Common Cannabis Industry Myths
With the growing legalization of medical and recreational cannabis, it's becoming increasingly important to educate the public on what goes on behind the industry's doors.
If the public has a stronger understanding of how the cannabis industry operates, they may feel more inclined to support or invest in the business legally.
The same idea applies to banks. With split cannabis legalization in the United States, the cannabis industry doesn't have access to a full list of banking services. The result of limited bank services is smaller companies not having depository services.
Let's dive into some common myths surrounding the cannabis industry to uncover the facts.
Myth #1: Dispensaries Can Offer Credit and Debit Transactions
In most cases, when a business creates a bank account, they can process debit and credit transactions.
Marijuana dispensaries do not have this luxury.
Top brands of card networks don't allow cannabis transactions on their network. If you're a dispensary owner, the only way around this is to lie about your business's nature—an act that can result in severe consequences that include hefty fines and even jail time.
If you reside in a state such as California where recreational marijuana has been legalized, chances are you're well aware of purchase policy's surrounding debit and credit cards. The best many dispensaries can do at the moment is to offer in-house ATM access for customers.
CBD is currently the only related industry that has access to payment-processing solutions through platforms, including Square.
If you want the convenience of purchasing cannabis with a credit or debit card, supporting marijuana legalization increases the chances of branded card networks accepting transactions through their networks.
Myth #2: The Cannabis Industry Won't Split
Many people are aware that the two main areas within the cannabis industry are medical and recreational use.
What's less commonly known is that these two streams will become increasingly separate as time goes on.
While possessing a medical marijuana card results in lower taxes for the purchaser when visiting a dispensary, research and trends display that medical and recreational marijuana will drift apart due to higher state regulation levels.
State regulation with recreational and medical marijuana wasn't always the case. Back in the 1990s, when California first made medical marijuana legal, the state did not make direct efforts to govern people's medicinal use.
The result of California practicing more of a hands-off approach with medical marijuana during the 1990s was recreational users obtaining medical cards that caused a fusion of the industry's two streams.
As the states become more involved with legal cannabis regulation, the industry's two main streams are becoming more and more separate due to the way each niche is researched. Medical marijuana is based on science and clinical trials, whereas recreational marijuana is based on consumer data and marketing.
Myth #3: Cannabis Industry Growth is Overhyped
The reason why the cannabis industry isn't overhyped lies in the fact that there are numerous health and social benefits linked to consuming marijuana compared to other substances such as alcohol.
Cannabis is proven to help epilepsy, crohn's disease, muscle spasms, and much more. Alcohol is a substance that has been tied to adverse health conditions such as liver disease along with social issues, including partner violence.
With the top ten marijuana companies bringing in $48 billion in 2017, it's clear that things are just heating up within the cannabis industry.
When comparing cannabis to alcohol, marijuana's ability to be produced and sold in multiple forms is one clear advantage that marijuana contains. Sure, you can make edible jello-shots with alcohol, but you can't commonly purchase edible alcohol products, nor is there a public desire to do so.
Experts estimate that marijuana sales will reach the $146 billion mark by 2025. The fact that investors supplied the cannabis industry with $10 billion in 2018 only serves to support this future projection.
There's an idea that cannabis prices will crash, and we're currently in a bubble. Multiple online sources make the sharp point that we're not in a green rush. The marijuana industry has produced statistics and substantial investments that put themselves on course for a steady future growth period.
Myth #4: Outside Branding is More Important Than Inside Branding
The bread and butter of a cannabis company is the product that they're serving.
Sure, flashy packaging helps attract customers' eyes, but what seals the deal with customer loyalty is consistency in quality.
Here's what consumers want in cannabis products:
- Premium quality
- Ease of use
- Wellness image
- Transparent company info
What cannabis consumers don't want is:
- Confusion about what a product presents
- Low quality
- Inconsistent experiences
When companies within the cannabis industry understand what customers want, they can produce and present products that resonate.
When looking to invest in the cannabis industry, look for brands building their identity from the inside out.
Myth #5: Only a Select Number of Brands Are Dominating the California Market
With California currently standing as the center of the cannabis industry within the United States, one might be under the impression that only a handful of products lead the market.
Studies from BDS Analytics reflect that over 15,000 different cannabis products are floating around the California market, with buyers reporting no favorite brand.
One might think this spells bad news for cannabis companies looking to separate themselves from the competition when the opposite is true!
If there's no one clear winner or group of favored products within dominating markets such as California, cannabis companies can build their brand from the inside out and be among the first household names.
Since the growing legalization of medical and recreational cannabis is relatively recent, it's natural that there's a lot of confusion surrounding the marijuana industry.
Without a doubt, banking laws are one of the most complicated topics related to the cannabis industry. As more states continue to fight for legalization, banks should eventually become more aligned with and supportive of cannabis business practices.