WHY IS IT SO HARD TO START A CANNABIS BUSINESS?
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Government and big business have high-jacked Canada's legal cannabis industry, and aspiring entrepreneurs face significant barriers.
At FAIR Cannabis, we believe in a fair, competitive, and diverse market that allows new and small businesses to flourish alongside larger companies.
Unfortunately, the current regulatory environment in Canada presents numerous obstacles that favor large corporations and stifle small-scale innovation and entrepreneurship.
BREAKING
DOWN BARRIERS TO STARTING CANNABIS COMPANIES.
Despite the legalization of cannabis, the framework established by various levels of government has made it exceedingly difficult and costly to enter the cannabis market. From exorbitant licensing fees to complex regulatory requirements, these barriers disproportionately impact smaller players, potentially leading to monopolistic trends and a lack of diversity within the industry.
Here, we explore the most pressing problems faced by those looking to start a cannabis business and propose viable changes to create a more equitable landscape.
High Licensing Fees and Startup Costs: The steep financial barrier to entry prevents many small businesses and individuals from starting cannabis operations.
How To Fix It: Implement a tiered licensing fee system based on the size and scale of operations to make entry more accessible for small-scale businesses.
Complex Regulatory Requirements: Overly burdensome regulations can be difficult for new entrants to navigate, requiring significant resources.
How To Fix It: Simplify regulatory requirements and provide clear, accessible guidance and support for newcomers to the industry.
Limited Access to Capital: Banks and financial institutions often hesitate to lend to cannabis businesses due to legal ambiguities and market volatility.
How To Fix It: Advocate for clearer federal guidelines that encourage financial institutions to confidently serve the cannabis sector.
Taxation Issues: High taxes at multiple levels reduce profitability and make it hard for new businesses to survive, let alone thrive.
How To Fix It: Lobby for fairer tax structures that consider the financial pressures on emerging cannabis businesses and adjust tax rates to promote industry growth.
Market Competition with Government: In some provinces, government-run stores compete directly with private retailers, creating an uneven playing field.
How To Fix It: Restrict government-run entities from competing in the retail space to ensure a fair market for private businesses.
Restrictions on Marketing and Branding: Current regulations heavily restrict how cannabis companies can market and brand their products, limiting consumer education and brand development.
How To Fix It: Relax certain marketing restrictions to allow more effective consumer education and brand differentiation, while maintaining safeguards to prevent youth exposure.
Supply Chain Limitations: Regulatory bottlenecks and inefficiencies in the supply chain can hinder business operations and growth.
How To Fix It: Streamline supply chain processes and reduce unnecessary regulatory hurdles to improve efficiency and reduce costs for businesses.
Zoning and Local Bylaws: Local government restrictions on where cannabis businesses can operate often limit available locations and inflate property costs.
How To Fix It: Work with local governments to revise zoning laws to accommodate cannabis businesses more broadly, especially in urban areas.
Lengthy Licensing Timelines: The protracted process for obtaining cannabis business licenses, exacerbated by detailed security checks, strict zoning rules, and other regulatory hurdles, creates significant financial strain. Businesses often incur substantial costs while waiting for approval, with expenses like rent, warehouse space, and utilities accumulating without any revenue generation.
How To Fix It: Streamline the licensing process by eliminating unnecessary steps and simplifying requirements. Establish clear timelines and expedited paths for approval to reduce the financial burden on startups and encourage timely entry into the market. Additionally, consider interim permits that allow businesses to begin operations in a limited capacity while awaiting full licensure.
Banking and Financial Services Challenges: Many cannabis businesses struggle to access basic banking services. Due to lingering stigmas and regulatory uncertainties, most major Canadian financial institutions are reluctant to serve the cannabis industry. This forces cannabis companies to rely on less convenient and often more costly alternatives, such as smaller credit unions or cash-based operations, which can complicate everyday financial transactions and business growth.
How To Fix It: Advocate for regulatory reforms that provide clear, federal guidance to financial institutions about servicing the cannabis industry. This would help alleviate concerns about regulatory repercussions and encourage more banks to support cannabis businesses. Additionally, promote the development of financial services dedicated to the cannabis sector, including banking, insurance, and investment products, to ensure these businesses can operate efficiently and scale effectively.
TAKE ACTION!
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