Starting a cannabis business isn’t like launching a regular startup. It’s trickier, messier, and a whole lot more political. The red tape isn’t just thick—it’s a labyrinth. Yet, despite all that, more entrepreneurs are jumping in.
With an estimated U.S. cannabis market worth $40 billion in 2024, the potential profits are huge. But so are the risks. So before you buy that dispensary neon sign or draft your pitch deck, here are the five key steps to actually getting started in cannabis—and staying legal, solvent, and sane while you’re at it.
Understand the Laws—All of Them, Literally
If you don’t start here, you’re asking for trouble.
Every state has its own cannabis laws, and they change often. In California, adult-use cannabis is legal statewide. But try opening a dispensary in Fresno? Not going to happen. The city banned them outright.
Some towns green-light growers but outlaw edibles. Others welcome delivery-only services but won’t approve storefronts. Even zoning rules can make or break your entire operation.
Federal law is still a brick wall—cannabis remains a Schedule I substance. That means technically, it’s still illegal to transport it across state lines. Even if both states allow it.
You’ll need a lawyer. And probably a backup lawyer.
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Learn state-specific licensing types (retail, cultivation, testing, etc.)
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Check local city and county rules (they often override state permissions)
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Keep tabs on shifting regulations and pending legislation
Build a Business Plan That Survives Scrutiny
This isn’t a pitch deck for Silicon Valley investors over flat whites.
You’ll need a cannabis business plan that spells out everything from seed-to-sale tracking to tax compliance. Regulators want to know what you’re doing, why you’re doing it, and how you’ll prevent diversion (aka product ending up in the wrong hands).
Many states require a formal operations plan just to apply for a licence. That includes things like:
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Security protocols
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Waste disposal procedures
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Inventory control systems
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Employee training
If you skip any of this, your application might not even be reviewed. And those application fees? They can cost thousands and are usually non-refundable.
Here’s a quick look at some real-world licence application fees across states:
| State | Retail Licence Fee | Cultivation Licence Fee | Notes |
|---|---|---|---|
| California | $1,000 – $5,000 | $1,200 – $77,905 | Fees vary by business size |
| Michigan | $3,000 | $4,000 | Annual renewal fees apply |
| New York | $2,000 | $2,000 | Social equity applicants favoured |
| Florida | $60,830 | N/A | Limited licences available |
Secure Funding Without a Traditional Bank
This is the industry’s Achilles’ heel.
Because cannabis is federally illegal, most banks won’t touch it. No loans. No credit lines. Sometimes, not even a checking account. That means raising money is often a grind.
VCs and angel investors are the usual fallback, but they want clean financials, future-proof compliance plans, and often a chunk of equity. Friends and family funding is also common—but risky, for obvious reasons.
You might even need to deal in cash for a while. That comes with safety and insurance concerns.
One option? State-chartered banks and credit unions. A few work with cannabis operators under tight rules. But expect high fees and regular audits.
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Don’t store large amounts of cash at your business site
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Consider private equity or cannabis-specific lenders
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Prepare detailed, defensible financial projections
Getting creative isn’t optional—it’s survival.
Find a Niche in a Crowded Market
Let’s be honest. Dispensaries aren’t rare anymore.
You need to stand out. That could mean craft cannabis with a story. Or organic flower grown with solar power. Maybe you go into infused beverages, or microdosing edibles for the wellness crowd.
There’s a big shift happening: mainstream consumers are looking for safety, consistency, and brand trust. Think of the shift from home-brewed beer to curated craft breweries. That’s where cannabis is headed.
Some founders are pivoting into services instead of products—think compliance consulting, packaging solutions, or transport logistics.
Even a one-person cannabis law consultancy can rake in serious revenue right now.
Expect Red Tape, Delays, and Headaches
You’re going to hit snags. Many of them.
Some states take 6 to 12 months to process applications. Others open windows briefly, then slam them shut. Even after getting licensed, you’ll likely face inspections, updates, rule changes, and permit renewals.
Miss a detail, and you could get fined—or shut down.
This is an industry where you can do everything right and still wait 18 months to open.
And don’t forget the taxes. Section 280E of the IRS code bars cannabis businesses from deducting most ordinary expenses. That means sky-high tax burdens.
Honestly, it’s brutal.
Yet people keep jumping in. Why? Because there’s room to grow—especially for those who do it right from the start.