Whatever the market may be, small businesses consistently face challenges when building and expanding their business models. In the cannabis market, just as in others, small businesses will face the most challenges from both a rapidly expanding industry as well as larger, more experienced companies that got in the game early and were able to monopolize parts of the market.
1. Everyone wants in
Everyone is trying to get in on the growing cannabis market making it turbulent and unstable. Small businesses are most impacted by market instability and the cannabis market trend will prove the same challenges that small businesses feel in other markets. This includes intense competition not only from other small businesses but also big, established companies that have significantly more capital and other resources at their disposal.
At the same time, whereas bigger businesses may have advantages in terms of capital and resources at their disposal, they too will experience similar challenges against small businesses. These include components like service and quality, both factors that become harder to maintain the more a business expands and the less centralized its services are.
Another challenge within the cannabis market is that, despite the fact that it’s relatively new, it’s already a massive market. Cannabis products range from beauty to medicinal uses and it can be challenging for small businesses to establish themselves within such a large market, let alone against strong competition.
2. Key players are consolidating
On the note of the cannabis market already being huge, it is also starting to consolidate. That means that dominant businesses are already starting to take hold over certain parts of the market making it even more challenging for small businesses to tap into the market.
Not only that but as these businesses begin to grow they can also expand. This means that they can take advantage over the influence they already have in a certain part of the market and branch out. Plus, they will know and understand the processes of applying for necessary permits and licences in addition to already having the resources to kickstart new ventures.
3. Financial advantages of key players
The purchasing power of chain dispensaries is a huge challenge for small businesses entering the cannabis market. Chain dispensaries can buy large quantities of high quality products and increase their output significantly faster than small businesses. Alongside this, they’ve already established their base business models whereas small businesses, especially newer ones, might initially take several years to even out their base business model before they reach their full production capacity.
4. Licensing experience
Another upper hand that bigger, more experienced businesses will have on smaller businesses is their know-how in licensing. Licensing is already a time-consuming and expensive process and the more small businesses seek to branch out, the more specialized permits will be required. This means both an increased time and financial commitment long before a business can start selling its products.
5. Competitive technology
Established companies with financial resources available will have more opportunities to make use of new competitive technology. This means better quality equipment, more equipment and equipment that produces higher quality products. This can allow those businesses to expand and sell more products at faster rates than smaller businesses can compete with.
The cannabis market is changing and expanding rapidly. In order to succeed, small businesses will not only have to adapt and compete with market giants but they will have to establish themselves in a highly competitive and growing industry. Despite the new challenges that the cannabis market brings for small businesses, they will likely experience many of the same dynamic-based issues that are experienced throughout different industries.