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How To Start A Cannabis Business In 5 Simple Steps

by Steven Brown
How To Start A Cannabis Business In 5 Simple Steps (1)

There’s no denying that running a Cannabis Business can be a practical career choice. Nowadays, Cannabis Businesses have more opportunities to make money as more states have legalized the drug. However, starting a Cannabis Business or any business – requires some effort to prepare, legally set up, and operate.

Before starting a business without money, you should know ​​the industry environment, like potential revenues, dangers, and competitors. Some other critical factors are researching the demand for your product or service and how to differentiate yourself from competitors offering the same product or service.

Undoubtedly, starting a cannabis business can be challenging. That said, we have created a 5-step guide to walk you through the intricacies of starting your own cannabis business.

5 Steps To Start A Cannabis Business

There is no denying that the Cannabis Industry Business can be very profitable. The steps mentioned below will help in starting your Cannabis Business with ease.

Step 1- Decide The Type Of Cannabis Industry Business

Typically, the first step to starting a business is coming up with a business idea, but if you are ready to start a marijuana business, that step is done. You have to decide where you want the marijuana industry to be. Do you want to grow Cannabis, supply it, or open a dispensary? You may want to do everything. The steps to start can only move forward once one decides on this aspect.

While many of the following steps to starting a business will be pretty straightforward, you should remember that laws governing can vary from state to state, so you should be sure of them before proceeding. To fully understand the regulations when determining where and how you can sell Cannabis, you will need significant research.

Additionally, it’s a good idea to start talking to individuals who have started their cannabis businesses. Usually, there are two types of cannabis businesses: plant-touching cannabis businesses and non-plant-touching cannabis businesses. In plant-touching, the companies directly handle the cannabis products, and in non-plant touching, they provide services to other cannabis businesses.

Step 2: List the Business Name And Legal Entity.

This step includes:

  • Legally registering your business with the state.
  • Giving it a name.
  • Filing business formation papers to your state office

It would be best if you chose a name for your Cannabis Business before starting. Your state’s procedure for selecting a business name will vary. Still, you must search in most cases to ensure the name you want is available. You can use an available business name to give yourself development opportunities. Then you can apply for a DBA (doing business as) name for serviceable purposes.

For example, the legal name of your business might be “Lowland Holdings LLC.” But you can register a DBA as “Alex’s Marijuana Dispensary” or something like that. 

You will then need to pay a small fee to reserve your name for a specific time. Complete these two tasks before registering your Cannabis Business, as you will need this information.

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Step 3-: Apply For Permits And Licenses

Proper business permits and licensing are crucial for running a cannabis business.

Every state has different permit requirements, so you must do thorough research about your state guidelines, as a tiny mistake can lead to your rejection, and you may not get another chance. Most of the applications are non-refundable, which can be a big waste of time and money.

Find out precisely what paperwork, licenses, and regulatory authorities you need to comply with to start and operate a marijuana business before you start your business. 

In addition to obtaining all of these cannabis-specific permits, licenses, and registrations, to do business in the state, you also must first register your business. One needs to be responsible for other marijuana-related workings, and one will also need to complete all the registration and tax-related tasks that a regular company would handle.

Step 4: Figure Out Your Taxes

Cannabis is one of the highest tax industries. Taxes are required when purchasing cannabis legally for recreational use. The state in which you start your Cannabis Business will also affect taxes. The purchase of medical marijuana is taxed at low rates in some states, but these taxes are not considered cannabis taxes.

Different states impose percentage-of-price taxes (also known as ad valorem taxes), weight-based taxes, and potency taxes on cannabis, and some impose multiple taxes. 

However, you should apply for an Employer Identification Number, also known as a business tax identification number, regardless of where you start your cannabis business.

You can apply for an EIN online and get approval almost instantly from the IRS. You will need EIN when tax season comes around, and you must pay your business payroll and income taxes. If you decide to open a business bank account or credit card or apply for financing, you will also need your EIN.

Step 5: Get The Money. 

Every new business owner has to face the fact that starting a business costs money. However, Cannabis businesses can have higher start-up costs than other companies. Additionally, if you cannot cover all of these start-up costs, you can look for financing to start your Cannabis Business. Another reason to create a comprehensive business plan is that any investor or lender you approach for funding will want to see it to know if your company is well-planned and profitable.

However, before starting a cannabis business, be aware that your funding and financing options will be limited compared to more common small companies. In addition, Cannabis Businesses may find it more difficult to obtain small business loans to keep operations running smoothly.

You might have to struggle a lot to acquire funds. Many of the best small business loan banks nationwide are subject to federal banking regulations that make it nearly impossible to lend to Cannabis business companies. 


It is understandable if you feel hesitant about starting your business. In reality, there is no need to be! Obtaining business insurance, finding a retail location, and hiring employees are other steps to be taken if you decide to continue operating your Cannabis Business.

In today’s tech-savvy world, a good business website also becomes a prerequisite for starting your business. It not only helps in better consumer interaction but also in creating high revenue. Shopivana is one of the best website builders, which allows you to curate your website easily and quickly without any coding knowledge and generates mobile-friendly and SEO-optimized websites for your benefit. You can leverage Shopivana to create a customized website for your cannabis business and scale your business to different levels. 

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