MMJ DOCTOR is located in the heart of Silicon Valley, in the most populated parts – San Francisco and San Jose. We meet a lot of people from IT-industry and we know for sure that a lot of new cannabis startups are born every day. Marijuana startups are popping up across America mainly for two reasons. One, they’re generally less risky than growing and distributing pot from a legal standpoint. And, two, traditional businesses, such as banks, still don’t want to touch those who directly touch the controversial plant. After all, pot’s stigma, like its stink, is strong and hard to get rid of, though forward strides are being made every day.
“Small-business people are swooping in where the big guys won’t. They’re coming up with anything and everything at this point, even taking out grow-house garbage to get in on the trend. It’s wild the type of entrepreneurship that the cannabis industry has created, and we’re only just scratching the surface.” – MMJ DOCTOR.
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With marijuana now legal in some form in 28 U.S. states and the District of Columbia, and legal at the recreational level in seven states, opportunities to make greenbacks on the booming cash crop abound. Here are seven business ideas for people looking to cash in on the multi-billion-dollar green rush, but not looking to grow or dispense:
#1 CANNABIS-FRIENDLY BED AND BREAKFAST
Startup costs: $40,000 to $50,000
Equipment needed: Private residence to rent or buy, reservations software system, computers, phones, furniture, linens
The idea for a cannabis-friendly bed and breakfast came to Joel Schneider in the bathroom — a hotel bathroom. “I was hiding in there, smoking a joint, blowing the smoke into the toilet and constantly flushing,” he says. “I knew I was far from the only one doing this and I didn’t want to hide anymore, so I started my own lodging business where it’s OK — and legal — to smoke pot on the premises.”
In 2014, the veteran lawyer and New York native made his pipe dream a reality with Bud and Breakfast. It’s a rented private home-based bed and breakfast in Denver. There, guests aged 21 and older can puff or vape cannabis products or nibble on THC-infused edibles from their own legally-sourced stashes, he says, in living and dining rooms and patios.
Schneider, who says he has smoked pot since he was 14, now operates a total of three bed and breakfast locations in the Centennial State, with 22 rooms in all. In addition to renting rooms for between $149 and $399 a night (depending on the location), each sells marijuana paraphernalia, including glass pipes, bongs and rolling papers, to guests. Complimentary candy and other snacks, such as granola, are placed around the premises to “satisfy guests’ munchies.”
“What we’ve learned is that, as the cannabis culture is very communal, our guests love to share,” Schneider says. “You don’t pass a cocktail around. You pass a joint. That’s what makes us unique. No one is locked in their room smoking alone and feeling paranoid. They’re enjoying marijuana in a safe haven the way it was meant to be enjoyed — together.”
He’s also learned that lodgers often smoke up more before they check out, mainly because it’s illegal to travel across state lines or by air with legal weed. “Let’s just say there’s a lot of waking and baking going on here,” he says.
There’s enough of that happening to earn Schneider approximately a million dollars in revenue a year, he says. Eventually, he hopes to franchise Bud and Breakfast. His advice to those considering jumping into the burgeoning cannabis-friendly lodging industry: “Don’t think for one second that just because you open up that people are going to make your place a destination they go out of their way to go to. You must be located in a tourist area. Location, location, location holds true.”
He also cautions against hiring all-out stoners. “You’ll burn through a lot of staff if you don’t make it clear to them that they have to be broken from that,” he says. “That they’re not just stoners, but they’re going to have to be responsible and do the job you hired them to do.”
Schneider says it’s difficult to estimate the total cost to start up his hospitality business, as he launched it with $100,000 and was wiped out within a week, then had to raise more funds. Still, he estimates that to do it right, those who aspire to do what he does, renting homes and converting them into bed and breakfasts, might need as little as $40,000 to $50,000 to start. Somewhere in that range should cover first and last month’s rent, furniture, a reservations software system, a website, and basic renovations, if needed, he says.
Bud and Breakfast isn’t Schneider’s first marijuana-focused business. Before diving into the lodging arena, he published his own marijuana-focused newspaper, the now-defunct Mile-High Times. He’s confident he’ll have a much longer, stronger run with his latest cannabis venture.
“I believe in what we’re doing,” he says. “We’re helping people come out of hiding and, believe me, they’re ready to.”
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#2 CANNABIS-FRIENDLY PAINTING CLASSES
Startup costs: $2,000
Equipment needed: Paint, paint brushes, canvases, easels, marketing materials
Sometimes the best business ideas begin as a joke. Such was the case with Heidi Keyes’s Puff Pass and Paint. Launched in 2014, the Denver-based painting class lets customers, you guessed it, puff and pass a joint, or a bowl or a bong or what have you, while getting in touch with their inner Picasso, one brushstroke at a time.
“My friend joked and said to me, ‘You know those wine and painting places?’ You should do that with cannabis,’” says Keyes, who has a degree in fine arts and has long worked as a professional artist. She mulled the kush concept over, then conducted an informal poll on her Facebook page asking who might be interested in taking a pot-friendly painting class. The response was overwhelming, she says. “Classes booked up immediately and before I knew it we had a huge waiting list.”
With demand high from the start, Keyes quickly expanded from Oregon to Washington D.C. and Oregon, two other areas where recreational marijuana is also legal. She began with groups of eight students and now offers classes for up to 25 people at a time. Now, around 150 people participate in classes every week across all of Keyes’s locations.
Keyes and her employees provide the paint, paintbrushes, and canvases. Their customers, ages 21 and older, BYOC — bring their own cannabis. They also bring their munchies and sometimes beer and wine.
Prices for the two-hour painting and puffing sessions range from $49 to $64 per person. As for what it cost for Keyes to start up, she pegs her initial investment, paid for out of her own pocket, around $2,000. She points out that renting spaces for classes is not included in her estimate.
Anyone considering starting a business like hers must be intimately aware of the local legal marijuana business and consumption zoning laws where they plan to operate, as pot will be consumed during classes. Laws vary from state to state and at the county and city level. Being that Keyes doesn’t grow, sell or distribute marijuana, she doesn’t, however, need any special licenses.
“There’s so much legal red tape that it’s important to speak to a lawyer before you start,” Keyes cautions. “Make sure you’re fully aware of the laws and respect them so we can advance the legalization movement, legitimize it and keep the momentum going.”
Looking forward, Keyes hopes to franchise Puff Pass and Paint. “I think we’re onto something here,” she says. “We let people experience both cannabis and creativity, pot and painting. They kind of do pair well together.”
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#3 CANNABIS-THEMED BIKE TOURS
Business type: Cannabis-themed bike tours
Startup costs: $20,000
Equipment needed: Rental bikes and helmets, bike locks, bike maintenance tools, office equipment, rain capes
For outdoorsy types who enjoy biking and cannabis-counterculture, leading marijuana-themed bike tours can be a fun, active way to exercise, do what you love, and make money doing it. With marijuana legalization and use on the rise throughout the U.S., more and more pot-themed bicycle tours are winding their way through locales where the drug is legal. (Bear in mind, though, that neither medical nor recreational pot is legal at the federal level).
Avid bicyclist Todd Roll launched a cannabis-focused bike tour in Portland, Ore., in October 2015 through his company, Pedal Bike Tours. The $69 three-hour Portland Pot Tour tour is led by a trained guide familiar with the City of Roses and its flowering cannabis culture. The fee includes a rental bike and an ice cream cone at the end of the tour, but no nugs. Though Pedal’s cannabis tours once featured joints for passing around amongst riders, marijuana is no longer provided or consumed during the laidback spins through one of America’s most bike-friendly cities.
While they can’t toke up and pedal, being that public consumption of marijuana is illegal in the Beaver State, tour participants are treated to a close up look at legal, licensed pot dispensaries, including Gras and Canabliss. The tour also stops at popular head (pot paraphernalia) shops and a boutique that sells intricately carved wooden pipes and hand-blown glass chillums.
“There’s a pretty low barrier to entering this type of business,” Roll says. “But we never saw it as a huge financial slam dunk, not like dispensaries pulling in millions. We saw it as a ‘Hey, this can be done and therefore it should be.’ We’re showing that this taboo product is worth a second look. It’s far less lethal than tobacco and alcohol and yet here we are defanging the monster it’s made out to be, one relaxed ride at a time.”
Apart from basic business licensing and establishing federal and state tax identification numbers, no additional licensing was required, as Roll neither sells nor dispenses marijuana. Riders can, however, purchase marijuana from the dispensaries they visit on the tour, for later consumption.
“We’re a tiny niche that’s easy to break into,” Roll says. “There’s still not a lot of competition and I anticipate that we’ll grow more as cannabis becomes more accepted. More people will be willing to take the pot tour instead of giggling about it.”
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#4 ON-DEMAND MEDICAL MARIJUANA DELIVERY SERVICE
Startup costs: $400,000 to $600 000
Equipment needed: App development software, office supplies, computers
In the fall of 2015, former Microsoft executive Keith McCarty saw a “once in a lifetime opportunity” coming into view and taking shape, like smoke on the horizon.
On-demand transportation services such as Uber and Lyft were rising in popularity, as was the mainstream acceptance of medical marijuana. By July 2014, the Silicon Valley tech startup veteran took the green leap. He launched Eaze, an app-driven medical pot dispensary-to-door service. His goal: to become “the Uber of marijuana delivery.” Since then, the San Francisco-based company, now flush with upwards of an estimated $20 million in venture capital, has chauffeured bud to more than 100,000 card-carrying medical marijuana patients in “roughly 100” California cities.
“There’s a lot of room for innovation and differentiation with what we’re doing that doesn’t exist in other business categories within the cannabis industry,” McCarty says. “Because of direct access to patients, you can become their voice in a fragmented industry with a large stigma attached to it. You can have an early and cascading impact in a post-prohibition future, particularly if you are passionate about getting it right.”
Other than a standard business license, no special licenses are required to operate Eaze, McCarty says. That’s because his company provides the app and technological rails that deliveries run on, not the pot itself. The app houses the signup flow to onboard new medical marijuana patient users. It also provides directions and predictive analytics that help drivers get where they need to go. Eaze also handles patient verification, ordering, and customer service through the app.
In the same way that Uber drivers are not employees, Eaze drivers are not employed by Eaze. They are employed by licensed medical marijuana dispensaries that contract with Eaze. Drivers earn up to $16 an hour making runs, not counting tips. Dispensaries pay Eaze monthly fees to list their drivers on the service. Eaze declined to share those fees with Entrepreneur.
In terms of training needed to start a business like his, McCarty says an “advanced knowledge of apps, technology and data” and an “advanced knowledge of cannabis laws, rules and regulations” are required. Of course, knowing how to successfully design, develop and launch an app in the Apple App Store and Google Play is imperative as well.
Starting an on-demand service like Eaze isn’t cheap. For starters, you’ll need considerable amounts of cash to cover extensive legal consultation, staffing, and marketing, along with app design and development.
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#5 CANNABIS INDUSTRY CONSULTING
Startup costs: $5,000
Equipment needed: Varies depending on your skillset and the services you offer.
Corey Hollister is co-founder and CEO of American Cannabis Company, a Denver-based consulting firm that helps commercial cannabis cultivation startups with everything from design and build-out, branding and marketing, to regulatory compliance and beyond. Formerly a corporate advertising professional, Hollister segued to greener pastures when he felt it was “the right time, the right place.”
He recognized the potential to earn some serious green of another kind in what has exploded into a $4 billion legal marijuana market, by his estimate. “There is a tremendous growth opportunity in converting the $60 billion black marijuana market into a regulated market, and it will take a lot of human capital,” Hollister says.
So far, he’s fared well at capitalizing on the kush rush, clocking a gross revenue $1.2 million in his second year in business and $2.7 million in the third, he tells Entrepreneur.
Four years into running his company, Hollister says he continues to be surprised by the number of successful, high profile marijuana smokers who can’t wait to jump into the burgeoning cannabis consulting space, doctors, and lawyers among them.
If you begin with a home-based business, he says an investment of somewhere in the ballpark of $5,000 should cover starting up as a cannabis consultant. That should cover insurance, business cards, a telephone and computer, and the design and implementation of a website to market your services. No special business license is required.
“To be successful in this realm, you will need an in-demand skill set,” Hollister says. “The needs of the space are complex and diverse. People with backgrounds ranging from legal, security, horticulture, and other varied sciences have successfully entered the cannabis arena. If you offer something most businesses need, cannabis-businesses will most likely need it as well.”
#6 CANNABIS EXTRACTION PROCESSING LAB EQUIPMENT SALES
Startup costs: $165,000
Equipment needed: Order tracking software, warehouse space, shelving, various lab equipment, shipping supplies
Burt Linnetz says he never planned to break into the cannabis business. He just sort of fell into it. The longtime entrepreneur had been humming along with his first business, Pacific Combustion Engineering, a Torrance, Calif.-based laboratory equipment supplier that he has owned for 15 years, when he started receiving interesting calls from prospective clients. They were nothing like the big-name, traditional clients he routinely services, such as NASA, Tesla, SpaceX and several colleges and universities. They were cannabis entrepreneurs specifically in the market for marijuana extraction processing equipment.
“The lab equipment manufacturers I work with were giving the middle finger to cannabis industry processors for the last two or three years,” he tells Entrepreneur. “They denied them under the guise of ‘marijuana is not legal at the federal level, so we’re not doing business with you.’”
To meet the demand, Linnetz self-funded and created a second company, also based out of Torrance, and called it Blaze Lab Solutions. Launched in January, the startup now supplies dozens of cannapreneurs throughout the U.S. with the various types of lab equipment needed to produce a variety of cannabis extracts, including hash, shatter, wax, oil and other derivatives.
Linnetz describes Blaze as a “one-stop shop” for all kinds of basic benchtop equipment, including glassware, hotplates, rotary evaporators, kilns, vacuum ovens and pumps, water baths and beyond. “We’re not talking nuclear lab stuff here, like I would supply to a teaching lab at a university or anything,” he says. “It’s all standard benchtop items people in cannabis extraction honestly can’t acquire elsewhere. So far, I’m the only one willing to deal with them.” (We did a quick search and found several other companies that do supply cannabis extractors with lab equipment.)
As far as the startup costs, Linnetz considers his $150,000 out-of-pocket initial investment reasonable. “I already had everything I needed, including a vast network of supplier contacts in the traditional laboratory equipment manufacturing industry,” he says. “I just needed to change customers.”
He incurred additional fees, though he did not disclose them, to hire a lawyer specializing in cannabis law. “He kept ramming it into my head not to ever touch or supply or distribute the product, but only to simply supply supplies to those who do,” he says. “It’s just smart business.”
Linnetz also sank $15,000 into a high-tech security system to protect a fast-growing stock of laboratory equipment in his 3,000-square-foot warehouse.
Where others in the lab equipment space saw trouble, Linnetz saw opportunity. “I’m a businessman, and I saw an opportunity for profit that other major manufacturers and suppliers were ignoring,” he says. His decision to make the leap has more than paid off, Linnetz claims, citing revenues of “more than a million dollars” during Blaze’s first 10 months.
As of today, Blaze remains a three-person operation, with Linnetz at the helm as CEO. However, if business keeps, forgive the pun, blazing along, he aims to hire additional employees. New orders continue to pour in as word of mouth spreads that Blaze is willing to work with people in the marijuana business, and as mainstream acceptance of the drug increases overall. “Just a few months ago, we were whispering the word ‘marijuana’ behind closed doors,” he says. “I was quiet about my new business. Now, it’s an open conversation and getting more open every day.”
Linnetz expects his business to take off even more after Prop 64 passed in November 2016.. “It will send the message that this isn’t just a couple of stoner guys growing a few pot plants,” he says. “It’s exploding into a multi-billion-dollar legit business now and it’ll only get bigger.”
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#7 CANNABIS CUISINE PAIRING AND CATERING
Startup costs: $100,000
Equipment needed: Kitchen and dining supplies, website, client management, transportation and booking software
To many, cannabis pairs just as finely with food as wine, and we’re not just talking about munchies grub here. Think about fancier fare, such as tender, slow-roasted duck breast nestled on a crisp bed of aromatic arugula that’s been tossed in fresh-squeezed lemon juice and extra virgin olive oil. Imagine treating your tummy to such tasty goodness, then easing back into a fat joint rolled with top-shelf Grand Daddy Purple indica strain marijuana.
Philip Wolf doesn’t need to imagine that combo. He often serves it to clients on a platter at private house parties, weddings and swanky soirées of all kinds. Cultivating Spirits, his Silverthorne, Colo.-based cannabis cuisine pairing and catering startup founded in 2014, cooks up three- and five-course gourmet meals, complete with hand-selected accompanying high-end smokeables and premium wines.
Wolf’s “cannapreneurial” lightbulb went off during a 2013 trip to Barcelona, Spain. He was sipping wine between the vines at a picturesque winery, casually nibbling amuse-bouches when it hit him. “I’d had a couple of glasses of wine with my friend, I was feeling good and I thought, ‘This is it. This is what the cannabis industry needs — upscale cannabis and cuisine experiences that will help destigmatize the plant,'” he says “Starting a business that crafted pairings with cannabis instead of just with wine seemed like the answer.”
Upon returning stateside, the longtime cannabis connoisseur, former medical marijuana dispensary owner and grow consultant passionately pitched his business partners. After doing some soul-searching, however, he decided to strike out on his own, bootstrapping the business.
As you might imagine, Wolf’s customizable cannabis and cuisine adventures — which notably doesn’t spoon out actually cannabis-infused eats, as some of his competitors do — aren’t for those on a tight budget. Ranging between $1,250 to $1,500 per person (depending on the size of the dinner party), they’re over-the-top sensual splurges by design. “What we provide isn’t a college frat guy, Cheech and Chong or Grateful Dead kind of stereotypical stoner experience,” he tells Entrepreneur. “Instead, we deliver eloquent, educational experiences that change perspectives and states of mind.”
Since he started, between his food, wine and cannabis tours, dinners and parties, the longtime certified budtender says he and his team of chefs have served some 2,000 customers. They work closely to carefully pair the aromatic compounds found in cannabis, known as terpenes, with the flavor profiles of certain foods.
“We choose strains that enhance flavors and feelings, teaching people how to enhance their experiences with cannabis throughout the day, in new ways,” he says. “Some of the effects are calming. Others are invigorating. It really depends on what you’re looking for.”
As for the startup costs, $100,000 covered everything Wolf needed to hit the ground running. He says he used the bulk of the money to build a website, pay legal fees and to purchase kitchen and dining equipment, as well as a limo for taking customers on tours.
Looking to the future, he expects to quickly see more green, as in profits. “If we’re anything like Napa Valley’s always-booming wine-tasting business,” Wolf says, “it’s only up from here.”
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