Cannabis business owners are often passionate about their product and service, but that doesn’t mean they’re immune to making mistakes. Given the strict regulations put in place by lawmakers, a few fatal errors can cause your business to have serious problems.
Keep reading to learn five of the most common mistakes made by cannabis business owners.
1. Not Marketing Your Cannabis Business Correctly
If you’re not marketing your cannabis business correctly, you’re essentially shooting yourself in the foot. You need to make sure you’re promoting your business in a way that is compliant with state and local laws and appealing to your target customer base. This is typically an issue when operating in a medical state, as all advertising and marketing initiatives need to be approved by state organizations like the Department of Health. Failure to comply results in hefty fines or worse.
Marketing also involves understanding your target audience and figuring out the best way to reach them. For example, if you’re selling cannabis products to seniors, you’ll need to use a different marketing strategy than targeting college students. It’s also crucial to ensure that none of your marketing could be perceived as a target for children and minors. Well-known dispensary chain Cookies recently found themselves in hot water for this exact reason.
2. Bad Record-Keeping
Inadequate record-keeping is another fatal mistake that cannabis business owners commonly make. To run a successful and compliant business, you need to keep track of everything from your inventory to your financial records.
Some benefits of good keeping records for your cannabis business include:
- Easier to track progress and growth
- Helps with tax preparation
- Demonstrates compliance with state regulations
- Enables you to make educated moves about your business
3. Not Staying Up To Date With Cannabis News
If you’re not living up to date with the latest cannabis business news, you could be missing out on essential information that could impact your business. For example, you might not be aware of changes in state or local laws that could affect your operations.
Keep track of legislative laws and updates, industry news, and changes in the competitive landscape. This helps you can make the necessary alterations to your business. If you fail to stay current as a business owner, your business is at a severe disadvantage. Some of those disadvantages could be minor, while others could be catastrophic. Whichever the case, not being current is a mistake.
Our blog is a great way to keep up with cannabis news and legislation!
4. Thinking You Don’t Need A Business Plan
A business plan is essential for starting and running a successful business, yet many cannabis business owners choose to forego this step. Without a solid business plan, it’s challenging to set goals, track progress, and make informed decisions about your business.
A business plan can also be helpful if you’re seeking investment or partnership opportunities. Investors and partners want to see that you have a clear and concise plan for your business.
There are several business plans, so you’ll need to figure out which one is right for your business. If you’re unsure where to start, plenty of resources and templates are available online. The most notable business plan types are:
- The Lean Business Plan: This type of business plan is best for starting businesses. It’s a concise and straightforward plan that can be completed quickly.
- The Traditional Business Plan: This type of business plan is more comprehensive and can be upwards of 50 pages long. It’s ideal for businesses that are seeking investment or partnership opportunities.
- The Mini-Business Plan: This business plan is between lean and traditional business plans. It’s typically 10-20 pages long and includes more detailed information than a lean plan, but isn’t as comprehensive as a conventional plan.
5. Processing Expired or Illegitimate Licenses
Another common mistake that cannabis business owners make is processing expired or illegitimate licenses. To operate a compliant and legal business, you need to ensure your licenses are up to date and legitimate.
If you’re caught with an expired or illegitimate license, you could face severe penalties, including fines and jail time. In some cases, your business could also be shut down.
To avoid this mistake, always check the expiration date on your licenses and make sure they’re valid before renewing them. You should also keep copies of your permissions in a safe place so you can easily access them if needed.
Bottom Line
These are just a few of the common mistakes that business owners in the cannabis space make. If you’re planning on starting a cannabis business, it’s essential to keep these in mind in order to set your business up for success.
Do you need help with your business’s accounting, bookkeeping, or compliance initiatives? Click here to contact us today for a FREE consultation!
