How to Start an Edibles Business
- sessmith92
- 4 hours ago
- 5 min read
By Samantha Haas
Initially published on potguide.com---- September 16, 2021
In 2020, the edible market as a whole saw a 54% increase, and industry experts predict that the edibles industry is expected to be worth 11.5 billion by 2025. Globally, edibles market makes up 11% of sales in the industry and is currently worth 1.23 billion. With numbers like that, it could be very appealing to start an edible company of your own, but it takes much more than obtaining a business license and setting up a shop in your hometown to get into the edible business. In this article, we break down what is required of someone who wants to start their journey into the edible industry.
Step 1.
Think about where you want your bakery to be and understand the rules and regulations of potential municipalities
It is important to note that not all municipalities are the same. Most require a $5,000 non-refundable application fee just to start with. So, if you’re serious about entering this industry, doing your background research is imperative. Your first step in this process will be looking up municipality ordinances and spending a good chunk of time at planning commission and city hall meetings.
Step 2.
Have your business plan made and all your finances in a row before opening
Like any business, a formal business plan should be made, and in the cannabis industry, most municipalities require it before you can apply for a license. Organization is key here. The more organized you are, the more professional you will appear, which is essential when you’re trying to persuade city officials to support you. From capital requirements to permits, licensing, lawyer costs, and more —there are many expenses and fees that you will be required to pay that you may not think about. On average, the cost of opening a cannabis business starts at $250,000, and that’s before the cost of making your baked goods.
Step 3.
Figure out where you’re sourcing cannabis for your products and what that entails
Do you plan to grow your own cannabis for your goodies, or are you buying products from a licensed grow or extraction facility? If you plan to use cannabis oils in your products, you’ll need to hire an extractor, or if you do these things on your own, you will have to get a separate cultivation or extraction license, which means more regulations and more money.
Step 4
Start the licensing process and know cannabis kitchen regulations.
Regulations for licensing any type of cannabis business may vary, but because our goal is to open a bakery, we’re going to focus on obtaining a processing license. There are a lot of requirements that one is expected to meet to obtain a license and the requirements vary by state. But generally, all states require what is listed below
· All products must be manufactured in a licensed, commercial kitchen
· Applicants’ basic information
· Applicant must be over the age of 21 to apply for a facility license
· Proof of business structure (corporation, LLC, sole Proprietor, etc.)
· Building permit number
· $5,000 security deposit for license
· Proof that a licensed extractor has been employed at the facility to extract cannabis byproduct
· All employees that are a part of the manufacturing process must be ServSafe certified
· Potency of products must be in line with state law
· All items that may become incompliant with state regulations must be removed from shelves and cannot be sold
· License must be renewed annually
· Licensing fees must be paid annually (an average of $2500 per facility)
· Owner of the property, building, and employees cannot have a drug-related crime or have a federal or state crime on their record within the past 10 years
Know the laws and regulations around packaging and advertising.
If you didn’t think the licensing requirements were enough, don’t freight—there are more hoops to jump through regarding compliance around packaging and advertising. And like everything else, these rules vary from state to state.
Packaging
· Childproof packaging is required
· Products cannot be packaged or named in a way where it could be confused with a trademarked candy or baked good
· Cannabis cannot be added to trademarked products to be sold by the processing facility
· Products cannot be brightly colored or be made into shapes that could appeal to children (animals, cartoon characters, etc.)
· Products must not be stored in opaque packaging
All of the following must be printed clearly on all edible packaging:
· Name of product and retail location
· “Made in Marijuhana facility” is stated
· safety and health warning labels
· Facility license and batch number
· All ingredients and potential allergens
· Recommended use-by dates
· Nutrition facts (if available)
· Types of cannabinoids and measurements
· Product identification number as designated through a state-regulated tracking system
· Name and Address of Processing Facility
Advertising
· Advertisements cannot appeal to minors
· A certain percentage of an advertising platform’s target audience must be under the age of 21. This normally ranges anywhere from 30-75 percent.
· Cannot promote excessive use
· Must present if the product poses a significant health risk to the public
· Cannot promote health claims or language that is false, misleading, or deceptive
· Advertisement must not be placed within a designated distance from a school, church, or youth center
· Cannot include direct cannabis-related language
· Cannabis businesses cannot give away free products as a form of advertisement.
It’s clear that starting any kind of cannabis business is easier said than done, but the edible business is particularly difficult because it is so saturated. But if you have the necessary resources, have perfected your recipes, and can think of a way to truly stand out from the crowd, you should be getting a piece of that sweet, edible pie in no time.
Sources:
General
Schaneman, B. (2021, January 11). Edibles Outperform Cannabis Industry Growth in 2020 on COVID-Spurred Sales Surge. Mjbizdaily.Com. https://mjbizdaily.com/edibles-outperform-cannabis-industry-growth-in-2020-on-covid-spurred-sales-surge/
Kovaceich, N. (2019, February 1). The Hidden Costs of Cannabis. Forbes.Com. https://www.forbes.com/sites/nickkovacevich/2019/02/01/the-hidden-costs-of-the-cannabis-business/?sh=4dc5c1fb7da3
Newcomer, L. (2020, November 5). How to Start and Edible Bakery (Ultimate Step-by-Step Guide). Everythingbuttheplant.Com. https://everythingbuttheplant.com/blogs/blog/how-to-start-a-cannabis-bakery
Weisz, B., & Rosenblum, M. (2021, August). Cannabis State-by-State Regulations. Thompsoncoburn.Com. https://www.thompsoncoburn.com/docs/default-source/blog-documents/ranking-of-state-cannabis-regulations.pdf
Edible Laws and Regulations Links
California Department of Public Health. Annual License Application Checklist For Cannabis Manufacturers. Cannabis.ca.gov. https://www.cdph.ca.gov/Programs/CEH/DFDCS/MCSB/CDPH%20Document%20Library/AnnualApp_Checklist.pdf
Michigan Department of Licensing and Regulatory Affairs. August 2021. Requirements and Restrictions on Marijuana-Infused Products; Edible Marijuana Product (Rule 33). Michigan.gov. https://www.michigan.gov/mra/0,9306,7-386-83994-454561--,00.html
475B.090. — Cannabis Regulation. 2020 Oregon (updated). 2020 Reg. Sess. (OR. 2019) https://www.oregonlegislature.gov/bills_laws/ors/ors475B.html
Comprehensive Cannabis Consulting. 2020 Maine Recreational Business Licensing Process for Marijuana Establishments. (n.d.). 3ccannabisconsulting.Com. Retrieved July 22, 2021, from https://www.3ccannabis.com/2020/01/2020-maine-recreational-marijuana-establishment-licensing
P. LaVia. (2020, January 3) Maine Cannabis Regulations: License Applications, Forms, Links and Other Resources. Viridiansciences.com. https://www.viridiansciences.com/blog/maine-cannabis-regulations-license-applications-forms-links-and-other-resources
https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=BPC&division=10.&title=&part=&chapter=15.&article=. (Website is currently down)