5 Challenges Faced by Cannabis Business in the Weed Market

Leading a successful business in the weed market is quite challenging. From the latest technological advancements to various government regulations, most small cannabis businesses are facing more competition.

As on January 1, 2016, out of 50 states

  • 26 states have legalized the medical use of marijuana
  • 21 states have decriminalized the possession offences of certain varieties of marijuana
  • Also, 16 states have adopted CBD (cannabidiol) only laws that allow the use of certain strains of marijuana for medicinal purposes.

Here are the 5 common challenges faced by cannabis businesses in a competitive weed market.

Tough Weed Market Regulations

The strict weed market regulations often involve costly and time-consuming tasks for operating a legal cannabis business. The rules and regulations require that cannabis businesses keep track of their products and follow the specified packaging regulations.

This usually requires painstaking documentation and paying for tracking software. Keeping organizational difficulties aside, adhering to rules and regulations requires support, infrastructure, employees, etc.

Before getting your product on the shelves you require third-party lab testing. Due to the shortage of such a testing lab, tests are usually expensive and have a long waiting period. Many of the products get rejected due to strict regulations.

A cannabis business loan may be able to solve all your problems as you may have the proper funding to set up your own in-house lab testing.

Expensive Technology

Once upon a time weed production meant growing only a limited number of plants in the darkroom under the LED lights. But now it has become a growing industry in the U.S. Nowadays large-scale growers enjoy reinforcing advantages with massive facilities and multiple cannabis growing licenses.

They have sufficient capital and smooth cash flow to buy costly equipment so that they can produce and sell high-quality weed product high-quality herb.

Due to such a high level of competition, small businesses could miss the opportunity to grow this popular cannabis product. One has to admit that it is costly and they have insufficient funds to support that extra step in the production.

To remain in the competition one needs fast business loans to cover the cost of expensive equipment.

Changing Weed Market Trends

Just like in every industry, weed market trends are rapidly changing.  This is the natural evolution of any market.

Cannabis oil is the most popular product promising steady growth in the next few years as vaping popularity outpaces smoking flower. It is more difficult to produce cannabis oil as compared to growing flowers.

Moreover, the future of the weed market will largely depend on what kind of cannabis will be legalized by the government in future.

The Consolidating Industry

Ironically, the legalization of the cannabis business is driving out various black-market growers who somehow managed to illegally survive amid prohibition.

Now, they are being replaced by authorized and legal businesses. With a higher purchasing power, these kinds of chain dispensaries can buy bulk product.

Additionally, it is legal for weed-growers to apply for multiple weed licenses in different places, thus generating large and growing collaboration that can purchase supplies at a low cost and sell their products at a low price.

Expensive And Slow License Process

Although most states have authorized the use of cannabis with some restrictions, yet there are various barriers that limit anyone from starting a small cannabis business. Particularly, it involves the following factors:

  • Applying for a license
  • Regular maintenance of the license
  • During the long application wait period, maintaining a successful small cannabis business without making a profit
  • Bearing applications and miscellaneous costs without getting a license

It turns out to be an expensive business that requires high set up costs. Normal considerations such as getting a traditional loan do not really apply in the weed market.

Conclusion

Don’t let the lack of funds restrain you from starting your small cannabis business. Call 703-399-1685, or write to us at info@royalefunding.com to connect our experts today.