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The challenges the cannabis industry is facing

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Despite wider acceptance of the use and benefits of cannabis, individuals and businesses engaged in growing the plant and downstream industries continue to face major challenges and roadblocks.

According to Daniel Ramirez, chief marketing officer for Belladonna Growhouse, because of the “stigma” on marijuana use, many cannabis businesses are having a hard time in coping with various marketing and regulatory requirements that go with it.

Ramirez cited their experience at the company, which is a fully licensed i502 producer or processor in Washington State. The official noted that each marijuana-based business faces a unique impasse that it should resolve.

Here are the top three challenges that newbies should know before engaging in any cannabis-related business:

  1. Branding

The challenge comes in making the cannabis business just like a “normal” business operation in the neighborhood. For the most part, the so-called “stigma” associated with the plant continues to hound its lucrative potential, especially in more conservative communities.

Making people accept and try out marijuana is not as easy as selling ice cream. That’s why employing traditional advertising techniques may not be applicable to this industry.

In creating a brand, marijuana-based businesses should focus on more interactive advertising campaigns, which include blogs and social media posts that allow a healthy discourse between the sellers and the buyers.

Remember that being spotted on traditional flyers and billboards is one thing. But talking to your customers personally will help you establish a more sustainable business model.

  1. Regulatory hurdles

Legal issues surrounding cannabis remain a tough challenge for the industry to hurdle given many restrictions imposed on its sale, even in the online community.

Many marijuana-based startups are finding it difficult to sustain operations because of the hefty financial requirement in maintaining a presence online. Also, a majority of the advertising and marketing programs for marijuana are so-called “pay-per-click,” which prohibit marijuana promotion.

Conflicting regulatory rulings on marijuana use and advertisements force growers and downstream industries to employ traditional methods, which is usually laborious and capital-intensive.

The lack of traditional marketing offers also makes it difficult for a marijuana business to grow. Major direct mail programs, broadcast media, and B2B marketing also have limited advertisement programs for the cannabis sector partly because of the conservative outlook of these businesses.

  1. The lack of premium quality products

As the demand for cannabis grows, the market is awash with a hundred vendors and manufacturers who sell the miracle product. This now concentrated market gives rise to difficulties on the part of the consumers who are faced with hundreds, if not thousands, of marijuana products to choose from.

Although consumers are served with a wide array of choices, a cannabis product worth buying proves to be rare.

One of the firms in the world that address this lack of quality-competitive cannabis products is  PotNetwork Holdings, Inc. (OTCMKTS:POTN). The company produces top quality CBD products using oils it acquires through supercritical CO2 extraction that fully separates the naturally occurring compound from cannabis strains. Its wide array of products is distributed through Diamond CBD with some of its best sellers, including CBD shots, various flavors of CBD oils, and the LT Pain Master CBD Cream.

POTN is able to showcase the quality of its products through its consumers that have helped the company break revenue records several months in a row. Its most recent revenue report says that the sales for April have exceeded $2 million, which is a 98 percent increase over April 2017.

  1. Canna-alcohol

There may have been a growing trend wherein recreational cannabis is bumping off alcohol. But the plant’s age-old rival is not going to give up its throne without a fight.

In fact, the Marijuana Business Daily reported that alcohol “is starting to see opportunity instead of threat” in the industry, as more firms experiment with infusing substances of the plant in alcohol. The report further warned the cannabis market of the canna-alcohol trend looming more imminently throughout 2018.

Constellation Brands may be one of the first to take the stride into the cannabis sector. One of the world’s largest alcohol brands, Constellation has acquired a major stake in Ontario-based Canopy Growth. The move is in line with the anticipated lifting of the ban on selling cannabis in Canada, a regulatory easing that will be enjoyed by cannabis makers—and, now, as well as Constellation.

Other makers include California-based Lagunitas Brewing, which is injecting the cannabis substance terpenes to its IPA. Rebel Coast is also planning to introduce the first CBD-infused and alcohol-free wine this year.

“Expect more alcohol companies to decide in 2018 to join the cannabis industry instead of fighting it,” the Marijuana Business Daily warned.

  1. Legal discrepancies

In the United States, financial roadblocks are usually caused by legal discrepancies, particularly the Internal Revenue Code’s 280E, which limits benefits of marijuana-based industries.

According to the Business Insider, the 280E, which was originally created as a preventive measure versus cocaine and heroin use, also requires cannabis-based businesses, as well as those engaging in the distribution of controlled substances, to pay about 70 percent in federal taxes.

Marijuana businesses are also exempted from tax deductibles, including property leasing and wages, which are usually accorded to other legal businesses. Once identified as a business under 280E, many banks and financial institutions also often refuse to lend money, thus, creating a financial void for many marijuana startups.

As the cannabis industry develops and gets more support from authorities, there is no doubt it can overcome the challenges. More companies like POTN will be able to thrive and provide high-quality cannabis products and services.

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