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Common Challenges Cannabis Startups Face and How to Overcome Them


Challenges are part and parcel of the very existence of startups, whether they sell CBD, cannabis, or any other product or service for that matter. In a world where 50 million new startups emerge each year, it takes a lot more to survive than a good idea, good intentions and a lot of enthusiasm. It is true that stability and continued growth are the ultimate goals for startups in the early years. But to get there, they have to deal with tidal waves of change that are shaking up established notions and the very foundations of running a business.

It’s not just paradigm shifts in the marketplace that keep entrepreneurs on their toes and second guessing every decision they make. Startups also face increasing challenges in running the day-to-day business while trying to keep customers happy and the workforce healthy.

Just because you’re in a new and emerging “controversial” industry doesn’t mean you shouldn’t protect yourself from the general risks associated with any business, cannabis-related or not.

Competition, cyberattacks and lawsuits

Competition is not a foreign concept to the business world. Startups are no exception. When two or more startups target the same market slice or niche, competition is inevitable. This is most evident where the market is saturated with startups. This is the case of California, which alone represents 19 percent of the total number of startups in the United States. Throughout California, Oakland-based startups, in particular, occupy a unique position commercially. While they benefit from great growth opportunities, a vibrant market, and business-friendly legislation (cannabis legalization included!), they also have to endure a healthy dose of healthy competition.

Not that competition as a challenge is a bad thing in and of itself. If managed well, competition can Drive business growth and drive success. A good way to manage competition is to study the market, understand customer needs, and be prepared to adjust business and change direction to keep up with market changes.

And then there are hackers who target startups more than other commercial entities. Their goal is to infiltrate the network and either steal the data and research or literally hold the business operations for ransom. Cyberattacks are disruptive and the damage they cause to the startup can be difficult to repair. Every startup should take cybersecurity seriously and set aside resources to maintain a strong security strategy and keep it up to date.

While cyberattacks are sneaky and take place in the shadows, lawsuits are more direct and aggressive in their approach. for example, cannabis startups are getting into legal problems, not necessarily because they are breaking the law or cannot comply with trade regulations. More often than not, they fail to protect their own intellectual properties or infringe on those over which they have no rights. This results in protracted legal battles that drain the resources of the startup.

To avoid possible costly lawsuits, the entrepreneur must understand the laws and regulations that govern their niche and industry. If the startup cannot retain a lawyer permanently, it should at least run through all agreements and NDAs with legal experts before signing them.

Manage people and finances

man teaching woman in front of monitor

While hiring and firing are core to the inner workings of every startup, managing the workforce is usually a more involved process. It’s one thing to find the right talent, but getting the most out of that talent and keeping it happy and loyal to the company is a different ball game. Additionally, many of the first recruits in the life of a startup could turn into co-founding partners. These talents should wear different hats and take on many roles that contribute to the overall success of the business, not just limit their time and skills to their specific department.

Not all entrepreneurs are good at finance. A gap that needs to be filled in advance. Startup finances should be planned well in advance, even before the company becomes a legal entity. This financial plan is not set in stone. It must be flexible enough to tolerate market vagaries and unforeseen financial difficulties that may arise.

Financial management involves the establishment of financial goals and establish a reasonable path and timeline to achieve them. It also requires keeping financial records using affordable software or a less affordable accountant. By keeping track of its income and expenses, the startup will be in a good position to take calculated risks, secure appropriate investments, and anticipate financial difficulties on the horizon.

More than ever, startups must meet a multitude of challenges and adapt to a changing business world. Each challenge requires a different set of skills. Above all, the entrepreneur must be resilient and proactive in his approach. With the right planning, many of these challenges can become less of an obstacle and more of a stepping stone to business growth and prosperity.





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