Starting a Business / Cannabis

The Challenges of Growing a Cannabis Business

This interview can help you understand the economic realities of starting a cannabis business.
VIP Contributor
cannabis, biotech and entrepreneurship reporter
4 min read
Opinions expressed by Green Entrepreneur contributors are their own.

Before migrating to the cannabis industry Amanda Ostrowitz J.D., worked as a regulator. In fact, her last job before co-founding her own marijuana company was at the Federal Reserve Bank of Kansas City.

A few years ago, Ostrowitz decided to leave the banking industry to focus on the cannabis space, founding a tech company that offers a marijuana-focused legal research platform, CannaRegs. In just a few years, her bootstrapped business grew to become a multi-million dollar firm, sought after some of the largest publicly traded cannabis companies out there.

Ostrowitz was recently a guest on Wonder Women Of Weed, a periodical show and column featuring accomplished female leaders in the cannabis industry. At one point, we (co-hosts Javier Hasse and Adelia Carillo) decided to ask her about the main challenges cannabis businesses come across as they scale.

Challenges change constantly. As soon as one gets resolved, the next one pops up, the entrepreneur explained. "I say if I go a week and nothing new (or no new problem) hits, then I must not have done anything that week. Anything you think, as a regular business person, would take you one day to do; give yourself three, because you are going to come into some new obstacles," she said.

Scaling is a lot about giving up control. But, growing is also about taking calculated risks. Even though hiring two new employees could help you make more money, are you ready to expand your workforce? Can you afford it?

This does not mean that you won't make mistakes because, believe us, you will. However, assessing the risk and potential reward of each move will help you minimize the bad decisions.

Courtesy of Amanda Ostrowitz

The banking issue

As you might be well aware, the cannabis industry faces considerable challenges related to banking. While some of the regular banking services (like checking accounts) are available for marijuana businesses, the herb's federal illegality makes access to other services, like credit card payments processing, pretty hard.

Surprisingly, limitations apply not only to plant-touching businesses like cultivators or retailers, but also to ancillary services firms. "I'm the bank girl, the former regulator," Ostrowitz said, pointing out that CannaRegs never touches the plant. "But, we're still having banking issues," she added.

"Our bank is wonderful as far as conventional banking goes, but merchant services have been extremely challenging for us lately. We take credit cards from clients and run them monthly and our merchant services provider cut us off . . . We have enough money coming in each month to pay everyone, but my challenge this week is to figure out how to get it into the bank."

Lessons

"I've learned that I can get anything done if I put my head to it and find the right people. But also, what I've learned is you can't take someone who's not passionate about what you're doing and teach them to be passionate about it," Ostrowitz said, responding to our final question about the biggest lesson she'd learned in her years as an entrepreneur. "You really sometimes have to be okay moving on and building new staff, even when that feels like a painful thing."

But don't worry. She concluded that training new staff and adding new people to your team is always exciting and will bring new life to your organization.

Check out the full interview in the video, produced in collaboration by Benzinga, Industry Power Women and Direct Cannabis Network.

Find more advice on how to scale a cannabis business in Entrepreneur Media's upcoming book, Start Your Own Cannabis Business, available for pre-order on Amazon.

By Javier Hasse
From retailers to growers, producers, and suppliers, there’s a seemingly never-ending list of startup opportunities in this emerging market. In Start Your Own Cannabis Business, marijuana, biotech, and entrepreneurship reporter Javier Hasse introduces forward-thinking entrepreneurs like you to the industry and shares hard-earned tips and success stories from pioneers and visionaries in the marijuana industry.
Learn More

Latest on Green Entrepreneur

My Queue

There are no Videos in your queue.

Click on the Add to Queue next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to Queue next to any article to save to your queue.

Podcasts episodes coming soon for GreenEntrepreneur.com

There are no Podcasts in your queue.

Click on the Add to Queue next to any podcast episode on Entrepreneur.com to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.

This 23-Year-Old Native American Is Boosting Tribal Cannabiz

Entrepreneur Media, Inc. values your privacy. In order to understand how people use our site generally, and to create more valuable experiences for you, we may collect data about your use of this site (both directly and through our partners). The table below describes in more detail the data being collected. By giving your consent below, you are agreeing to the use of that data. For more information on our data policies, please visit our Cookie Policy.

Name Category
Google Ad Serving, Ad Targeting, Analytics/Measurement, Optimisation
Rubicon Ad Serving
Teads Ad Serving
Nativo Ad Serving
Teads Ad Serving
New Relic Analytics/Measurement
Log Entries Analytics/Measurement
Sailthru Content Customization