In today’s world, medical marijuana may be much needed medicine to many sick patients, while to others it is very much a business – and a profitable one at that, for at least those who are running a successful operation.
However, as with any business, there are various ways to measure success. For some smaller companies, net earnings are the true benchmark of performance. In other words, the amount of money an owner can deposit in his or her personal bank account each month is the measure of success. For some large companies, especially publicly traded ones, year over year growth and efficiencies may be the gold standard of whether a business is doing well. At the same time, others will only focus on individual figures, such as return on investment (ROI) and monetization, even if that involves troublesome over-valuation.
According to a recent news feature from Forbes, owners of medical marijuana businesses are finding it hard to find an accurate measure of success. Part of the problem deals with a potentially inaccurate public perception of how the industry operates. Many people seem to think the vast majority of medical marijuana dispensaries are reaping huge profits. Essentially, people believe if that if you grow a few plants, the money will come hand over fist. However, as the article points out, those in the medical cannabis industry face a variety of problems those in traditional retail sectors never have to worry about.
First and foremost, you are dealing with a product that is still very much illegal to possess under federal anti-drug laws. There are limits on when and how you can advertise your dispensary, and many are limited to using only social media to promote their business. You generally do not hear ads for medical marijuana on the radio or see signs on bus shelters.
In addition to advertising, there are a lot of technical issues involved in growing marijuana. In our current climate of people wanting the highest quality strains of cannabis, it is not a matter of planting seeds in a pot and adding some water. Many are required to grow marijuana indoors, which means thousands of dollars in grow lights and hydroponics equipment, special fertilizers, and, in California, issues dealing with restricted water use due to the ongoing drought.
Once you have a retail business up and running, you have to deal with regulatory compliance. As our Orange County medical cannabis dispensary attorneys can explain, you must have professional security guards posted at the entrance of your business at all times. You must also take extra precautions to prevent your business from being robbed, which is, unfortunately, a common problem.
Once you make money, you must have somewhere to deposit that money, and traditional banks can be a problem, as it is technically money from an illegal enterprise, according to federal banking regulations.
It should be noted that none of this means you cannot make a lot of money in the medical cannabis industry. However, before you get started, you should strongly consider sitting down with an experienced attorney to go over your business plan and take the time to discuss these issues. This will not only help you to be more successful, but it can actually save you a lot of money and headache in the long run.
The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 949-375-4734.
Marijuana Businesses Find It Hard To Measure Success , June 4, 2015, Forbes More Blog Entries:
San Diego’s First Legal Marijuana Dispensary Opens Doors, April 5, 2015, Los Angeles Medical Marijuana Lawyer Blog