Even before the chaos of the COVID-19 pandemic, running a cannabis business in the United States has been a tremendous challenge due to stringent compliance laws, high taxes, and competition with the black market.
Now, the economic uncertainty surrounding the pandemic threatens nearly every industry, and cannabis is no exception. With thorough preparation and professional support, however, your cannabis business can survive the tumultuous events of 2020 and even use these challenges to pave the way for long-term success.
Without further ado, here are 7 tips for cannabis business owners during 2020 and beyond.
1. Compliance, Compliance, Compliance
Nothing can guarantee a company’s success, but compliance is a must—especially in the world of cannabis. As a cannabis business owner, you face more compliance risks than those in other industries, which is why you must take extra care to build solid legal foundations. As a result, you can limit and even prevent regulatory investigations and legal disputes. Currently, the cannabis industry is a regular target for costly lawsuits related to quality, advertising, ADA compliance, and more.
The best way to ensure your business is fully compliant with local, state, and federal regulations is to develop a compliance plan and monitoring strategy with help from a seasoned attorney. With the right amount of care and support, you can create a culture of compliance, where no one in your company takes shortcuts or ignores protocol.
Do things the right way—and document it. As a cannabis business owner, you are subject to a much higher rate of inspections and investigations. Due to these risks, even partners and investors will examine your operations with a more critical eye before deciding to do business with you. Keeping thorough and detailed records can help you explain your past decisions, protect your company from litigation, and make accurate projections using well-organized financial data. The level of professionalism you maintain today can make or break your company’s future.
3. Long-Term Planning—and Regular Adjustments
All around the world, COVID-19 vaccine trials are well underway, and many hope we could have a solution to the pandemic sooner rather than later. Even so, the economic effects of a recession can last for months or even years. Your budget should account for future difficulties, and you should get in touch with lenders and service providers as soon as you know you may struggle to make payments.
Many startups are reactive rather than proactive. With a comprehensive strategy that you regularly update, you can align business and budgetary decisions in a streamlined and cost-effective fashion.
In business, “diversify” usually references the allocation of capital into a range of investments to reduce risk. Instead of diversifying your investments, however, diversify your employees, partners, and other team members. Research is beginning to demonstrate that diversity in gender and race is undeniably correlated with higher levels of success—especially when this diversity is present at leadership levels.
5. Adaptation and Innovation
When we look at history, we can see that society never emerges from disruptive events the same as they were before. COVID-19 (and all other social, political, and economic events of 2020) is an opportunity for businesses to embrace the unknown and create something entirely new. Companies that can innovate in the face of change are the ones that not only survive but thrive.
6. Participation in Changing Landscapes
We aren’t powerless in the face of legislative and regulatory changes. Both individuals and businesses can advocate for themselves and their interests, and the cannabis industry needs this advocacy now more than ever. Many believe it is only a matter of time before the federal government legalizes cannabis, and we can use our voices to encourage that movement and build a future that allows your business to enjoy exponential growth.
7. Professional Support
For the highest likelihood of overcoming present and future challenges, you’ll need assistance from qualified legal professionals. At Purdy & Bailey, LLP, we are helping cannabis business owners survive the economic turbulence of 2020, and we look forward to putting our 50+ years of experience to work for you as well.