According to the Colorado Department of Revenue, marijuana sales in Colorado have been on a steady incline since legalization. The industry is estimated to have brought in well over $1.5 billion in 2017 alone, and there are other states that have had their economies boosted significantly by the legalization of marijuana. However, looking at the business side of things might not be as simple as it seems.
Many may believe, based on media portrayals, public opinions, or the like, that immediately after legalization, in Colorado or elsewhere, the cannabis industry booms and countless profitable businesses surface with immediate success. Sometimes, though, it takes some patience and helping hands to get cannabis companies off the ground, just as it would for any regular startup. Through the use of business incubators and accelerators, growth may increase for more fast and sustainable success.
What are Business Incubators and Accelerators?
A business incubator, per the National Business Incubator Association, is "a business support process that accelerates the successful development of startup and fledgling companies by providing entrepreneurs with an array of targeted resources and services. These services are usually developed or orchestrated by incubator management and offered both in the business incubator and through its network of contacts." Incubators offer things like guidance, training, and capital to startups, helping with marketing, branding, management, data, technologies, business strategies, and more. Many include office space, curriculums, and regular advising. If a company gets involved with a business incubator, their chances of success should improve.
Businesses, such as those in the cannabis industry, can pay monthly fees of varying amounts to participate in incubator programs. They are generally long-term and can be applied to industries like restaurants and technology, as well.
Business accelerators are quite similar to incubators, but part of the methodology is different. The biggest difference is that business accelerators are often investors in the companies to which they provide guidance. Start-ups can come to accelerators for foundational and/or diversified funding. Business accelerators may fund events, developments, and other ventures to put a company on the fast track to success and profit. They are also often shorter and more concise than business incubators, lasting maybe three to four months instead of 18+ months.
The number of business incubators and accelerators has increased pretty drastically in the last two decades, which means that they have been here and ready to be involved in the blooming of the cannabis industry. There are even some, as described below, that specialize solely on cannabis businesses and all facets of the industry.
Again, it may seem strange that a new industry in high demand could need the help of a business incubator or accelerator. However, there are many reasons why that is often the case.
Different states across the country have been legalizing medical and/or recreational marijuana, and this comes with a lot of pros and cons. Depending on the region and the margin by which legalization passes, the industry may be met with controversy and potentially invasive or restrictive regulations. These can make it very difficult to properly get a business off the ground, and an incubator or accelerator can help by providing guidance.
Also, compared to other industries, the world of cannabis is largely uncharted. Consider it in contrast to the restaurant industry, for example; restaurants are often clients of business incubators or accelerators, but even without them, there are countless people who know the ins and outs of the restaurant industry. New food establishments open every day, and in many ways, the formula for creating a successful restaurant is recognized and comprehensible. That being said, while a lot of strategy and knowledge required to create a successful cannabis business can be drawn from other industries, jumping into the cannabis space means getting involved in an industry of its own kind.
This "industry" is a fragmented one, too. You may just think of the cannabis industry in terms of the countless dispensaries that appear like weeds on every street corner in Denver and cities like it. However, that industry includes growers, labs, dispensaries, and even delivery companies. There is no dominant market share as of right now, and consolidation of companies has yet to really occur, meaning that a variety of people can be involved on the business side of things, from amateurs to professionals. A complex business environment is created, and that is where incubators and accelerators can come into play to increase prosperity.
What are Some Well-Known Incubators and Accelerators in the Cannabis Industry
One of the biggest marijuana accelerators in a company called Canopy. They claim to be a "venture fund and business accelerator focused on ancillary products and services in the legal cannabis industry," aiming "to help build the cannabis industry sustainably, profitably and rapidly by investing in and educating cannabis entrepreneurs." Canopy offers investments for startups, as well as a mentorship-based education program.
Another cannabis accelerator is Gateway, a "full immersion business accelerator and seed investment program born out of Silicon Valley and located in the capital of cannabis advocacy and innovation." Gateway focuses on using the business spirit of Silicon Valley and California to build networks of partners, collaborating with companies like Microsoft BizSpark and Amazon Web Services to assist a variety of companies.
Blinc is a cannabis incubator based in New York that calls itself "distribution centric." The Blinc Group "methodically uncovers practical innovations that bring emerging vape and cannabis technology to market." They specialize in industry knowledge, distribution networks, business solutions and insights, and more. It is all about planning for the future, testing product concepts and laying the groundwork for the highest level of potential in leadership and economics.
A final big name in the world of cannabis incubators and accelerators is Greenhouse Ventures. Greenhouse Ventures claims to be the first cannabis accelerator in the world. Similar to the companies described above, the mission of Greenhouse Ventures is "to contribute toward developing a sustainable cannabis and industrial hemp marketplace by accelerating the growth of early-stage ventures that service both industries." They offer legal aid, financial guidance, go-to-market strategies, and mentors. They host a curriculum and boot camp and also work with medical, data, agriculture, distribution, and market technology, and more.
Where Do I Start?
If you or someone you know is interested in getting involved in the cannabis industry, it is definitely a smart idea to consult with a business incubator or accelerator that specializes in cannabis. Consider all the factors of your potential business and have a clear plan in mind before checking out different accelerators. Once your own plan is solidified, be sure to do some thorough research into a variety of options, expanding past those outlined above. Understand the similarities and differences between incubators and accelerators in order to make an informed choice. There are more and more incubator and accelerators every day, and each may offer slightly or drastically different services; look around to find one that works best for your own business.
The cannabis industry is steadily expanding, but that is not without help and guidance. Cannabis incubators and accelerators exist to ensure profitable and lasting businesses that are sure to meet the growing demand for marijuana and its related products.