The Main Types of Cannabis Businesses

Broken down into two categories: those that touch the plant and those that do not.

Cannabis Business Sectors

Cannabis Business Sectors: Budtender showing a guest an edible product in a retail dispensary.

In the United States, cannabis is legal in some form in more than half the nation. With more states moving towards legalization the demand for jobs is on the rise. In 2021, the marijuana industry’s economic impact is forecast to be $92 billion with a year over year increase. We continue to see stigmas shift as cannabis use comes out from the shadows and becomes normalized in mainstream media. 

With all this growth you might be wondering how you can make your way into such a booming industry. But, first you need to understand the main types of cannabis businesses that exist in today’s legal market.

Let’s start by breaking down the types of businesses into two main categories: those that touch the plant, and those that do not. 

Plant-Touching Cannabis Businesses

Plant-touching businesses require licenses and are governed by the laws and regulations in each state.

Cultivation

Cultivation businesses breed, grow, and harvest cannabis. They supply flower to dispensaries to be consumed in plant form or to THC/CBD extraction manufacturers.

Laboratory Testing

Cannabis testing labs determine the chemical code of cannabis products, usually grading the potency and quality of the product to make sure it is safe to sell to consumers.   

Manufacturing

Manufacturers extract THC and CBD from raw flower and turn them into a wide selection of products. They then supply the dispensaries with manufactured cannabis goods. Edibles, vape cartridges, topicals, tinctures are all examples of products that can be manufactured.

Distribution

Distributors transport flower and manufactured products through the supply chain. After cultivators harvest the plant, distributors transport it to laboratories for testing. After the laboratories test the plant, distributors then transport the tested plant to manufacturing or the dispensaries. 

Dispensaries 

Dispensaries and their delivery services are the only business-to-customer license requirement type. They sell products to customers from a retail location or through delivery sources. Dispensaries also receive inventory wholesale from cultivators or manufacturers.

Ancillary cannabis businesses

On the other hand, ancillary businesses don’t touch the marijuana plant itself, and therefore don’t have to worry about the licensing or regulatory obstacles that plant-touching enterprises do. 

Construction

For decades, local general contracting businesses have been building out commercial and residential developments in their communities all over the world. These skills can be applied to build out cultivation, retail, manufacturing, or testing facilities. 

General contractors willing to learn and specialize in their state’s cannabis-specific building regulations will be in high demand.

Packaging

Packaging businesses provide containers, bottles, bags, jars, and wrappers for cannabis products. It goes without being said; packaging must be compliant, with child-proof protection and labeling that meets the appropriate state’s disclosures. The standards for cannabis packaging can be similar to other regulated industries like alcohol or tobacco. 

It’s not uncommon for alcohol packaging/labeling companies to expand their services into the cannabis industry.

Technology Products

Technology essentially enables cannabis business owners to run their businesses more effortlessly. Some tech entrepreneurs opt to use code to manage everything from employee training modules to product sales and delivery, all of which need specialized technical solutions, especially with the sensitivity of the cannabis industry.

Accessories

Whether you’re a first-timer or a veteran, every consumer needs some form of accessory to enhance their smoking experience. Check out the market for glassware, vape devices, or rolling accessories.

The opportunities among ancillary businesses are endless, from finance, sales, and marketing, to legal, compliance, or education! Our advice is that you start by applying your existing expertise and transferable skills to align with the industry’s needs. Then, see where that takes you. Each year the demand for new jobs continues to increase, so the people who establish themselves today are only helping set their future in stone.

There is no denying the cannabis industry is emerging with significant momentum, now the question is, are you ready to be a part of it? 

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