As you are doubtlessly aware, there’s a legal marijuana business going on in multiple states. And it’s huge. Recreational marijuana sales are averaging $123 million monthly, with a projected gross intake of $1.5 billion for 2016. In Washington, sales were slow at the beginning of 2016, but have grown about 5 percent a month since then.
There must be some things cannabis startups are doing right. In any business, even if you’re picking the low-lying fruit, there’s only so much where that comes from. You have to continue doing things well for it to be successful.
If some marijuana-savvy business people weren’t running their businesses well, Colorado alone wouldn’t be averaging $62 million a month in sales, with continued annual growth in revenue. Shoddy legal marijuana businesses would be undercut by the black market.
Great entrepreneurs learn from everything. Here are four insights you can take away from the legal cannabis industry. You don’t even have to inhale.
1. Look Forward with Data
Startups in the marijuana industry aren’t just operating in the short-term, with a view dominated by state legalisation. They’re looking forward with data-based decisions.
Wholesale company Cannabese is partnering with several software firms to automate the wholesale business. The partnership is also intended to create a network connecting buyers and sellers nationwide. Once marijuana is legalised at the federal level, the network “can be quickly and compliantly united,” says Amy Poinsett, co-founder and CEO of MJ Freeway.
According to Marijuana Business Daily, MJFreeway and BioTrackTHC are software solutions for tracking and gathering data on the “seed-to-sale” pipeline. Their partnership with Cannabese will harness data to:
> Improve transactions using data in real-time
> Improve “product and price transparency”
> Improve the supply and sales network
These types of improvements are what any entrepreneur can look to do with data as the possibilities continue to unfold. In terms of inventory management, POS systems offer sales analytics and data, and can send you alerts when you’re running low on something. Over the long-term, data analytics are fantastic for tracking trends and determining which of your offerings need more marketing or an overhaul.
2. Get Innovative
Within any given niche, you can innovate with expansive new ideas. In the marijuana industry, it’s been happening at a rapid pace.
High-profile startups illustrate the type of innovation we’re talking about here. “It used to just take a serious set of brass balls to succeed in this industry, and you’ve got to have a brain now, too,” says founder and CEO of Bhang Chocolate, Scott Van Rixel. “You’ve got to have a formula, and you’ve got to be able to repeat that formula. You’ve got to have good business sense. The days of just having to take a risk are over.”
Business-savvy startups include Eaze, a pot-on-demand delivery service that goes one further by hooking up those who qualify for a medical marijuana card with an MD. Eaze wants to be the Uber of marijuana. The company facilitates new customer acquisition by making it easy to get your hands on a card. It’s off to a promising start with $12.5 in VC funding.
Weedmaps is an app for locating dispensaries. It’s also a community, like Yelp, through which users can find, rate, and talk about dispensaries, doctors, and delivery services. Weedmaps gets about 50 million page-views per month.
Massroots is a social network for marijuana users. It’s the first cannabusiness to apply for the Nasdaq Capital Market, and a gathering place that uses ads to monetise the social interest around marijuana. Massroots capitalises off the industry without having to open a single dispensary or grow a plant.
All three of these startups connect the grassroots marijuana industry with the digital world. In doing so, they expand what cannabusiness is capable of.
3. Do Authentic Marketing and Branding
Alexa Divett is a certified business coach and author of eBook Marijuana Millions: The Foundation for Success. The key to good marketing and branding, she insists, is actually knowing the industry inside and out–not just wanting to make money off of it. This includes knowing the background, knowing what the cannabis cause is all about.
“The eBook also talks about using community service as a public relations tool and how helping your community is a very smart marketing and branding technique,” Divett says.
Industry knowledge and community involvement are great foundations upon which you can build successful marketing and branding campaigns. Divett is advocating for entrepreneurial authenticity–with a solid core of knowledge and participation in the everyday of the industry and community, you can market a brand anchored in reality.
Any startup in the cannabusiness has to know the audience well to be successful. The same rings true for business across the board.
4. Ask Why Not?
Adam Bierman is the founder and CEO of MedMen, a marijuana consulting business. “Your team and your business need you to be strong and present. The best way to do that is to be at peace with making your own market,” he says. In the marijuana industry, there haven’t been any pre-established market standards, no rules. To attract investors, Bierman has to say “why not?” Why can’t I create this service, why can’t I charge this price, why can’t I promise this sort of windfall to investors?
In a normal industry, market conditions apply. But as an entrepreneur, there’s nothing stopping you from doing something no one else has done. There’s nothing stopping you from creating your own market with a brand new product or service.
Bierman’s advice doesn’t sound like it merely applies to the marijuana business. He says, “Remind yourself that this product, service, and opportunity exists because you were willing to do something no one else was willing to do, and in the same way you are creating your unique business, you are creating your own market.” He advocates for standing your ground on the value you offer.
Asking why not is a philosophy. A philosophy of risk, of staking new ground, of confidence. It’s an outlook any entrepreneur can harvest from the world of cannabusiness.