If you’re considering starting a cannabis extraction business, these critical business errors could stop you in your tracks.
Launching and running any new business venture is incredibly challenging. Now multiply that challenge exponentially for those looking at launching a new venture into the cannabis extraction business.
Consider, for example, the need for complex chemical processing and analysis to create our products and the multiple legal hurdles at the federal, state, and local levels, and it becomes even more apparent that this particular entrepreneurial journey can get really dicey.
Mistake #1: Not Hiring the Best Talent
Your cannabis extraction business will need to be a finely-tuned machine to function well and make the profits you’d like to get from the company. But don’t ever be tempted to focus on reducing payroll as a way to put more money in the profit column of your books. While it may cost you more upfront, hiring experienced talent will save you money and even help you make more money in the long run.
Consider the fact that the chemistry used in a cannabis extraction business is complicated. There is complex chemistry, potentially using toxic chemicals, to extract the valuable cannabinoids – THC, CBD, terpenes, and others. If you don’t hire someone with experience to run the chemistry of your cannabis extraction business, you’re risking more than just the quality of your product. You’re putting the health and safety of your customers, team, and community at risk.
When it comes to managing your business, you’ll want to hire experienced talent who know the importance of following the laws and running a team that has to be knowledgeable and 100% precise in applying all of the related cannabis regulations statutes. People that you’ll be able to trust to follow the rules and requirements that keep your business safe and running smoothly.
Mistake #2: Taking Your Eye Off the Legal Situation
Knowledge of existing city, state, and federal laws and having an eye on the updates to those laws will be critical to your business’s success. How you set up the company, within the regulations, licensing requirements, and laws, can help you avoid fines and court cases. When it comes to managing your operation’s legal and financial aspects, having an attorney and accountant, who are intimately familiar with your state’s legal environment, is aware of potential liabilities, and has experience with cannabis-based business start-ups would be optimal.
Additionally, as the cannabis processing business owner, it’s your responsibility to ensure that your employees and others connected to your company conduct themselves 100% within the current laws and regulations. Ongoing and recurring training and staff huddles to discuss the laws and regulations, along with the processes and procedures at your company, can help reinforce this critical issue. It can also help ensure that a random search or tip from a disgruntled former staff member doesn’t lead to your business losing its license or facing massive fines.
Mistake #3: Not Listening to the Experts
Some business owners and entrepreneurs prefer to be the “smartest person in the room.” Hence, they shy away from hiring the best people in their industry to advise them on starting their cannabis processing business. In starting a complex business like cannabis processing, listening to the experts will be a critically important part of setting up and running the operation correctly. Even if you have extensive business experience, you’ll have a lot to learn if this is your first venture into the cannabis industry. And if you already have cannabis industry experience, consider that you may know little to nothing about the complexities of cannabis processing. Consult with several sources to make sure that you’re making the right decisions along your business journey. Talk to people who are successful in the industry and have considered a wide range of processing equipment options. This exploration will help you make a more educated decision on what cannabis extraction equipment to buy.
Mistake #4: Not Bringing in Experts at the Beginning
If your commercial real estate agent, accountant, lawyer, and insurance agent aren’t well-versed in the regulations, laws, and liabilities of the cannabis industry, it can cost you some serious cash. This is a case where your friend from college who will give you a break on their fees may not be the best choice. And if you don’t have those people lined up yet, you’ll want to start seeking out and building those relationships as soon as you get serious about the idea of creating a cannabis extraction business. This type of operation requires expert advice on several different fronts.
Mistake #5: Losing Sight of Industry Trends
In the cannabis industry, rapid changes in the laws and the United States market are causing both volatility and opportunities. Being forward-thinking and staying in front of industry trends will be necessary to any cannabis processing business in the coming years. Reading industry publications and attending trade events can help you stay up to date on new products becoming popular, so you can adapt your business to accommodate those trends.
In just one example, in 2021, consumers are getting more sophisticated in their preferences. There are cannabinoids in everything from carbonated drinks to skin creams. Additionally, dabbing, shatter and glass are becoming more normalized for every day THC users. Social media cannabis advocates and influencers, some with millions of followers, continue to educate the masses on new and different ways to consume the product.
As consumer desires and regulations evolve, keeping your eye on the trends can help ensure that you profit from the evolution of the cannabis market.
How Precision Helps Cannabis Extraction Businesses
Customers of Precision have the advantage of our best-in-class extraction equipment paired with our laboratory infrastructure, design and engineering specialty. This combination allows us to be more than just a supplier, we’re system integrators who can design a solution to fit your goals. Schedule your free consultation today.