A recent house committee has approved the federal decriminalization of marijuana and the bill will soon make its way to the entire house. What many see as an inevitable federal legalization will bring many changes to the current cannabis industry landscape.
Access To Banks
“Only one in about 30 banks or credit unions across the United States accepts a cannabis business as a customer. Those that do take on cannabis companies often charge them hefty monthly account and transaction fees, in part to help offset the extra costs they incur by doing so.” Currently there are no laws that say a bank cannot do business with a cannabis dispensary, however, they are required to report any suspicious or illegal activity. Federal legalization will open up a world of funding options for those in the cannabis industry and allow them to consolidate banks as there will be no fear of their accounts being seized by the federal government. This will make it far easier to expand and invest in their business, and alleviate the current patchwork of multiple different small local banks currently required just to function.
Increased Competition
“Federal legalization could throw the doors open for small businesses to pursue big ambitions or allow large multinational players with ample expertise and fund to enter the market.” Legalization will mean a drastic increase in competition, both in the local market as well as from overseas. This will likely drive costs down which may have a negative impact on smaller businesses. Dispensaries need to be ready for this change with a game plan to build brand awareness and to differentiate themselves from the competition. This may come in the form of offering boutique services as well as developing new, unique products. For those already in the cannabis business, building customer loyalty early on should be a top priority.
Accounting Changes
“Because it developed in an atmosphere of few or no regulations, a lot of these companies aren’t keeping very good track of their finances, and as the industry becomes more mainstream and professional, they’re going to need to get their books in order, or they’re going to be in trouble.” Federal legalization will likely bring a host of new tax laws, making keeping accurate account of all financial transactions a must. Many dispensaries don’t even have an accountant and are using unsophisticated software or keeping financial records in spreadsheets or even on paper. This will not be an option once cannabis becomes federally legal. In what will become an very large industry, dispensaries will need to hire on full-time accountants and implement financial software that will help them to accurately track their all of their financial transactions.
Marketing Investment
“Even if recreational or medical marijuana is legal in your state, there are still local and federal regulations that restrict your marketing options. You are basically limited to sharing your campaigns with adults living in legalized areas who have given consent to receive your promotions.” With the looming increase in competition, marketing will take on a major role in the sustainability and growth of cannabis-based businesses. Currently it is not legal to openly advertise cannabis products, leaving a very small market to pursue. Legalization will open the door for widespread marketing efforts, so developing a plan to market your products in the age of legalization should be a priority right now. Creating digital strategies around content marketing, social media, paid advertising and traditional methods will help your business stand out in what is sure to be a crowded market. Content should focus on the benefits of cannabis while educating consumers on the correct use of their products. A comprehensive list of differentiators should be developed in order to persuade customers to use your products rather than those of your competition. Branding will be essential to the success of your business.
