federal crime, following local and state laws will reduce and likely minimize serious problems.
The type of licenses and documentation your cannabis business requires will depend on both the location of your operation and the type of business you are conducting. For example, as a grower, your requirements will be vastly different than that of a retailer. GreenGrowth CPAs has helped over a dozen cultivation and manufacturing companies successfully secure their licenses and we would be thrilled to help you obtain your license.
We can help:
- Calculate the start-up costs and provide a 3-year projected income statement for emerging marijuana businesses
- Provide application support assistance which includes:
- Application project management support
- Application writing
- Applicant bio writing
- Compose standard operating procedures that adhere to local and state laws
- Write operating plans
- Write inventory control plans
- Write noxious odor control plans
- Write risk mitigation plans
- Write security plans
- Research local & state marijuana laws (Supported states include California, Florida, Ohio, Washington, Oregon, and Michigan)
Business Structuring
Securing Capital
Attract the right funds and additional partners for your business is vital. Investors may be intrigued by the cannabis industry, but its newness may create a level of risk that turns away funders. In addition, cannabis businesses are a bit more capital intensive than most, with estimations of $50,000-$65,000 in start-up expenses.
Broadly speaking, there are two ways to get capital for a new business: debt and equity.
- Debt
- This requires taking out a loan that you have to repay over time (usually with some interest).
- Debt lenders have a fairly straightforward application process requiring items such as a credit score, character, capacity to repay, cash flow and collateral.
- Equity
- By offering equity, you’re selling a piece of the company and trading a degree of ownership for cash.
- Investors often ask for a formal pitch and want to understand your leadership team, product details, market size, and competition.
- If you show that you’ve gone through your state’s proper licensing and permit procedures, while maintaining immaculate records, your chances of working with an equity investor will increase.
Though there aren’t many traditional funding sources open to a cannabis business, crowdfunding is still an option. The SEC allows anyone to invest $2,000 in small businesses in exchange for a stake. Companies can raise up to $1 million through crowdfunding sources. Check out Fundanna, CannaFundr, and 420fundme.
Traditional banks often can’t offer your cannabis business a loan, but there are other investors who will invest if you can show a solid ROI (return on investment). These general rules will help your chances:
- In operation for at least six months
- Incorporate as an LLC, limited company or S corporation
- Have a personal credit score of at least 500
- No criminal record
- Pass a background check
- Gross monthly sales of at least $10,000 (alternately, if you’re a start-up, be able to demonstrate how your business will be able to have a certain level of monthly sales)
- Have a business plan
- Have a business bank account
Look for venture capital funds that are familiar with the industry. Research Privateer Holdings, which has raised more than $100M to fund legal marijuana businesses. Others include Tuatara Capital, MedMen Capital, and Snoop Dogg’s Casa Verde.
Online loan companies have an easier time lending than traditional banks. Do some research to see if an online loan company can legally extend a loan to a cannabis company (as regulations will vary by state). Online loans often have an easier application process, lower interest rates, and higher approval rates.