Picks and Shovels - How to Start a Ancillary Weed Company That Doesn't Actually Sell Any Cannabis

The cannabis industry is relatively new and some niches haven't been tapped since the industry got established in some states just months ago. Be it medical or recreational cannabis states, many areas in the industries are underexploited. Starting a weed company does not mean selling weed per say, you can also start what is called an ancillary company, a company that helps the weed industry but does not actually sell or "touch the flower". Those businesses do not need a marijuana licenses and can operate as any regular retailer in the state as far as merchant processing and banking.

In limited license states and fully legal states, there are many vacant positions in different areas that you may not have heard of yet. The point is that the cannabis industry has not been fully unearthed, it may take federal legalization for the full potential of the industry to come to light, but for now, there's a spot for you to fill up. Right now, the cannabis industries in some states seem choked up and without free spots, the truth remains that several sectors in the industry remain underserved.

In a state like California with a highly developed industry, the brand-building sector is fairly dormant. Companies have little stress establishing their operations because there are no license caps, but very few of these companies consider building their brand to reach more people. That's an example of one lane you can fill. On another hand, there are states like Maryland and New Jersey where the industry is new and licenses are still limited. Here there is potential in cultivation, supply, marketing, research, and many other sectors.

Untapped Business Opportunities In The Cannabis Industry

Here are some market niches you can consider delving into to make an impact in the cannabis industry.

Supply Niche

States with high production and lowered demand have their focus on inter-state supply at the moment. These Multi-State Operators (MSOs) will end up having the upper hands in the States where they operate. Smaller brands have to improve their product quality and standards to remain relevant. By perfecting the standards of their operating procedures, they may be able to expand their businesses and attain long-term success.

These small operators or Single-State Operators (SSOs) lack capital inflow. The Senate is yet to permit the SAFE Banking Act, so these individuals have to scale through the big challenge of sourcing for cash to increase production or plan expansion. Regardless of these, they pay high taxes and are left to make credit card payments at exorbitant rates. All these are enough to hinder their growth.

The last bet for these SSOs is to have a targeted strategy that guarantees demand for their product. They can consider selling to an MSO or joining forces with other small brands to have a better footing. They could also choose to stay small and luxurious. All that's needed is a clear strategy and a resolve to stick to it.

That's where you come in, you can approach these brands to create strategies that would increase their supply.

Trulieve is a perfect example to show how SSOs can grow from struggling to compete with other SSOs to now controlling a large share of Florida's cannabis industry. Trulieve is set for long-term success because it trained its focus on fine-tuning the supply chains with the state. Now, they have expanded into California, Massachusetts, West Virginia, Pennsylvania, and Connecticut.

Brand-Building Niche

Brand-building has to be the best big thing in the cannabis industry. Cannabis brands have successfully produced premium products at affordable rates for their customers. The next thing for these companies to do is to properly label products to appeal to more customers. In mature markets what distinguishes one brand from the other is product labeling.

Placing a hyper-focus on improving product labels and descriptions to meet the satisfaction of customers is a niche you can exploit. Customers want a frictionless buying experience, and to do this product labels must be reviewed. Brands can choose to label their products based on their recommended uses(increased creativity), the best time to use (at night to sleep), or their induced effects( for an uplifted mood).

Cultivation Niche

This isn't a new sector. At the last valuation before the pandemic, the global cannabis cultivation sector was pegged to be worth over $129.3 billion. This figure will likely be about twice that valuation right now because there has been a massive boost in the cannabis industry since the onset of the pandemic. The increased number of approved legislation is also an important factor. This particular business would require either a medical growing licenses or recreational growing licenses from the state, a much easier license to get compared to a retail store license.

Cannabis farming is one of the most lucrative markets in an industry, especially in newly legalized states with limited licenses. The downside is that there are several challenges to be overcome before farmers can gain their footing in the market. There are expensive licensing fees and applications to sort through. The market is also regulated by strict laws and rigid financial reports that are mandated by the cannabis commissions.

You can delve into this niche by introducing farmers to robotics and automated cannabis farming and processing. Automating the processing stage, such as drying the buds with a machine, will save time and labor. It will also help in the mass production of quality products.

Products Niche

The number of products available in the market is limited and there are numerous other ways cannabis can be modified to produce innovative products. As time goes on, consumers will get bored with flowers, pre-rolls, and even vapor pens, they'll be in search of something new and fun.

Two products that show prospects include edibles and concentrates. Currently, both have the lowest market share, but in a few years, drinks containing cannabis (edibles/drinkables) will become mainstream.

You can delve into this sector by creating and perfecting a recipe for an edible, or a drinkable. So far your product is of utmost quality, consumers will rush to your brand. Available data shows that youths are now less inclined to drink alcohol, cannabis beverages could be the next big thing among the young generation in the future.

Californian brands are extensively improving cannabis products to satisfy their customers. This niche would be better developed once cannabis delivery services and other consumer-focused innovations are given free rein. Don't be surprised to see cannabis pills, dissolvableS, and even liquid shots in a few years time.

Bottom Line

People who claim that the cannabis industry has no free opening are wrong. There's enough space currently for you, your friends, and even interested family members. Don't hesitate to make a move.