Capturing Opportunities in the Current Cannabis Market

At the federal level, marijuana remains illegal, but state-level businesses face less enforcement, making them effectively profitable.

FREMONT, CA: New Frontier Data research predicts that the US cannabis market will reach USD 72 billion annually by 2030. At the moment, cannabis remains federally illegal, despite 37 states, three territories, and Washington, DC legalizing medical marijuana, as well as 21 states, two territories, and Washington, DC legalizing adult-use cannabis programs.

A growing number of states are legalizing cannabis, and members of Congress are advocating for reforms and even legalization at the federal level. As new markets open, the cannabis industry seems poised to continue its growth.

Cannabis is commonly seen as a product made by manufacturers, a plant grown by cultivators, and a dispensary that sells it. Although these elements play an important role in the legal cannabis supply chain, there are many more facets to the cannabis industry than these three.

Plant-touching cannabis businesses: Cannabis businesses that touch plants include breeders, cultivators, manufacturers, dispensaries, and others that may come to mind. Other businesses touch plants, such as those transporting and delivering harvested cannabis and finished products.

There is considerable regulation surrounding plant-touching businesses, an already highly regulated industry. Cannabis business license applications can be lengthy and expensive without guaranteeing success for entrepreneurs who want to open a plant-touching business. This is because of the high level of government oversight, with stringent requirements and background checks in place to ensure that all cannabis businesses follow regulations regarding public safety, product quality control, and other factors. Like liquor licenses, application licensing processes vary by state, and licenses are typically limited in number.

Ancillary cannabis businesses: A cannabis ancillary business is any business not directly related to the cannabis industry. Despite not necessarily being involved in breeding, growing, refining, or distributing cannabis products, these companies support plant-touching businesses. This group can include lawyers, marketers, and companies producing packaging and machinery.

Despite the excitement surrounding the start-up of cannabis businesses that touch plants, ancillary businesses have a lower entry barrier. Ancillary businesses often require less capital and do not carry the same legal risks as plant-touching businesses, allowing them to enter the industry more efficiently. Additionally, the cost of goods and services is often lower, as ancillary businesses do not have to pay for the same overhead and compliance costs as plant-touching businesses. Cannabis ancillary businesses are still regulated heavily, but they do not have to go through the lengthy and expensive licensing process of many non-cannabis companies.