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legal cannabis and hemp industries

What Are the Risks Involved in Starting a Cannabis or Hemp Business?

The proliferation of cannabis and hemp businesses across the nation continues to skyrocket with the nation-wide legalization of hemp and the increasing number of states legalizing cannabis. While the potential for profit is high, there are risk factors involved that those who would like to get in on these new niches should be aware of.

Potential Risk Considerations

Starting a business always involves risks. This is true regardless of industry. Hemp and cannabis are both agricultural crops. As such, they are subject to issues inherent in agriculture. Though hemp is a hardy plant, the weather is still a concern. For instance, too much water too early can ruin the crop.

While the market is thriving for hemp and cannabis products, there are still concerns about competition. Other market factors have become apparent in the time of COVID-19, which has resulted in an overall boon for the industries, though those with physical shops either had to close their doors or shift their delivery methods.

Special Considerations

In addition to the risks involved in starting any business, there are some special considerations for the legal cannabis and hemp industries, including:

  • Marketing claims that could lead to legal issues.
  • Inadvertent production of crops with THC levels higher than the legal limit.
  • Difficulty finding adequate insurance.

The growth curve for these industries is predicted to continue on an upward trajectory, and many entrepreneurs are taking advantage of the trend to start a new business. For those taking the leap, it is important to consider and plan for the potential risks.