6 Ways To Start A Cannabis Business In Illinois

TheThis article is the eighth in a row called “So you want to start a canna business?” Created in collaboration with Good Tree Capital. The final article in our series focuses on growing your cannabis business.

So you’ve got a license in Illinois and your cannabis business is up and running. Next, create a solid growth plan.

Your cannabis business doesn’t grow overnight, and different business models help a company grow in different ways. The common thread of all business models, however, is the need to steadily increase the income generated.

Here are six different considerations for cannabis entrepreneurs ready to grow their cannabis business in Illinois.

1. Increase your sales goals

Finding the balance between price and quantity is essential and to find it you need to have a thorough understanding of your finances and customers. A direct price hike can increase your bottom line, but likely to the detriment of your customers.

To mitigate this, you can increase your sales goals and focus on attracting new customers.

2. Expand your product or service offering

Another way to grow your cannabis business is to expand your range so that some products can be sold at a markup and others at a discount.

If you are a manufacturer, grower, or any other company further up the supply chain, the same logic applies. Either way, you are selling more products and growing organically over time as you keep optimizing your operations – as long as you can keep up with the costs of higher production!

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3. Obtain additional cannabis business licenses

As your business grows, it is likely that you will reach a tipping point that indicates the need to expand.

If you are a grower, you can hit the limit on how many flowers your business can grow under your license. Or, if you are a pharmacy, you get to the point where your business is solid and essentially running on its own so you can shift your focus and take your expertise to new markets.

In both cases, all signs point to extension, which currently means that you need a new license. Replicating the model across the state by purchasing additional licenses will allow your company to grow sales, but it will also solidify your brand as a well-known and respected company for the services you provide.

For the latest information on cannabis business licenses in Illinois, click here

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4. Consider the vertical integration

Some companies know they have perfected their craft and want to multiply, while others see an opportunity to take operations optimization one step further. Lowering costs is a critical element in optimizing your operations.

Over time, you can build relationships and close deals with other companies that are part of your supply chain. But prices can only be so low, and these business partners still need to take advantage of you to keep their business going. This encourages many companies to integrate vertically.

Vertical integration is when a company develops or purchases other companies in its supply chain. Profit margins keep getting bigger for businesses that supply themselves before they supply others, and control over your supply chain gives you even greater control over your sales drivers – price and volume.

5. Become a multi-state operator

Whether you are going down the vertical integration path or looking to open additional locations in your state, if your business is looking to expand one step further, you have the option of becoming a Multi-State Operator (MSO).

MSOs have licenses across state lines, and while they cannot move products freely from state to state, their strength lies in intellectual property, equipment, branding, and labor between the operator’s cannabis businesses.

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The key to an MSO is operational efficiency, which is driven by strategic growth and expansion. This can take two forms. One way is to expand rapidly, enter regulated markets in multiple states, and grow with the market. Another is to approach states with fewer licenses and establish yourself as the dominant player in younger markets before they become too established.

Whichever path you choose, basing your strategy on operational efficiency is critical. MSOs have a history of racing to gobble up as much of the market as possible, and while effective for expansion, it doesn’t guarantee and often hurts profitability.

6. Apply for a grant to help you grow

Depending on where and how you are going to grow, you may need additional funding to get there. As we described in our previous article, How To Get Financing For Your Cannabis Business, You Have Three Choices Of Financing: Profit, Debt, Or Equity.

If you can support your growth strategy with operational profits, then great! But even the most successful, profitable companies want to make sure they can use their cash flow to keep their businesses going; Because of this, bond and stock investment options are more than likely the best way to go.

Debt and equity financing can come from investors like trusted friends and family, private equity firms in the cannabis space, cannabis lenders like Good Tree Capital, and even the state of Illinois with the Social Equity Cannabis Loan Program.

There are several avenues of funding available, so all you have to do is decide which route fits your business model and growth goals while your cannabiz continues to thrive!

Read the full series from Good Tree Capital

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