Marijuana is having a moment. Experts recently dubbed cannabis the fastest-growing industry in the U.S. Legal weed generated $10.4 billion in the United States in 2018, and the number of "plant-touching" jobs is expected to pass 500,000 by 2022 , according to New Frontier Data, a cannabis market research and data analysis firm.
Investors have taken note, pumping $10 billion into North American cannabis businesses last year - a good sign for budding entrepreneurs hoping to cash in on the green rush.
But be warned, the cannabis industry is not for the faint of heart. Everything is harder - from opening a bank account to finding office space to hiring qualified employees - says Shane Schmitt, general manager of Wy'East Oregon Gardens, a cannabis cultivation and processing facility in Portland, Oregon.
"It's more difficult than starting a business in any other area," says Schmitt, 43, a seasoned entrepreneur who previously worked in finance and construction. "There's not a playbook for an industry that people still think should be illegal."
To succeed, you need more than a solid business plan and ace team (though those are crucial, too). You need to be truly passionate about cannabis, and not in the "I like to smoke weed" kind of way.
"I have a different definition of passionate now. Passionate to me is 'What are you willing to take pain for?'" Schmitt says. "There's been a lot of pain."
Doing your research from the get-go can help you stave off some of that pain. Groups like the National Cannabis Industry Association can help you connect with people working in the space, including in crucial areas like legal support, consulting and insurance. And cannabis conferences - yes, those are a thing - can help you network with other "ganjapreneurs."
These lessons from industry vets can also help you anticipate potential challenges.
DO WHAT YOU KNOW
You don't want to jump into a new venture with no relevant experience. The cannabis industry is no exception.
"People often want to run a dispensary or set up a cultivation center and I ask, "Well, have you ever done retail? Are you a farmer? Are you a botanist?" says Morgan Fox, a spokesperson for the NCIA.
Instead, do what you know - whether that's accounting, public relations or plumbing - and put a cannabis spin on it.
"The thing about cannabis is you can apply it to pretty much anything," says Zac Smith, 38, founder of Traveling Hands Massage, a San Diego-based mobile massage company that uses oils infused with THC and CBD.
While Smith had nearly two decades of experience as a massage therapist, he had very little experience with making cannabis oils.
"I was making the oil myself at home. It was messy and I realized there was no way I could keep it uniform," Smith says. So he found a guy with years of experience extracting THC and making oils to handle that aspect.
THE DEVIL IS IN THE DETAILS
The legal cannabis industry is heavily regulated, but those regulations often don't cover every possible business application. That means business owners like Ivan and Anne Wood have to take extra precautions to make sure they're in compliance.
The Woods run Mangia Ghanja , a cannabis-infused catering company in San Diego. Under recreational use rules, they can cater private events but they can't charge customers for cannabis-infused food unless the client provides them with the cannabis, the Woods say.
"If we decided to have an event and infuse the food and charge an entry fee of $1, then we are breaking the law," Ivan says.
There aren't specific cannabis rules for the culinary industry in California, Anne says, which makes it difficult to find legal help to decipher regulations. "It's so new that we're still blazing that trail to figure out how to make it work."
BEWARE THE GREEN TAX
"If you're touching the plant, everything costs twice as much," says Schmitt of Wy'East Oregon Gardens. In reality, though, the markup can be more than double.
A regulatory license with the city of Portland, for example, is $3,500 per year for a cannabis business. That's in addition to state licensing fees, which can be as high $5,750 per year. A traditional business might pay a few hundred dollars a year.
The so-called green tax applies to actual taxes, too. Plant-touching cannabis businesses can't deduct any business expenses on their taxes, so they pay the full effective tax rate.
EMBRACE THE COMMUNITY
Cannabis entrepreneurs have to jump through a lot of hoops and they face a lot of uncertainty. But that has created a strong community that fledgling businesses owners can tap for advice.
"Talk to other successful cannabis business to find out what they've done to get where they are," says Anne Wood. "There are plenty of people who will put their arms around you and share their experience."
This column was provided to The Associated Press by the personal finance website NerdWallet. Kelsey Sheehy is a writer at NerdWallet. Email: email@example.com. Twitter: @kelseylsheehy.
NerdWallet: How to buy marijuana stocks http://bit.ly/how-to-invest-marijuana-stocks
National Cannabis Industry Association https://thecannabisindustry.org
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