Every successful business begins with a good business plan. The plan should include market research, financial projections, competitive analysis, management documentation, regulatory requirements, products, and anticipated service offerings.
The same holds true for a Cannabusiness Plan. Here are pointers to help develop your New York State cannabis business plan:
What Are Your Financial Projections?
Conduct a critical analysis of your present financial standing and projections. A five-year financial estimation is advisable, capturing the operational cost, net present and future benefits or value, and projected annual income.
This projection should also capture the marginal and direct cost of business operations, alongside its revenues. You can appraise your revenue by evaluating sales considering market potential, retail price, production costs, and necessary expenses like rents.
Describe Your Product or Service in Business Plan
A good proposal should explicitly describe what services or products the business will offer to the public and how it intends to deliver. Your product description is one of the selling points of business. It will help capture the attention of potential investors when adequately written.
Conduct a Competitive Analysis
Conduct proper research on your competitors’ edge. Knowing their areas of strength and weakness. Also, research your competitor’s style and extent of customer service. Explain how you intend scaling in their midst.
Vet Your Business Team
The strength of your business team is proportional to the success of your business. Therefore, it is necessary to critically analyze your team’s qualifications, strengths, and weaknesses. Past business experiences will also come in handy here.
Conduct a Market Analysis
Research the location you intend to site your business. Also, strategize on how to penetrate your target audience and the extent of your business coverage zone.
License Requirements for Cannabis Business
Depending on the line of your cannabis venture, you will have to apply for specific licenses before commencing business.
While there are many license types available, cultivators, processors and distributors are not permitted to sell directly to consumers, nor is vertical integration allowed.
Only those with a retail dispensary license or on-site consumption license can sell directly to consumers. However, businesses that intends to get a micro business license would be exempted.
This exemption will allow a seed-to-sale operation, but a microbusiness will be subjected to annual caps yet to be determined by the OCM.
It is important to note that MRTA legislation intends to give 50% of licenses to value candidates. Distressed farmers, service-disabled veterans, women-owned organizations, minority societies, and individuals whose family members have been sentenced for offenses related to cannabis hold priority. These MRTA suggests the opportunity for these priority applicants to also apply for zero-interest funding, grants, and incubator programs.
Building the administrative framework permitting individuals to sell cannabis in New York State will take time. As we wait, now is the time to begin developing your business plan. It’s also important to understand the laws and regulations. That way, you are ready when the full-scale opportunity comes to start your Cannabis business.
About Bowers & Company CPAs
Bowers & Company CPAs has formed a Cannabis and Hemp branch to help new and existing businesses understand this complicated, growing industry. Our professionals can help business owners navigate tax implications, industry regulations and operating procedures. Our team members will provide counsel and support to existing cannabis businesses and start-ups in tax planning, licensing, operating procedures, general business consulting and more.
Since the sale of cannabis is still illegal at the federal level, business cannot take certain deductions or credits when filing taxes. That means cannabis entrepreneurs must pay taxes on their gross margin and cannot deduct other common business expenses such as sales payroll and rent to reduce their liability. Bowers & Company CPAs can help business owners maximize after tax cash through careful planning.
Bowers & Company CPAs aims to offer helpful information to our clients and friends. Learn more about how we can help should your business need Cannabis and Hemp Services.
Disclaimer: To ensure compliance with requirements imposed by the Department of Treasury, we inform you any U.S. federal tax advice contained in this document or video is not intended for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.