June 18, 2024

Opinions expressed by Entrepreneur contributors are their own.

The revitalization of the cannabis industry has brought together a community of empathetic and strong supporters of social justice. They have created a powerful movement to right some wrongs and ensure everyone has a fair chance to participate in the lucrative industry. 

Social equity entrepreneurs entering the industry bring seasoned business skills, legacy skills, or entry-level entrepreneurial skills that all need help in some way to navigate the challenges of launching a cannabis business. 

Writing a robust business plan should be at the core of social equity business programs to give participants an edge on achieving their goals and securing funding. A multi-level business development program satisfies the different business skillsets for the new cannabis entrepreneurs.

Related: 3 Women Who Are Trailblazing Social Equity Programs

Barriers to entry

The financial and societal barriers for a person of color entering the cannabis industry as an entrepreneur are high. The cost to open a dispensary can be upward of $312,000, or $500,000 to operate a processing facility, and a hefty $2,500,000 for a vertically integrated operation. Couple the start-up costs with the societal barriers, and you have a recipe for excluding the people most legislation aims to help. 

But a business plan gives you a competitive advantage, serving as a roadmap for the business and covering all the steps needed to launch and operate a business. It’s an excellent place to begin for business newbies, people exiting the illicit market, and business professionals looking to transition into the industry. A well-researched business plan will force one to think deeply about the business from A – Z, identify obstacles beforehand, critically think through a solution, and evaluate the company to decide if it is viable.

What a business plan will identify 

  1. Products or Services: You don’t need to reinvent the wheel, but you DO need to stand out from the competition. 
  2. Market research will provide an in-depth analysis of the competition, determine the cost someone is willing to pay for your product or service and reveal how best to position your brand in the marketplace.
  3. A marketing plan will be the strategy to win customers and generate sales.
  4. sales strategy will identify the route to generating revenue. 
  5. An operational framework is the engine of a business. It’s the entire process a company takes to produce and deliver a product or service to the end-user.
  6. Legal and Compliance responsibilities. If overlooked, this could put a business out of business.
  7. SWOT analysis is the strengths, weaknesses, opportunities, and threats a business plan reveals about a company.  

Multi-level business development program

A social equity program should include an apprenticeship, incubatoraccelerator, and mentoring program to meet the participants’ different levels of expertise.

In addition, there are different types of businesses that need addressing in the program, like cultivation, manufacturing, retail, and ancillary. These businesses have individual challenges and compliance issues that can send a company off the rails from a lack of knowledge and experience.

Level 1: Apprenticeship

An apprenticeship would serve as a workforce training program that will give the person interested in entering the cannabis industry hands-on experience.

Level 2: Incubator

The incubator program is for the business newbie at the beginning stages of learning how to start a business. A hands-on business plan writing workshop and mentorship would give them the starting point they need to compete.

Level 3: Accelerator

At this level, a team is assembled, a business plan is in place, and an operating license has been secured. An accelerator is meant to assist in launching a business and prepare them for seeking funding through business plan competitions, grants, or venture capital. 

Other support systems include mentorship office hours, financial planning services, compliance assistance, and free temporary office space to get the business off the ground.

Level 4: Mentoring

Providing skilled professionals to share their expertise should be included at every level. Guest speakers are needed to educate participants in the incubator program and give advice to those in the advanced business planning stage of the accelerator program.

Who will run the social equity programs?

A business development program under the guidance of an MSO/SO would be ideal because of its resources and ability to provide real-world, hands-on experience. It would take a significant financial and employee commitment to make it work on the corporation’s side, but it would boost a participant’s chance of success.

Farm co-ops, shared kitchens, and land trust use are other ways states can fund and incentivize social equity programs.

Let’s hope the state governments will incentivize (i.e., tax breaks) and enable the large corporations to lend a hand in providing a comprehensive social equity program that will make the cannabis industry fair for all.