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Nonplant industries are thriving in the cannabis industry. Here are some big-time opportunities.
5 min read
Opinions expressed by Green Entrepreneur contributors are their own.
With the growing cannabis industry expected to exceed $24 billion in sales by 2025, it’s easy to understand why so many entrepreneurs are looking to get in on the ground floor. Canada recently legalized marijuana and there is a good chance that in the next ten years, the U.S. will follow suit. The companies that get in early have a chance to not only thrive but to corner huge swaths of an exciting new market.
But some of that enthusiasm is tempered by the fact that, although cannabis is legal medicinally (and increasingly recreationally) in two-thirds of the United States, there is still a stigma around the plant. For many business people, growing and distributing marijuana is still outside their comfort zone.
Related: To Touch the Plant or Not: What Type of Cannabis Business Should You Start?
Nonplant industries
If this thought feels familiar--fear not. There are plenty of ways to thrive in the cannabis industry without ever touching the plant. For example, my company, Kush Bottles, provides packaging and supplies that are highly specialized for the cannabis industry. We started out selling containers that dispensaries could use to display marijuana. We’ve since moved on to things like child-resistant packaging, compliant labeling and made two significant acquisitions in the vape and concentrate space, which is the fastest-growing segment of the industry.
In my eight years in the cannabis industry, I’ve seen plenty of nonplant businesses form and thrive. If you’re thinking about getting into the business but don’t want to touch the plant, think technology, ancillary, and real estate.
1. Tech
On the technology front, cannabis is lagging behind other industries. This is in part because technology plays can often be expensive, and since cannabis is still a Schedule 1 drug at the federal level, most big banks don’t want to invest in cannabis-related companies. But like every industry, cannabis could benefit from the efficiency that comes with technology.
Financing is beginning to loosen up, thanks to laws like one recently passed in California that allows for the establishment of state-chartered banks to serve the marijuana industry. As it does, we’ll see more investment in cannabis tech.
If you’re a tech entrepreneur, consider building platforms that are tailored to the cannabis industry. The mix of agriculture, retail, and varied levels of legalization makes cannabis unique. A tech company with a deep knowledge of the ins and outs of the industry has an opportunity to thrive. When cannabis becomes legal at the federal level, there’s no question that the big tech companies that currently avoid the cannabis market will come flooding in. But the cannabis community, much like the craft beer community, is strong and united. People will stay loyal to the companies that showed up during the early days.
2. Ancillary
Another good area for entrepreneurs is in the ancillary businesses around the cannabis industry. This includes companies (like Kush Bottles) that are supplying the industry. But it also includes public relations firms, law firms and insurance companies that are specializing in the cannabis industry. If you have a service business, consider specializing. The cannabis industry is complicated and specific. Put in the time to really understand the market and the players, and you’ll be able to build a nice business.
Cannabis tourism is another ancillary industry that’s poised for growth. As more states legalize, hotels, restaurants and resorts will benefit from catering to the cannabis crowd. Desert Hot Springs Inn, in the Coachella Valley in California, is one hotel that’s actively courting cannabis tourists by providing them with places to smoke or vape. The California Hotel & Lodging Association told the LA Times that it is getting calls from hotel operators asking what they should tell guests who ask about cannabis. That’s a sign of an underserved market.
3. Real Estate
Finally, consider real estate. Right now cannabis is a real-estate-intensive industry. Because it is so new, customers want to come into a retail store and explore the different offerings. Many people still think about smoking pot as rolling joints and packing bongs. But the reality is that there are lots of different ways to use cannabis, including edibles, vape pens, lotions, patches and CBD drops. This new market requires customer education that can’t just be delivered over the internet.
There’s also a great need for warehouses and greenhouses. But landlords can still be skittish when it comes to working with the cannabis community. We were recently denied a lease on a warehouse we were looking to rent because the landlord was morally opposed to our business, even though we do not touch the plant.
If you’re in real estate, consider advertising yourself as cannabis-friendly. As the industry grows, more serious business people and investors are getting involved. These aren’t the stoners most people picture when they think of cannabis. The people I know in the industry are highly educated and approach their business with the utmost professionalism — folks who want to work with banks and tech companies and landlords to help their businesses grow.
For entrepreneurs who are considering cannabis, we welcome you. There’s plenty of room for everyone and the more cannabis businesses, the better for all of us.
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