Cannabis dispensaries and related businesses face obstacles not found in other industries. This is still the case in places like Washington DC where it has been legalized, and likely to be the case in Virginia where it is in the process towards legalization. Maryland, which had already legalized marijuana for medical use and where recreational legalization has recently failed may still deal with these obstacles in the future. 

This article will look at some of the unique obstacles cannabis entrepreneurs face and where possible ways to overcome them. You will likely notice how some or all of the obstacles can feed or influence each other.

Social Obstacles

Some of the obstacles cannabis business owners will face can only be overcome with time. The villainization of cannabis and those who use it goes as far back as the early 1900s. It was swept up in the same social-religious fervor that gave rise to Prohibition. As soon as 1906 some places and states were labeling marijuana as a ‘poison.’  

However, the social stigma surrounding cannabis use for any reason has been shifting. More and more entertainment media has been normalizing marijuana use to the public eye. Thanks to the internet it has become easier to share information that educates people about marijuana, it’s effects, and side-effects. The internet and social media have also helped spread awareness of the social justice disparities surrounding drug legislation and thus further needs to legalize marijuana. By replacing ignorance with knowledge the social obstacles for the cannabis industry can be overcome but it will take time and effort. 

By changing the minds of society you also affect how people vote. In the 2020 elections all marijuana motions on the ballots were passed.

Legislative Obstacles

Other obstacles require time and effort in the political arena. Campaigning and voter participation to impress upon politicians that they should vote for legalization. This has been showing fruit albeit in a step-by-step journey. Virginia will legalize marijuana possession for recreational use as early as July 2021 while Maryland- as has been above referenced- failed to pass similar legislation. Even then marijuana is still labeled a Schedule I substance at the federal level which in turn causes other obstacles for cannabis business owners. Doctors are often limited in recommending cannabis due to the Schedule I labeling.  

In Washington DC it is still illegal to sell or purchase marijuana due to standing Congressional Mandate. Attempts to circumnavigate that Congressional Mandate have been met with legal actions. Though in this case the Mayor of D.C. has been pushing for a bill to change that and create a regulated market for cannabis in D.C.  

Vote for the politicians who promise to do something about marijuana legalization, support them however you can. And hold their feet to the fire to remind them why you got them where they are. 

Financial Obstacles

Then there are the business obstacles. Most banks will refuse to provide services or offer loans to marijuana businesses. Though legalizing marijuana has led to tax windfalls for states like Colorado, individual cannabis business owners still struggle to keep up with costly regulations that in turn affect the pricing of their goods. As Steven Mintz points out on his blog- Ethics Sage- due to US Treasury Section 280E marijuana business cannot deduct expenses incurred in the “trafficking” of a controlled substance from tax income. The result is higher taxable income and increased taxes owed to the federal government.

Another accounting-related issue is the quandary surrounding how to correctly value the ending inventory of cannabis products. Ending inventory is supposed to be valued at the lower between cost and market. Even though the market tends to be higher than cost, owners and investors will more than likely see revenues surpass the cost of goods sold by a massive margin then in turn increasing later taxation.   

Due to the higher operating costs of regulation and federally affected taxation legal cannabis business owners often find themselves in competition with still active illegal sellers who do not have to deal with regulation and taxation. In turn these illegal sellers can sell their product at rates that severely undercut the legal business owners. 

Many of the financial obstacles you will likely face, even if the whole DMV legalizes, will be there until major legislative change happens at the federal level. 

The solutions to those and other obstacles will likely take a great deal of time to overcome for the cannabis industry as a whole. Not just individual entrepreneurs. Does this mean there’s little for you to do in the short term? No. It just means you will have to pick your battles and go about them with patience and flexibility.

One such area is marketing. A subset of financial obstacles that is affected by social and legislative obstacles. But these are obstacles that can be circumnavigated and overcome.

Marketing Solutions

Whether you run a dispensary, a delivery service, or another cannabis-based business you need marketing. 

Marketing is how you raise awareness of your product or service. Awareness translates into interested customers. 

Marketing for marijuana and marijuana-related products requires a combination of tenacity, adaptivity, creativity, and patience. 

Those looking to market your cannabis business are often faced with complications tied to the obstacles that have already been stated. Due to those obstacles most major marketing companies will not handle a business that involves cannabis. 

Financial restraints due to already-stated regulation and competition with illegal dealers make marketing campaign decisions weightier compared to businesses in other industries. 

Hopefully these tips and suggestions will help you get started on formulating your own solutions to the above marketing obstacles and others.

Unique Branding

Despite the restrictions even legalized marijuana faces, whether you are in DC, Virginia, or a future Maryland you will more than likely have to contend with stiff competition. Figure out how to differentiate your brand from the others. Make it stand out from the competition.

Create content that is uniquely you such as videos and articles to engage with people. Maintain constant content so that people are educated on who you are and what you offer that no one else does. 

Customer Retention

The cannabis industry is replete with returning customers. It will be vital to maintain good relations and reputations with those returning customers. Create surveys and spaces (such as a website or certain social media sites while still adhering to the laws) where prior or recent customers can share their positive experiences with your brand. Make sure you have ways to regularly connect with past customers such as newsletters, discounts for recurring customers or special deals for customer referrals. Maintain an attitude of customer service that is supportive in the face of customer problems or complaints. 

Legal Hurdles

This should be a no brainer but even then laws regarding cannabis can be tricky. Some details can get overlooked especially when it comes to marketing. Do not make any health or medical claims regarding cannabis. Doing so risks the FDA taking your marketing campaign or website offline. Even if people claim cannabis has helped them with this chronic pain or that anxiety issue only doctors are allowed to make such recommendations (even with their federally instituted limitations). Basically avoid anything that either cannot be hard-proven or needs a doctor’s recommendation. Be sure to check what the laws in your area have to say about advertising cannabis-related businesses on billboards, in local papers, or on the radio. You never know what avenues might be open to you. 

Digital Tools

As with so many other industries the internet is integral to any business’ future and that includes anything cannabis related. But even here there are restrictions. Facebook, Google, and Twitter do not permit ads for cannabis products with only some exceptions for hemp. There are platforms that allow you to engage more directly with the cannabis community. There are also other tools.

Due to the relative financial limitations of a cannabis business SEO can be a cost-effective tool. SEO stands for Search Engine Optimization. It is an entire method of thinking and design meant to make your websites and online marketing campaigns engage better with search engine algorithms (mainly Google’s). By better engaging with these algorithms you can increase your brand’s chance of showing up high in the ranks on the first page of search results.     

Maintain connections with customers through email marketing. Use podcasts to add a voice that will go along with your brand. Even with restrictions there are still many digital tools available to you.

Think Locally

Because of federal restrictions the vast majority of marijuana markets are localized. Even when Virginia fully legalizes there could be counties that still ban cannabis as has been the case in other states that legalized it. 

With a focus on local customers think about how to gear your product, brand, and marketing campaigns to appeal to cannabis users of your area. Engage with potential customers at trade shows (when they become feasible). Try to network with influencers, sponsors, and marijuana friendly ad networks. Find complementary brands- those who don’t necessarily compete with your brand- to partner with. Create a place for yourself and your brand in your region’s marijuana culture.

In Summation

Yes there are difficulties you will face even if cannabis is fully legalized for recreational sale and purchase throughout the DMV. Obstacles few if any other industries have known in American history. But things are changing. More laws to legalize are being pushed and more of them are even passing. The landscape for cannabis businesses is incredibly dynamic with ways to navigate it if you are patient and adaptive.