Arizona Cannabis Microbusiness
Since the legalization of cannabis in Arizona in 2010, the industry has been on a boom spree. The hype around the legalization of cannabis in Arizona has rekindled the debate on the efficacy of opening a microbusiness in the field. As a cannabis enthusiast, the thought of opening a cannabis microbusiness in Arizona might be overwhelming.
But how do you hack this underutilized venture and succeed? Read on to know what is expected of you and the return on investments (ROI) that come with operating a cannabis microbusiness in Arizona.
How to Apply for a Cannabis Microbusiness in Arizona
The application process for a cannabis microbusiness license is a complex process that requires a deep understanding of the legal structure. If you are looking forward to having your application approved, the following tips will come in handy.
Understand the Types of Licenses Required in Arizona
There are two primary licenses that you should consider applying for if you are in Arizona:
- Marijuana Establishment License: This license allows you to have a single location for each of the following functions: cultivation, processing and production, and manufacturing and packaging.
- Marijuana Testing Facilities License: This type of license allows you to analyze the potency of marijuana and identify any contaminants that the marijuana might have.
The Benefits of Operating a Cannabis Microbusiness in Arizona
Having a cannabis microbusiness license in Arizona allows you to carry out the following functions:
1. Cultivating Cannabis
As a license holder of a cannabis microbusiness license in Arizona, you are allowed to grow this highly revered plant. Although the number of cannabis plants that you can grow as a microbusiness license holder is slightly lower than in other cases, we cannot overlook its importance.
2. Selling Cannabis and Other Infused Products
A cannabis microbusiness license in Arizona allows you to sell cannabis to people over the age of 21. Besides cannabis, you can sell products infused with cannabis to people over the age of 21.
3. Processing and Creating Weed-infused Products
As a cannabis microbusiness owner in Arizona, you have the right to process cannabis and infuse it into other products. Some of the products that you can infuse with cannabis include topicals, edibles, and vape products.
Costs Incurred in Operating a Cannabis Microbusiness in Arizona
Operating a cannabis microbusiness in Arizona is costly due to the volatility in the industry. The various licenses have pushed the cost of operating such a business to insane levels. The following is a breakdown of the various costs that you should brace yourself for if you are planning to operate in Arizona:
- Taxes: The taxation policy for marijuana in Arizona is complex and high. Marijuana sales attract a tax of 5.6% and an additional 16% excise duty. All the taxes from the sales go to the Department of Health Services, Arizona.
- Registration costs: Like the taxation policy, the registration process for a cannabis microbusiness in Arizona is complicated, with several costs incurred. The average cost of registering a cannabis microbusiness in this state is $5,000. Besides the business registration cost, you should also pay for all your employees’ ID cards. Each ID costs $500 on average. The more employees you have, the higher the cost of registration. Other costs incurred in opening and running a cannabis microbusiness include license renewals and municipality taxes.
How to Raise Capital for Cannabis Microbusiness in Arizona
The cannabis industry is still volatile, making it hard for banks to issue micro-businesses with loans. It is also hard for investors to pump money into the venture, given the stringent regulations that put the venture at a high risk of collapsing.
How to Own a Cannabis Microbusiness in Arizona
The following is a quick guide to help you open a cannabis microbusiness in Arizona:
· Establish Your Major
Cannabis microbusiness is a broad field that ranges from cultivation to manufacturing, packaging, and even selling cannabis and cannabis products. You’ll also want to decide whether you want to operate the business alone or as a partnership.
The state of Arizona requires you to be its resident and have resided in the state at least three years before the date of application. Other people who must be residents in Arizona include employees, officers, and directors. The minimum age of all members of a cannabis microbusiness is 21 years.
· Create a Solid Plan
Before you think of establishing a cannabis microbusiness in Arizona, you should have a solid plan. A business plan works as a blueprint that guides your operations. Some of the things that you should include in the plan for your cannabis microbusiness include the following:
- Job description: Each activity in your business must have a clear description, and experts in the field assigned their respective roles.
- Projected expenditures: All projected expenditures for your cannabis microbusiness must be disclosed in the business plan together with expected revenue.
- By-laws: As a cannabis micro business owner, you should have a list of rules that guide your operations.
· Recruit Employees
The highest number of employees allowable in a cannabis microbusiness in Arizona is 10. When recruiting employees, you should focus on their competence and integrity.
· Market Your Microbusiness
After setting up your cannabis microbusiness, the next thing that you should think of is advertising your activities and products. Despite the increased legalization and popularity of cannabis across Arizona, most digital platforms have remained reluctant to absorb the business. Some of the channels that you can use to advertise your products are search engines and Instagram.
How to Tackle Conflict of Interest in The Cannabis Microbusiness in Arizona
Conflict of interest is a huge hindrance to the success of cannabis microbusinesses in Arizona. If you are planning to establish a cannabis microbusiness in Arizona, it’s vital to avoid the following things that contribute to a conflict of interest:
- Purchasing marijuana or marijuana-infused products from other licensed businesses. Buying these products from other licensed marijuana businesses creates a conflict of interest.
- Owning or having an interest in other marijuana businesses. As a microbusiness owner, you should only dedicate time to your business since showing interest in other businesses could be perceived as sabotage.
- Selling marijuana and marijuana products to other licensed marijuana users. It is unethical to sell marijuana or cannabis-infused products to other licensed businesses since this creates a perception of trying to sell the idea to other businesses.
FAQs on Cannabis Microbusiness in Arizona
As the state of Arizona continues to legalize marijuana, questions surrounding the licensing of marijuana microbusiness have been flying all over. The following are answers to some of the commonly asked questions about Arizona cannabis microbusiness.
Who Should be My Target Audience?
Establishing your target audience is a gradual and complex process that involves a deep understanding of the market. The first step towards identifying your target audience is establishing the market gap in cannabis.
Once you’ve found a market gap in the industry, develop a strategy that ensures you deliver top-grade marijuana (products). The second step is finding out whether the target customers would be happy with your services. You can go ahead and launch the project after building an audience.
How Can I Finance the Cannabis Microbusiness Effectively?
As of now, the law does not permit banks to finance cannabis businesses. Therefore, you have a limited number of options that you can use to finance the business. If you are thinking of financing your cannabis microbusiness in Arizona successfully, think of the following strategies:
- Investing back profits: After making profits from sales, you should invest back part of them to the business for expansion purposes.
- Equity investments: You can use savings to finance your cannabis microbusiness.
- Debt financing: Some investors will readily finance your business. The only downside of debt financing is that it increases the cost of operations.
How can I Succeed As a Cannabis Microbusiness Owner in Arizona?
Your success as a cannabis microbusiness owner in Arizona depends on how you target prospects and deliver products to them. If your business is located in an area with high-income earners, you should focus on delivering top-grade weed (products) at premium prices.
On the other hand, if your operating area is filled with low-income earners, you should focus on making more sales. Using these tips increases your chances of being successful.
What is The Future of Cannabis Microbusiness in Arizona?
The continued legalization of cannabis products in Arizona reflects how easy it will be to obtain a microbusiness license. In this case, we expect cannabis microbusiness in Arizona to expand exponentially.
How Can I Make My Arizona Cannabis Microbusiness Outstand The Crowd?
There are several things that you should apply to make your cannabis microbusiness in Arizona outstanding:
- Identify if there are competitors and find ways to outshine them
- Calculate the costs involved in setting up and running the business
Final Thoughts on Cannabis Microbusiness in Arizona
The high growth rate of the cannabis industry s in Arizona is pushing people to try out microbusiness. The article above compiles a list of things you should beware of when planning to open a cannabis microbusiness in Arizona.
Having a viable plan is the first step towards succeeding in the cannabis field. As Arizona continues to make rules on the cannabis business friendlier, it is expected that the industry will continue to expand exponentially. If you plan to establish a cannabis microbusiness in Arizona, follow the steps above and actualize your dreams.
Learn more about any of the Arizona Cannabis License Laws below: