How to Start a Cannabis Business

1. Understand regulatory and legal requirements. Do market research.

Legalization of Cannabis around the World

The legality of cannabis for medical and recreational purposes varies by country in terms of its production, distribution and consumption, as well as what medical indications it can be used for in medical markets.

Cannabis Legalization Maps

Countries that have legalized recreational use of cannabis are Canada (2018, licensed sales since 2018), Georgia (2018), Germany (2024), Luxembourg (2023), Malta (2021), Mexico (2021), South Africa (2018), Thailand (2022, licensed sales since 2022), and Uruguay (2013, licensed sales since 2017), plus 24 states, 3 territories, and the District of Columbia in the United States and the Australian Capital Territory in Australia.

Countries that have legalized medical use of cannabis include Albania (2023), Argentina (2017), Australia (2016), Barbados (2019), Bermuda (2016), Brazil (2015), Canada (2001), Chile (2014), Colombia (2016), Costa Rica (2022), Croatia (2015), Cyprus (2017), Czech Republic (2013), Denmark (2018), Ecuador (2019), Finland (2006), Georgia (2018), Germany (2016), Greece (2018), Ireland (2016), Israel (2012), Italy (2013), Jamaica (2015), Lebanon (2020), Luxembourg (2018), Malawi (2020), Malta (2018), Mexico (2017), Morocco (2021), the Netherlands (2003), New Zealand (2018), North Macedonia (2016), Norway (2016), Panama (2021), Peru (2017), Poland (2018), Portugal (2018), Rwanda (2021), Saint Vincent and the Grenadines (2018), San Marino (2016), South Africa (2017), South Korea (2018), Spain (2022), Sri Lanka (2023), Switzerland (2022), Thailand (2018), the United Kingdom (2018), Uruguay (2013), Vanuatu (2018), Zambia (2019), and Zimbabwe (2017). In the United States, 40 states, 4 territories, and the District of Columbia have legalized the medical use of cannabis, but at the federal level its use remains prohibited (check Cannabis Legality by State).

Global Cannabis Market

Global sales of legal cannabis are expected to grow by about 18% to $41.5 billion in 2024. The US market is expected to account for almost 80% of global cannabis sales as a result of increased adoption in legalized states and newly legal states. In the Canadian market, sales are forecast to grow 12% to $4.6 billion (USD) in 2024, representing 11% of global sales. North America’s dominance may decline in the long term if the next wave of growth comes from Europe.

Cannabis Markets: Stats and Forecasts

Recent forecasts show that the cannabis industry is expected to grow significantly, with global legal sales reaching $57 billion by 2030. In U.S. cannabis markets, legal cannabis sales will reach $40.5 billion at a compound annual growth rate (CAGR) of approximately 5% from 2023 to 2030. The adult-use cannabis channel is expected to account for a significant portion of these $40.5 billion in sales. In Canada, with a projected CAGR of 6% from 2023 to 2030, the legal adult-use market will reach $5.4 billion (USD) by 2030, while the medical channel will gradually decline to $200 million annually. Global markets outside the US and Canada are projected to grow at a CAGR of 33% from 2023 to 2030, with sales reaching $10.4 billion. This growth will come primarily from Europe when they introduce an adult use program.

2. Decide the type of cannabis business. Choose a location. Check local zoning regulations.

Cannabis License Types

There can be different types of cannabis licenses for the following main cannabis operations:

• Growing cannabis (cultivation and processing)
• Making cannabis products (extraction and manufacturing)
• Testing cannabis or cannabis products (testing laboratory)
• Transporting and storage cannabis, wholesale (distribution)
• Selling cannabis (retail, storefront and non-storefront)
• Holding an event where cannabis will be sold (event organizers)
• Marketing and advertising and other services for cannabis companies

Legalization does not mean that the government has gone ahead and developed regulations to license commercial production and distribution; it often takes longer and sometimes years pass from legalization to a working program. Before planning your cannabis business, check your local regulations, license types and requirements.

3. Develop a solid business plan. Secure financing.

A cannabis business plan contains both common parts with other industries and specific sections that are important for cannabis operations and licensing. The cannabis financial model is a necessary part and foundation of the financial section of a business plan and should be the starting point when writing a cannabis business plan. A good business plan and presentation reflects business goals and strategies, market analysis, operating plan, organizational structure and financial information. The business plan covers five to seven years in advance and guides the reader along the path of the expected evolution of the business:

1. An introduction to the business (Executive Summary)
2. An overview of cannabis industry and target market (Market Overview)
3. Marketing strategy, production and sales forecast (Sales Strategy)
4. Technologies, equipment, procedures (Operating Plan)
5. Personnel, executive team (Organizational Structure)
6. Funding analyses, financial statements, ratios (Financial Plan)
7. Floor plans, schemes, more detailed procedures (Appendix)

Details of the next steps vary depending on the location in which you intend to start your cannabis business, and we recommend using official sources to learn more about local processes and requirements.

4. Prepare the necessary documentation.

5. Obtain required licenses. Pay fees.

6. Register your business as an employer and a tax payer.

7. Keep track of your ongoing compliance requirements.

Physical security measures, good production practices, packaging, labelling and transport requirements, reporting requirements and more.

Main steps in short

• Understand regulatory and legal requirements. Do market research.
• Decide the type of cannabis business. Choose a location. Check local zoning regulations.
• Develop a solid business plan. Secure financing.
• Prepare the necessary documentation.
• Obtain required licenses. Pay fees.
• Register your business as an employer and a tax payer.
• Keep track of your ongoing compliance requirements.

Starting Cannabis Business FAQs