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Plant Touching vs. Ancillary Cannabis Businesses

Plant Touching vs. Ancillary Cannabis Businesses

Think of a cannabis business and you likely think only of the plant itself: growing, harvesting, packaging, and selling cannabis.  While plant processes may account for much of the day-to-day operations of a dispensary, business owners must understand much more complex aspects of their business: marketing, web development, employee recruitment, legal compliance, and business strategy.  Within the industry, all aspects of the business strictly relating to cannabis plants are simply known as "plant touching", while all aspects of the business not strictly related to cannabis plants are known as "ancillary."  Entrepreneurs who want to strike it rich in the "green rush" need to know how to prioritize each separate aspect of their operations.

Plant Touching Cannabis Businesses

Plant touching businesses oversee everything "from seed to weed", from the choice of soil for the initial plants all plant touching cannabis businessthe way to the sale of the final flower.  A mom-and-pop cannabis shop may have a single person performing multiple roles, while a larger dispensary will have individual professionals assigned to oversee each aspect of growth and development.  A small company has the benefit of flexibility, able to pivot from one aspect of cultivation to the next as it comes, but as a company scales, they may need to invest more resources into each division so that all aspects of plant touching can go ahead without interruption.  

Types of Plant Touching Businesses:

  • Breeding: focusing on how to cross strains, clone plants, or enhance chemical output (such as THC or CBD content), the breeder is the first link in the chain of a cannabis sale. They may be connected to a particular dispensary, or they may "freelance" by creating new strains and selling them to the highest bidder.
  • Cultivating: ensuring that plants grow large, healthy, and potent, the cultivator is the botanist (professional or amateur) who sees to the development of adult plants from seeds or spores. Given the number of regulations, both state and federal, that fall on the growth of cannabis, the cultivator may need to adhere to the most laws of any person in the plant touching business.
  • Dispensing: selling the actual product to the customer, the dispensary may have the most employees and the most operational scope. These are the customer-facing presences of the cannabis industry, responsible for ensuring quality experiences and retaining customers.
  • Extracting: By taking the chemical compounds within cannabis and applying them in another form—like an edible or an oil—the extractors perform some of the most complex tasks in the industry. They are almost always trained chemists and scientists who understand how to make certain the manufacturing process adheres to quality standards.

Pros and Cons of Plant Touching

The greatest benefit of the plant touching business is that it takes all of the profits: a dispensary owner can pocket as much of the extra money as they desire, or they can reinvest the profits and scale their business.  By contrast, they also take the most risk: if a crop fails, their shelves and cash registers may be bare.  Plant touching also involves more regulation and legal processes, ensuring that every employee in the different operations must be 100% clear on their responsibilities.

Ancillary Cannabis Businesses

ancillary cannabis businessIn the 21st century, very few businesses exist without the help of other businesses and the cannabis industry is no exception, relying on partners and vendors for business-to-business (B2B) operations.  Few dispensary owners have the time, budget, or manpower to plan their own advertising, process their own payments, analyze their own data, file their own paperwork, and appear in court to represent themselves.  Here is where ancillary businesses support the industry.

Types of Ancillary Businesses

  • Marketing: brand recognition is half the battle, especially in an emerging industry like cannabis.  Each dispensary needs the help of a marketing agency to plan everything from their company logo to their advertising campaigns.
  • Legal: law firms that specialize in cannabis regulation are growing nearly as fast as dispensaries, as more and more shops turn to attorneys for support.
  • Payment processing: while some dispensaries get by with nothing but cash, increasingly relaxed laws make it possible to pay with debit cards or digital currency, necessitating a point of sale solution. 
  • Accounting: every business generates paperwork and cannabis is no exception.  Accountants help to balance the books, file taxes, and ensure that profitable operations continue while operations in the red are brought to an owner's attention.

Pros and Cons of Ancillary Businesses

Ancillary businesses don't need to worry very much about the tides of business; their rates are usually the same for a dispensary as they would be for a restaurant or a hardware store.  Some may have to pay attention to regulation, while others have none to deal with.  Some cannot depend on cannabis customers for their livelihood and must expand into other industries.

Plant Touching or Ancillary? It's Up To You

An entrepreneur interested in getting into the cannabis industry doesn't necessarily need to purchase a lot of soil and showroom space.  They can enter into an ancillary business that supports a dispensary if it better suits their strengths and strategies.  However, those in the plant touching business of the cannabis industry will have the most direct contact with the plant itself, and will gain the most reward from the grow.


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Posted by Canna Business Team



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