As more states legalize cannabis for medicinal and recreational use, investors have started to look for ways to earn money from the industry. In many cases, entrepreneurs and investors don’t have to start their own cannabis farms and dispensaries. Instead, they can find a cannabis business for sale, buy the company, and start making money.
The rush to invest in cannabis also applies to entrepreneurs that want to grow and sell hemp. Now that the 2018 Farm Bill has gone into effect, hemp businesses can operate in every state as long as their plants contain no more than 0.03% THC..
Small Marijuana Businesses Often Sell to Larger Corporations
Before California legalized cannabis, most of the illegal marijuana grown in the United States came from small farms in the Emerald Triangle. The Emerald Triangle is an area of Northern California that includes Humboldt, Mendocino, and Trinity Counties.
Small farms in the Emerald Triangle could grow marijuana illegally because the densely forested mountains gave them cover from the Drug Enforcement Agency (DEA). In fact, many of the early farms were started by people who wanted to live independently in an off-the-grid environment. The mountain’s cool temperatures and fertile soil also gave them the resources needed for cannabis to flourish.
Since California legalized marijuana for medicinal and recreational uses, some of the small farms have continued to operate independently. Many of those farms, however, cannot compete with larger operations that have enough funding to invest in more efficient growing practices, connect with dispensaries, and pay state taxes.
As a result, many small farmers want to sell their operations. The number of marijuana businesses for sale in the area makes it possible for new investors to enter the market and start earning money immediately.
Consolidating Cannabis Growing Farms
In Washington, another state that has legalized recreational cannabis, consolidation has made it possible for investors to reap rewards quickly.
From January to September of 2017, the 10 largest farms in Washington produced 16.79% of the state’s cannabis. The 500 smallest cannabis farms in the state produced a combined 13.12%.
Investors should keep in mind that not all cannabis farms look like traditional farms. Many of the farms grow a wide variety of strains indoors. Indoor farming gives owners more control over the amount of sunlight, water, and nutrients that plants receive. Since some customers prefer consuming cannabis flowers that were grown outdoors, taking a dual approach can help investors satisfy various demands in the recreational cannabis market.
This creates a remarkable opportunity for entrepreneurs that want to maximize their cannabis business’s potential by consolidating small farms into larger operations. Investors can earn money from small farms that grow marijuana and hemp, but consolidation makes it easier to increase a business’s market share and profits. Consolidation also makes it possible to introduce a wider variety of products consumers.
Buying Cannabis Dispensaries That Thrive
Not all entrepreneurs want to continue specific businesses in the cannabis industry. Instead, they prefer to develop the framework for dispensaries that appeal to consumers and compete well with other business.
Finding a marijuana dispensary for sale means that investors can profit from the experience of entrepreneurs that have worked in the industry for years. When evaluating opportunities, investors should consider the dispensary’s popularity, connections to cannabis farmers, past and current profits, and growth potential.
In some cases, it makes sense to purchase a marijuana dispensary in a city and state that already has plenty of legal cannabis stores. Colorado, for example, makes it relatively easy for recreational cannabis dispensaries to serve clients. The state hasn’t over-regulated the industry, so investors have more freedom to run their businesses as they see fit.
Colorado also has a growing cannabis tourism industry that makes it possible for several dispensaries to thrive in the same area. Thanks in part to cannabis tourism, marijuana sales in Colorado grew by 51% from 2014 to 2018. Other states have experienced similar growth from tourists that want to try cannabis.
Buying a Successful Marijuana Business
Despite the increasing number of states that let dispensaries sell cannabis legally, the federal government still considers the plant illegal. Hemp legalization has helped investors find new, successful ways to earn money. Federal prohibition, however, builds walls between investors and marijuana businesses.
Securing the funds needed to start a successful cannabis business remains difficult for some because many lenders don’t want to work with the industry. Some lenders worry that the federal government will target them for participating in illegal businesses. Others worry that the industry’s legal limbo makes cannabis too risky.
Investors and entrepreneurs may also find it difficult to secure insurance for their farms and dispensaries.
A marijuana business for sale that already earns steady profits, however, lowers the risk that investors must accept when entering the cannabis industry. If a dispensary already makes money, then its owners have found ways to navigate cannabis’s complicated legality. Starting a new cannabis business takes a lot of time and money because it forces investors to learn about complex regulations and find other companies willing to work with it.
Instead of starting new businesses, it makes sense for entrepreneurs to buy existing cannabis businesses for sale. As long as investors scrutinize their options, they stand to make a lot of money from this growing industry.