Cannabis License Planning: Is One Year Out Too Early to Start?
Fast Cannabis Legalization Is Drawing High Competition
The cannabis industry is becoming increasingly competitive as more entrepreneurs recognize its potential. With over half of states still left to institute adult-use markets, open application periods, and award licenses, the cannabis industry is still navigating its path toward maturity. Cannabis legalization is actively occurring around the country and even more states are on the verge. Of these, several state timelines are set for application windows within the next year.
In the 2022 election, both Maryland and Missouri legalized recreational use. Maryland’s application window will open in September, and Missouri microbusiness and wholesaler applications are being accepted this summer. Adult-use has been legal in New York since 2021 and the much-anticipated application is also set for release in September with application windows to follow.
In legislative sessions this year, we’ve already seen Delaware, Minnesota, and Kentucky make progress—with Delaware application windows starting in May of 2024 and Minnesota and Kentucky drafting regulations. Kentucky is the only new medical-only market, so if you want to get in on the ground floor, that’s the spot. Washington D.C. will also accept additional license applicants this fall, and California municipalities are even in the mix with Redondo Beach licenses available on the horizon. One other state to keep an eye on is North Carolina as they may shock us with quick action this year as well.
Why Early Cannabis License Planning Is Necessary
With all of this opportunity, you may be wondering if it’s too early to start planning your cannabis business, especially for markets like Delaware that are a year away? At Canna Advisors, we’ve does this for over a decade, and from our experience, the most successful teams have taken the time to line up the key components with plenty of time before submission. Because of that, we are adamant that teams start early when applying for a cannabis business license. Beginning consistent planning sessions for your business one year out from the application date provides you with an all-around competitive advantage, allowing your business to be among the first to secure a prime location and team, meet funding goals, establish an operating plan, and submit your application. It also gives you time to differentiate your business, develop a meaningful brand, and demonstrate your commitments to compliance and community engagement.
1) Account for Staffing Needs & Team Building
Building a strong core business staff from the outset helps establish shared goals, develop trust, and ensure everyone is aligned with the vision and mission of the business. Familiar teams have open lines of communication and can effectively collaborate and problem-solve together. By starting early, you can optimize team composition for the best possible application and leverage individual strengths to maximize the productivity and efficiency of the business.
2) Understand Regulatory Compliance
It’s no secret that the cannabis industry is heavily regulated, and that application process can be complex and time-consuming. Starting early allows you to thoroughly understand the regulations, requirements, and documentation needed to obtain a license. This gives you ample time to gather all the necessary information and ensure compliance, reducing the risk of errors or omissions that could lead to application rejection.
3) Navigate Local Business Regulations
In addition to state-level regulations, many local districts have their own specific requirements for cannabis businesses. Those could include zoning and setback restrictions, security measures, signage, community engagement, permitting, council meetings, and a variety of other requirements. Starting early gives you time to research and understand the local regulations, engage with local authorities, and adapt your business plan accordingly.
4) Identify & Adjust For Changing Application Deadlines
Cannabis license application processes usually have specific deadlines or open windows that only occur at certain times of the year, and which can occur with little warning. We saw this situation earlier this year when both Florida and Texas released sudden application deadlines just a few months away. By starting early, you can identify the application timelines and ensure that you have sufficient runway to complete, review, redact, and submit your application before the deadline. This reduces the risk of missing out on opportunities due to time constraints.
5) Create A More Comprehensive Finance & Business Plan
As with most new businesses, applying for and running a cannabis business license typically involves significant financial investment. Starting early allows you to develop a comprehensive business plan, conduct market research, assemble a financial model or pro forma, secure financing, and seek investors if needed. By giving yourself more time, you can carefully consider your business strategy, financial projections, and operational requirements, which increases your chances of success. Especially if fundraising is a key part of your strategy, give yourself at least a year of lead time.
6) Stay Ahead of Competitive Cannabis Real Estate
Identifying a suitable location is crucial and the competition for the best locations is sometimes fierce, especially on the east coast or in dense metro areas. Starting early allows you to research and evaluate different sites, to consider factors such as proximity to your target market, local ordinances, seller or landlord receptiveness, and neighborhood dynamics, and to engage with local authorities before other new business hopefuls have the chance. Even conditional or provisional applicants will need to secure property eventually and waiting too long can leave you out of luck.
7) Be Ready For Delays and Unexpected Challenges
The application process for cannabis business licenses almost always encounters unexpected delays or challenges. It could be due to changes in regulations, issues with documentation, unruly landlords, surprising background checks, last-minute redactions, or other unknown circumstances. By starting early, you leave a buffer to accommodate any delays and overcome challenges that may arise during the process.
Your One-Year Plan To Cannabis Success Starts Now
Twelve months might seem like too long, but you will be glad you started early. While an experienced and professional team of cannabis consultants can make a complicated application process look simple, starting in advance when applying for your cannabis business license gives you time to craft a financial proforma and strategic business plan, seek and secure funding, develop your brand, determine procedures that comply with regulations, research local requirements, meet application deadlines, navigate unexpected hurdles that are sure to crop up, and stay ahead of the competition. Preparing in advance provides you with a potential first-to-market advantage, allows you to build a strong business and application, and increases your overall chances of success in the highly competitive cannabis industry.
Don’t put off strategizing your business until it’s too late. Contact our cannabis licensing team now to start a consultation and plan for a win in your state.