How to Do Market Research for Your Business Plan

Business Plan Market Research: Understanding the Cannabis Industry Landscape

The legal cannabis industry is a huge and fast-growing industry in the United States, currently valued at roughly $24 billion. It’s big, it’s fast-moving, and with whispers about federal legalization bubbling up with increasing frequency, there are few signs that this state of flux won’t continue for the short- to medium-term.

All that being said, it makes it pretty hard to get a firm grasp on just what we can look forward to. That means that getting your industry information from trustworthy and authoritative sources should be Job #1 when you’re performing market research on the industry as a whole.

Where should you begin? Start with these trusted cannabis media outlets that focus on the business, finance, and entrepreneurship angles of the industry:

• Cannabis Business Times: A national publication aimed at cultivators, investors, and cannabis businesspeople in general, you’ll find crisply reported industry news, articles on financial and legal resources, and authoritative tips on regulatory approaches and strategies.
• Ganjapreneur: A publication aimed at activists, businesspeople, and investors, this up-to-the-minute website features reportage on the legal and commercial fronts broken down by state and province, as well as a podcast and a subscription-based business directory.
• Green Entrepreneur: This spinoff of the long-running Entrepreneur imprint covers the business side of both the medical and adult-use realms. The publication is known for high-quality content and solid international reporting; recently, it spun off into more exploratory realms—“Sex on Psychedelics,” anyone?—which may indicate an appetite for more offbeat content.
• Marijuana Business Daily: With nearly a decade of publication under its belt, this well-regarded industry publication may be the most like a traditional print newspaper in voice and tone. It’s focused on professionals in all sectors of the legal cannabis economy, with dense state-by-state news coverage, industry statistics and trends, and select international coverage and forecasts.
• Marijuana Venture: With a self-described focus on professional cannabis growers and retailers, this monthly journal includes a bumper crop of news, tips, and legal advice geared towards those who cultivate cannabis or otherwise participate in its production and processing.

Business Plan Market Research: Demographics and Competition

We’ve written about this topic before, but it bears repeating: It is absolutely, 100% vital that you understand your market. Even the best-prepared and most objective of us can fall into easy traps when it comes to building their business plan. Traps like: “My business will crush the competition with friendlier service and better products!”

The fact remains that every successful business succeeds because it has identified a problem—like a lack of medical cannabis for seniors or a glut of dispensaries offering the same products within a given geographic—and then positioned itself to be the solution.
Put another way, those businesses didn’t try to be everything to everyone. Instead, they tailored their offerings to what the market actually demanded. And to identify this, they rolled up their sleeves to do some good old-fashioned market research.

Where do you begin? Start with governmental offices such as the U.S. Census and the Bureau of Labor Statistics, then work your way down to county and municipal databases. Your local library will be a helpful resource in this case, in large part because librarians are specially trained to direct people like you to sift through mountains of resources and data.

The question you’re asking, of course, is: Who is my target market? Shed your assumptions; the cannabis-curious population ranges from Generation Z to Baby Boomers. Look at local demographic trends and see if there are any published surveys about cannabis use. This will help guide your business plan, and it will guide your marketing efforts. That’s because knowing who you’re trying to reach—and then speaking directly to them with the greatest possible specificity—is the definition of effective marketing.

Of course, a big part of your research should focus on existing dispensaries in your area. There are a number of ways to go about this, some of them obvious and others less so. While Googling “dispensary near me” will tell you a lot, there are more instructive ways to look, including:

• Local business directories
• Your local Chamber of Commerce
• Advertising, both online and off
• Cannabis exhibitions and trade fairs
• Flyers and marketing literature you’ve received (be sure to sign up for competitors’ marketing materials)
• Checking your local government’s planning office for pending applications and building works-in-progress

But don’t stop there! Take the time to actually visit dispensaries and get a feel for what they provide—and what they don’t. This part can actually be a lot of fun! Pretend you’re casing the joint: What do the vibe, the physical layout, the level of service and the product selection tell you? Can you identify strengths, weaknesses, and opportunities? What would you do differently, and what ideas would you adopt and modify as your own?

This brings us to a method of self-analysis. When you’ve developed a fully informed picture of your competitors, you may want to investigate the concept of SWOT analysis, short for: “Strength, Weakness, Opportunity, Threat.” It’s a simple, intuitive, and graphic way to sort through all the factors affecting your potential business, and see how you can boldly lead it to opportunities you might not be aware of.

Business Plan Market Research: Researching Local Regulations and Restrictions

Finally, you’ll need to spend some quality time researching all the applicable regulations regarding your proposed business. Sometimes, municipalities in legal-cannabis states don’t have any dispensaries because they’re prohibited by local law (this is the case in California, where a huge proportion of cities in the world’s largest cannabis market prohibit the sale of cannabis products.)

The next part is both easy and hard. Every cannabis-legal state maintains a regulatory office dedicated to spelling out the restrictions on cannabis businesses as well as the licensing procedures and costs. Search within your area for the most up-to-date information, and you should get a crystal-clear idea of what’s required to get fully licensed and compliant.

The hard part? The truth is that even with this information spelled out, you’re probably going to need to hire a cannabis-proficient lawyer to help you make it through all the legal hoops.

One more note: Because cannabis isn’t legal at the federal level, each state imposes its own restrictions on how you can advertise your dispensary. Be sure you’re in compliance, or you could be hit with costly fines before you even open your door.

Need help here? Start with our state-by-state guide, or better yet: Reach out. We’re always here to help.