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How to Start a Cannabis Business Using an Accelerator

February 17. 2017. 6 mins read

The legalization of marijuana has created an entire industry consisting of many parts like growers who actually produce the plant, labs that test the quality of the product, dispensaries that dispenses the product, and even companies that will deliver a bag of your favorite skunk right to your front door. The entire “industry” is extremely fragmented meaning that not one single company has a dominant market share in any area of any state that we’re aware of. Sure, you might have a dispensary owner who has 5-10 locations in one state and is starting to gain some brand recognition but as of right now, every stoner and his brother has decided to “start a cannabis business”. And now you’re thinking about it too? We’re here to help.

If you can visualize the state of the marijuana industry a decade from now, you would expect to see a great deal of consolidation. Smart business minds will rapidly overtake the weekend warriors who didn’t know what they were getting themselves into. The end result will be your typical long tail distribution with a handful of players dominating a majority of the market. What it comes down to is this. If you are a “marijuan-trepreneur” with no prior business experience, the only way you will be able to grow your business and stay ahead of the competition is by seeking out the help of people who know how to grow businesses. Here are some startups that did just that:

Probably the single biggest benefit you get when a venture capital firm funds your company is not the money, its the expertise they bring to the table to help you grow your business. Ever since our first article warning investors about the dangers of marijuana stocks, people have been banging down our door asking about how to invest in marijuana stocks. We’re also getting lots of inquiries from budding entrepreneurs who want help building their businesses. The advice we have for anyone who is looking to start a successful cannabis business is to get involved with a cannabis accelerator (also called a cannabis incubator). These are firms that will take a share of your equity in exchange for money and assistance in growing your budding business. Here are 8 cannabis accelerators for you to consider.

Canopy

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Canopy claims to be “one of the most active investment funds in the cannabis industry” with 45 investments made so far. In true accelerator fashion, they provide a capital injection of at most $70k along with a 16-week mentor-driven boot-camp and critical knowledge of the industry  in return for a 6-9.5% equity stake. Here’s their elevator pitch on why you should choose their firm over the many others:

Given that their strategic partner is ArcView Group, you’re likely to have access to a lot more funding if your idea has legs.

Gateway

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Gateway is a cannabis startup accelerator that offers a 4-month program inclusive of coaching and mentoring and an upfront investment of $30k for 6% equity (1% allocated to mentors). You’ll need to move to Oakland for the duration, “the cannabis capital of the US” as Gateway puts it. Here’s a look at their value proposition along with the names of companies from their first intake:

They claim to invest in up to 10 startups twice a year and you can sign up for their third intake right now. Provided that you can avoid getting shot while walking the streets of Oakland, the opportunity for creating some synergies alongside all the participating companies sounds like a pretty good deal. Many of their startup founders have tech backgrounds coming from companies like SpaceX or Ubisoft and also mainstream consumer brands, like Pepsi Co and American Express.

Green Labs

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Green Labs caters to emerging cannabis startups through their investment arm, The Denver Angels, and offers their expertise in digital marketing, programming and legal strategy. What you might think of as the traditional “live in” incubator is now referred to as “co-working” and usually it means paying some ridiculous monthly fee to work in a room surrounded by people with long beards and skinny jeans sipping organic chai lattes. If you like how that sounds and want to move to Colorado, Green Labs offers a co-working arrangement with prices seen below:

Apart from their accelerator program and co-working space, they also serve as a network that connects startups to events and other entrepreneurs.

Greenhouse Ventures

Greenhouse Ventures’ accelerator program includes up to $2 million in seed or growth capital. The firm selects entrepreneurs who have a track record of success along with a commendable idea and an executable strategy. During the course of the engagement, the company also offers a network of industry experts, serial entrepreneurs, angel investors and an average of $60k in professional services to the startup given they can raise their first round of capital within a year after the demo day. Greenhouse takes an average of 5% equity in each venture in the form of non-voting common stock.

FLI (OTCMKTS:FRLF)

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FLI (OTCMKTS:FRLF) offers a different approach in their accelerator program as they primarily look to utilize their multimedia platforms to expand an emerging cannabis startup’s business. With 15 years of experience in the cannabis industry, the company looks to build strong brands inclusive of services from logo creation, social media engagement, product development and investor relations. They are an over-the-counter (OTC) company though and you know how we feel about that.

Ackrell Capital

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Ackrell Capital is an independent investment bank focused on the cannabis industry that offers a 10-week accelerator program for cannabis startups in cooperation with Vator, Inc., a leading platform for startups and investors.  Apart from capital investment, the CannaVator program will also consist of both virtual and in-person classes inclusive of coaching in various financial governance and human resources development fields. Some of the research they are putting out looks epic. The firm is run by experienced executives that any business would get value from working with.

CannaAngels

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While relatively new to the scene, cannabis firm CannaAngels plans to provide startup founders with services ranging from deal structure and pitch development to marketing and mentorship. Canna Angels Founder and CEO, Sherri Haskell, is an accomplished financial and marketing executive armed with multiple securities licenses, years of deal structuring, capital development, and fund management experience. The advantage of working with a smaller firm is that you get more hands on attention.

Merida

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Merida offers to accelerate enterprise-level cannabis startups that have successfully crossed the “fragmentation gap” and emerged into stable revenue generating growth companies. The firm has been working with cannabis startups since 2009 and investing in cannabis related companies since 2012. Their focus is on primarily 4 distinct domains namely cultivation, infrastructure, data and tech services and pharmaceutical development. If you already have a successful business and you need to scale it, Merida might be worth talking to.

So there you have 8 cannabis accelerators you can approach as the first step towards starting your own cannabis business.

Conclusion

You may have typed “how to start a cannabis business” in Google search and this article popped up. The only way you’ll be able to start a successful cannabis business is by partnering with one of these accelerators. And don’t just expect that you’ll walk in there with your brilliant “idea” and people will fall all over themselves trying to grab a pen to sign your NDA (look it up). You know how much your idea is worth? Fcuk all.

Alongside your idea you will need to have a business plan with financial projections that shows you did some serious research and you’re not some dime-a-dozen “wantrepreneur” who thinks his idea is gold but doesn’t actually want to do the work. You need to say why you’re the right person to execute on that plan. You need to sell yourself as much as you sell the idea. Take that business plan, march into one of these incubators, and convince them you’re willing and ready to learn, and that you’re ready to bust your ass for 14 hours a day to bring your idea to life. That’s how you start a cannabis business.

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    1. Interesting question. It’s highly unlikely that they’re going to offer “growing marijuana” classes at the local community college. Your best best is probably to do a lot of research using Google and then get some hands on practice… provided you live in a State where that is legal.