Cannabis Industry Business Plan Development

Today we hear from our Subject Matter Expert (SME) Rachel Johnson from Boost Business Plans who has done some awesome work in the cannabis industry and has personally written over 100 business plans and proposals.

[See Our NEW Cannabis Business Plan Training Here]

She has been writing business plans for the cannabis industry for several years and has seen a lot of the “ins and outs” when it comes to applying for a license with the city and also presenting a plan in order to attract an investor. In both cases, you need to make sure that your cannabis business plan is clear.

It needs to show that you have done all of your research, you are very well positioned and prepared, and that you not only want to operate a successful cannabis business – you want to be in compliance with city and government law while all the while giving back to the community.

Writing your own business plan may seem daunting, but when you take the “scariness” aspect out of it, it’s much easier to get it done. You’ll find it easier to break it down into sections so that you are writing your business plan step by step. If you look at the project and think it’s overwhelming, this can help. Instead of thinking “I have to complete writing an entire business plan” you can think “I need to complete my Company Summary”.

Now, the most common one in my experience is for start-ups. This is if you need a business plan to present to a prospective investor or any other private entity in order to acquire funding to start a cannabis business. This could be for a dispensary, a processing lab, a testing lab, a distribution business, cultivation, or a social consumption lounge. This can also be applicable to businesses that cater to the cannabis industry, but do not deal with cannabis product directly.

Cannabis Business Plan Executive Summary

Think of an executive summary as a truncated version of your entire business plan – a “snapshot” if you will. It touches on a few main topics in order to entice the reader to find out about those topics in further detail later in the plan. However, you may have heard of scenarios where some prospective investors only look at the Executive Summary as they do not have the time to pour through the business plan in its entirety.

That is why this section must be a solid clear and concise representation of your idea or business. Generally, you’ll write this section last after you have written a business plan. Why do you ask? Well, you will have already done the bulk of the work and research in all of the other sections, so it is easier to pull excerpts from those other applicable sections and polish them in the Executive Summary, with emphasis on the word “Summary”.

Cannabis Business Plan Introduction

The introduction should say who you or your organization is and what you do within a couple of paragraphs. What is your company’s name? What business are you in? Who are the owners and where is the company located? Why are you passionate about this business?

For example, you would write:

“The Green Butterfly will be a dispensary serving a vast variety of cannabis items in the City of Glendale. The founders and owners, Jane Smith and John Smith, are experienced business owners who both have a passion for finding the highest quality cannabis products on the market. The product mix will include more typical items such as flowers, concentrates, and packaged edibles, as well as fresh beverages and foods under The Company’s brand. Products will be sold to consumers of a qualified age, in both the local Los Angeles market and tourists alike. Having lived in Glendale most of their lives, they felt that dispensary options were not easy to come by. Seeing the obvious hole in the market, they decided to apply their skills and business savvy and open their first cannabis dispensary together.”

So to sum it up, you have explained:

  • What: A dispensary called The Green Butterfly
  • Where: In the City of Glendale
  • Who: Jane and John Smith, experienced business owners
  • Why: Limited options and a passion for offering high-quality cannabis products to the community.

You can go into more detail of course but we wanted to give you a jumping-off point. Who is your target market customer? What are the current trends? This is where you need to do some research. How many cannabis consumers reportedly are there out there? In your local area? Are there any other dispensaries in a neighboring town and if so, what are their drawbacks?

For example: Are they not open seven days a week? Do they not have a lot of product options? Are they not conveniently located? You need to establish that there is a large demographic out there that your establishment would appeal to. And keep in mind, pointing out that there are also additional potential cannabis tourist customers can’t hurt.

Cannabis Industry Snapshot

This is a snapshot of what the cannabis industry is up to. For example, what are the reported sales of within the last year? Where do analysts think the industry will go in the upcoming year? What are the reported statistics? Now, please note: Keep a record of your sources and where you pull any data from as a back-up.

Some investors may say “Say, where did you find that information and where can I find out more?” It’s always better to be prepared with answers as it makes you be and seem more professional, well prepared, and knowledgable about your target market.

Cannabis Business Financial Plan

This is normally a short statement, but it can be more elaborate. How much money will you need to start the business? What would it be used for? For example: “The Green Butterfly plans to raise capital from investors in the amount of $875,000 to fund real estate, initial inventory, marketing, operations, and dispensary build-out expenses.”

Of course, keep in mind this is a “snap-shot” of your business plan. Your details of these sections will be more explained in the body of the plan. In the start-up section, you can write a brief description of what you will need to start your company.

For example, if you are opening a restaurant and bar, you will need funding in order to lease a space to operate, stock inventory, supplies, furniture, liquor license, permits, security, point-of-sale systems, and more. It doesn’t have to go into too much detail.

Cannabis Business Products and Services

The products and services section is where you have to explain what you are offering. It can be a service that you provide or a product that you selling. If you are an expert in your field, but talk in layman’s terms. You should know your product, service, and industry well, but don’t expect your potential funders and partners to have the same level of knowledge.

Assume the reader doesn’t know as much as you when you explain what you’re offering. Avoid acronyms, slang, and jargon when outlining your products and services. The Market Analysis Summary is one of Rachel’s favorite parts of the business plan. We know, we know, we sound a bit like a geek, but this is where you learn about your industry and target market’s buying patterns.

You pretty much learn something new every time, as your industry’s market is ever-changing. New reports are released every day. New studies are constantly being performed. A new target market segment that wasn’t known before can be identified. And as you write this section, you will make some sometimes surprising discoveries!

Cannabis Business Management Summary

The Management Summary is the section where you will detail YOUR managerial experience and training. This doesn’t have to be an actual resume. Think of this as a snapshot of your career, relevant experience, education, or even a passion for the cannabis culture movement even.

Have you gone to trade shows or conventions in your business’ industry? Did you come across unexpected health benefits of medical cannabis during an experience that you happened to have dealt with in life? In this section, you have to sell yourself and your business partners on the premise that you are the right people to get the job done.

The profit and loss statement starts with any cash inflows that you have. After you find your total cash inflows such as from your sales, you then reduce this amount by the costs you had during the year to make the sales and reduce it again by subtracting your operational costs. Rachel has written hundreds of business plans over the years for all sectors of the cannabis industry including dispensaries, distributors, cultivators, processors, testing labs, and social consumption lounges.

[Editorial Note: Boost Business Plans was created by Los Angeles native Rachel Johnson. She has worked in the finance world in a vast array of industries for over 19 years. Rachel has consulted entrepreneurs, entertainment entities, and private estates and has personally written over 100 business plans and proposals since 2010 alone. On behalf of her clients, she has attained funding from Small Business Administration (SBA) lending, grants, angel investors, venture capitalists, and more.]

Let us know what you think.

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