Partner Up: Building a Cannabis Ecosystem

A business ecosystem is a network of companies that work together to create value for customers. A cannabis ecosystem is made up of companies that work together to bring quality cannabis products to consumers in medical and recreational states. Since cannabis is still federally prohibited, each state with a legal market is its own ecosystem.

Key players in a cannabis ecosystem are:

• Cultivators, who grow the plant from seed to harvest
• Processors, who turn plant material into smokable buds
• Manufacturers, who turn raw plant material into finished products like edibles and concentrates.
• Testing labs, who ensure the safety of cannabis consumers
• Distributors, who help ensure cannabis products make it off the farm and onto the shelves.
• Retailers, who create space for consumers to find cannabis products
• Ancillary businesses, like security, banking, and insurance, who help cannabis businesses get the protection they need

Regulatory bodies also play a role in this ecosystem. Some regulatory bodies encourage healthy competition and small businesses while others favor large, multi-state companies at the expense of other businesses. The rules that govern a given state create the environment for a cannabis ecosystem to flourish or struggle.

Some states have young, thriving cannabis industries while others have older markets that are struggling to survive. You cannot create the environment (although cannabis companies certainly should aim to help shape favorable regulations) so you must learn how to adapt and survive in it.

“A rising tide lifts all ships.” 

This old business adage speaks to the importance of recognizing mutually beneficial situations. In this fledgling cannabis industry, building partnerships helps existing businesses strengthen their foundations and create far-reaching ties with other industry professionals. 

Finding a cannabis partner can help you in many ways. It may be easier to wade through regulatory complexities with assistance, or get banking and financial advice from someone who has been there before. Cannabis is still overcoming the stigma from the past 100 years of prohibition, and the more people who champion the positive impact of this plant, the louder our collective voices become. 

Partnerships can give you access to new customer segments and increase your market reach while sharing resources and expertise. A good partnership may help you reduce your operational costs or your risks. Whatever your goals are, there’s a partnership that can help you achieve them. We can go farther together.

How can you find partnerships to help strengthen your business?

Consider your needs. There are industry-specific partners, both plant-touching and ancillary, who can help you create a strong foundation and supply chain.

Perhaps you want to find retail partners to get your product onto shelves or supply chain partnerships to reduce the cost of production. Maybe vertical integration makes sense for your organizational goals, or maybe your needs can be met through a simple partnership with a local tax professional. Think outside the box – maybe you can offer marketing internships through a local marketing organization or partner with a college that has a cannabis curriculum.

You can also partner with non-cannabis businesses that offer complementary services. Reaching out to a healthcare provider, medical business, or technology company can be a create way to increase your business’ reach without increasing your marketing budget. Consider a partnership with a research and development company that can help you innovate new products, a local cafe that may be interested in hemp beverages, or an animal shelter to provide much-needed resources. A local non-profit may be interested in a branding collaboration or perhaps you can share a non-alcoholic beverage with a marathon for finishers.

Creativity goes a long way when it comes to identifying potential partnerships, so don’t shy away from ideas that seem out there or impossible when suggested.

Once you know what kind of partnerships you’re seeking, you have to build them. Solid business partnerships are not made out of thin air, but rather through time, effort, and consistency.

The best place to find a cannabis partner is at cannabis industry events. Attend local networking events, regional conferences, and national tradeshows. Start conversations with people and keep an open mind. With specific goals and a clear picture of what you’re looking for, you may be surprised at how fast you can find a potential partner when you start talking to people.

But don’t jump into doing business with just anyone. A good business relationship has a foundation of mutual trust and respect. Trust is earned, so don’t be afraid to do your due diligence. You want to know someone you’re getting into business with: their reputation in the industry, their financial stability in business, and whether their business values align with theirs. Being surprised by any of these factors is a red flag in a potential partnership.

A good partnership is one with honest communication, clear expectations, and a mutual benefit. Being honest from the start with a potential partner lays a strong foundation, but lasting partnerships help both businesses equally. If a deal feels one-sided, don’t bury your concerns – address them.

And finally, the best business deals have robust legal agreements outlining the expectations and responsibilities of all parties involved. A handshake is important but only goes so far – contracts are the backbone of successful agreements.

Succesful partnerships don’t just happen through the years – it takes almost as much work to maintain a partnership as it takes to create one. Keeping lines of communication open is vital to allow all parties to address concerns as they arise and to fostering a sense of trust.

Things change, in business and in the cannabis industry, and flexibiltiy is an important trait in a long-lasting business.

• Be willing to adapt to changing circumstances and market conditions. Let your partnership evolve as it serves everyone.
• Regularly evaluate the success of your partnership to ensure it performs well and you’re making adjustments as needed. Let everyone speak openly and address concerns headon.

Creating ecosystem of businesses is not a revolutionary idea in the cannabis industry – it’s a tried and true business strategy used across all industries, from technology to automotive. Having a network of cannabis partners creates a fourishing ecosystem for all cannabis businesses to thrive in.

Protecting your cannabis company can seem confusing; however, we’re a full-service insurance brokerage working with carriers worldwide to offer you the best coverage possible. We’re here to help! Please reach out to us today by email [email protected] or calling 646-854-1093 for a customized letter or learning more about your cannabis insurance options.