How to Restructure Your Cannabis Business as More States Legalize

Nov 3, 2019 | Cannabis Business

The cannabis business is currently caught in an interesting dance of legality and opportunity. On one hand, it is still considered illegal according to federal law. However, on the other hand, a constantly growing number of states are legalizing it locally. Those states that legalized early have already seen a thriving new cannabis industry rise up, both for urban areas and bringing money and tourists to once-depressed small towns.

THE MULTI-STATE CANNABIS BUSINESS CHALLENGE

For cannabis entrepreneurs, this has been a bonanza of business with your products in high-demand wherever they are allowed to be sold. However, the complex web of legality also uniquely limits cannabis business from flowing freely from state-to-state. Because even though cannabis may be legal in two bordering states, (California and Oregon, for example), crossing the state border is still a federal action in which federal laws apply. So cross-state cannabis is a no-go. At least, if you’re trying to transport the leaf or products themselves.

This puts cannabis entrepreneurs in a challenging spot. How can you grow your business into the newly legalizing states without breaching federal laws about crossing state lines? You are not as limited as you might believe. Cannabis itself can’t cross state borders, but your business can. Let’s explore a few strategies for restructuring and expanding your cannabis business into new states without breaking federal law.

CULTIVATE SUPPLIERS IN INDIVIDUAL STATES

The major limiting factor is that you cannot share supplies from one location to another across state lines. You can ship packaging, plans, decoration, and shelving, and even vapes and glassware. But you cannot ship cannabis or any cannabis-derived products.

This means you will need to cultivate a network of suppliers in each individual state where you plan to open a new dispensary location. The more local growers and producers you know, the greater your stock can be from shop to shop.

Cannabis Buyer’s Market

Fortunately, the current market is very buyer-friendly when looking for new cannabis supply partners. Growers in established cannabis-legal states are overproducing with no ability to spread out their products across state lines. New dispensaries looking for grower partners will find eager grow operations who would love to help you bring their buds to new towns and neighborhoods just to get the stuff out of their coolers and off the loading docks.

GET MEDICAL TO ACCESS GREATER MARKETS

If your brand does not already have a medical branch, it’s time to build one. When you’re planning to expand your cannabis business into new states, it’s important to remember that medical marijuana is legal in far more states than recreational use. Conservative states that have acknowledged the use of cannabis for hard-to-treat conditions like epilepsy, cancer care, and nerve pain conditions are making marijuana medical-only. Others are stopping through the ‘Medical Zone’ for a few years while the state population adjusts. The best way to successfully expand and reach new multi-state audiences is to also open dedicated medical-only locations.

The Respectable Pharmacy In-Road

These can serve in states that only allow certain medical conditions and medical-card-only customers to buy marijuana commercially. Make your medical branch separate from your recreational branch so that the stricter states can see that you take the medical side of the business as seriously as they do. The more respectable and serious your medical dispensaries are, the more welcome your cannabis-pharmacies will be in conservative areas that are just opening up in the market.

For states on the path to recreational legality who are currently in the ‘medical zone’, your medical establishments will also set you up for a quick and easy expansion to recreational when the laws change again in a few years.

BUILD A DEDICATED STATES REGULATION-ADHERENCE TEAM

Jumping through regulation hoops is the name of the game in the cannabis industry. Every state is like a new level, where the hoops are in entirely different places with new heights to jump through. You may have become a pro at keeping up with the regulations and legal requirements of your home state. But going multi-state means keeping up with the wild and often problematic changes in each individual state you expand to.

Many of the states that are resistant but changing anyway are using regulations to put a hold on cannabis expansion. Don’t let the strict, sometimes bizarre, and ever-changing regulations stop you. Instead, become a pro at regulation adaptation. Make it a brand hallmark that your cannabis establishments are always in perfect compliance and in good standing with the local authorities who are sometimes wary of new cannabis businesses.

Your Regulation-Adherence Team

Business team reviewing how to restructure your business as more states legalize cannabis.   

 

Meeting to discuss multi-state regulation-adherence

The best strategy is to build a dedicated team, or a collection of teams, whose sole purpose is to keep up with the regulations. Your team should include lawyers who can keep you up-to-date on the letter of each state (and county and city)’s laws. Include local liaisons who will talk to city councilmen and county sheriffs to ease community concerns. Include marketing specialists who will coordinate all your local packaging, labeling, and logistics as well as hone your brand.

Check-in with your team monthly to hear about any recent changes or upcoming regulations.

LEARN MORE ABOUT RESTRUCTURING YOUR CANNABIS BUSINESS AS MORE STATES LEGALIZE CANNABIS

Managing a multi-state cannabis business is not impossible. Brands like Curaleaf, Green Thumb, and Trulieve are already doing it. With the right strategy, you can do the same by forging your growing cannabis brand into a national icon of respectable medical cannabis pharmacies and trendy recreational dispensaries. Just be ready for the roller coaster of regulations, roadblocks, and sudden opportunities that await. Contact us today to start financially planning for your big expansion to new states.

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