Cannabis insurance

Legitimizing Cannabis: How to Make Your Canna-Business Valid

Cannabis has existed “under the table” for decades — but the world is changing fast. As cannabis insurance experts, here’s how legitimizing cannabis looks from our point of view.

Cannabis businesses have existed for decades — but the progression of legalization has created a divide between legitimate canna-businesses and those that remain unlicensed or “under the table.” No legitimate business wants to be conflated with those engaging in unethical business practices. There are a few steps every cannabis business can take to ensure validity and not be confused with an illicit player making risky moves.

Introduction to Legitimacy Challenges in the Cannabis Industry

Cannabis businesses exist on both sides of the law. Still, only those in the legal industry have a chance at long-term viability, building an engaged audience, and being seen by consumers and other sectors as legitimate.

A legitimate business is considered safe regarding product quality, regulation compliance, and consumer and employee safety. What separates a legitimate cannabis business from one of ill repute is the seriousness with which they take these tasks.

Some may see this legitimacy in the legacy market as exclusionary. However, the continued federal prohibition of cannabis makes many businesses wary of working with anyone in the cannabis industry. Furthermore, bad players attempt to cash in on the legal gray areas of cannabis, which confuses and can even harm consumers..

Following Rules and Regulations: The Foundation of Legitimacy

A legitimate business in any industry must abide by the rules and regulations that govern said industry. Whether these regulations are set by local or state governments or branches of the federal government makes no difference: a business that refuses to play by the rules cannot be trusted.

Regulations in the cannabis industry are admittedly thornier than those of many other industries. Still, the challenges of following these regulations do not exempt businesses from the need to do so. Staying on top of shifting rules at every level of government is simply the cost of doing business in cannabis.

But there are also ways to make it easier. Delegation is the name of the game for any busy canna-business owner. There are several content channels you can subscribe to that track regulatory updates at the state and federal levels. You can assign regulatory compliance to someone on your staff as their full-time position. Or you can engage with a regulatory or legal consultant — just ensure they’re fully entrenched in the cannabis industry.

Legitimacy also comes from other regulatory compliance, such as keeping on top of your licenses and inspections. Legitimate businesses maintain thorough records and fill out forms completely. Being issued a public warning by a company like NASDAQ can harm people’s perception of your business.

Financial Responsibility: Paying Your Bills and Beyond

The cannabis industry has a fiscal responsibility problem. So, one of the easiest and simplest ways to differentiate your canna-business as legitimate is by paying your bills on time.

And yes, it sounds simplistic. In any other industry, this problem would be unheard of. But in every legal state (and even legal countries, like Canada), the same story plays out repeatedly — big players refusing to fill invoices, taxes, and even employee wages. It is unacceptable yet incredibly prevalent.

It should go without saying that legitimate businesses prioritize paying their employees on time, as well as their vendors and taxes. Sometimes this happens because companies struggle to turn a profit, with not enough in the bank to cover the bills at the end of the month, or because vendors unexpectedly exit the industry. But paying your bills on time is crucial for long-term success and cultivating relationships with loyal employees, creditors, suppliers, and other stakeholders.

Thinking Outside the Box: Innovative Strategies for Cannabis Business Legitimization

At its heart, the goal of legitimizing canna-businesses is about getting over the plant’s stigma and having the same standard of consumer safety in other industries. While there are some basic best practices (like following the law and paying bills on time), there’s also a lot of room for interpretation around legitimacy in the industry with outside-the-box ideas.

These could include innovative strategies such as adopting sustainable practices. Indoor-grown cannabis is a significant energy consumer, and anything that companies can do to offset this footprint is valuable in the eyes of the consumer. Cannabis companies may also consider getting involved in the community. The plant carries a stigma, but being a good neighbor and an involved community member can help change the hearts and minds of people who wouldn’t otherwise think kindly about your business.

The image of your business also matters. Whether you want to take a polished and professional approach to attract consumers or adopt a street style, embracing uniqueness while maintaining a certain level of professionalism is crucial. This approach doesn’t mean only creating branding that Mad Men would love but also encompasses how well your employees are trained and the level of customer service baked into your business. Be a brand you would want to use.

Legitimate businesses are tapped into their community, both local and at a national industry level. Get out to networking events, attend conferences, and get to know people who do what you do.

The cannabis industry is wonderfully complex, and success does not come easily to any business owner. It takes consistent and intentional actions to follow the rules, cultivate and maintain relationships, balance daily business tasks like getting the right cannabis insurance policies, and perhaps even a burst of inspiration to establish your business as a long-term legitimate canna-business.


Protecting your cannabis company can seem confusing; however, we’re a full-service cannabis 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 emailing [email protected] or calling 646-854-1093 for a customized letter of commitment or learning more about your cannabis insurance options.

Related Insights