Many entrepreneurs are making the bold move of entering the cannabis industry by opening their own dispensary and/or other operations. Starting a business in this industry is a huge investment that can generate revenue, but can also be confusing, tricky, and hard to navigate.

Gaining entry into the cannabis market is a business venture that must be well planned. This is not a decision to make in haste and requires professional assistance, financial planning, and precautionary steps to be successful.

The following information was created for those starting a cannabis business, or who are already in operation, to help them avoid the barriers that exist.  We will examine these obstacles reveal solutions that can effectively combat these barriers.

Financial Barriers

Cannabis Business Entry Barriers

The costs to start up and operate a cannabis business are excessive in all sectors. Fees are based on your geographic location and can include:

  • Property Leasing
  • Licensing (Initial and Renewal)
  • Attorney Fees
  • Product Inventory
  • Employees

These costs can be excessive and potential business owners must be financially prepared for these expenses.

Securing Funding

Cannabis Business Entry Barriers

It is difficult to secure any traditional funding for a cannabis-related business. This is because marijuana is only legal on a state level. Because it is illegal federally, major financial institutions consider the investment to be high-risk and will not provide financial services or funding.

Interested Entrepreneurs must be prepared for this fact and expect high-dollar start-up costs that will have to be out of pocket.

Excessive Taxes

Cannabis business taxes

It is also crucial that you educate yourself on your local, state, and federal marijuana tax regulations. Not accounting for the high tax rate for cannabis business operations is the most common reason that business ventures fail.

Tax rates for marijuana vary greatly based on the location of your business and whether sales are medical or recreational marijuana. The majority of states charge an excise fee for cannabis purchases. This is lower and in some cases non-existent for medical marijuana purchases.

It is crucial that you educate yourself on location-specific tax laws and account for these fees in the price of your inventory.

Additional Barriers

Business entry barriers for cannabis businesses

There are additional barriers that cannabis businesses experience after the start-up of their operations. It is important to be aware of these potential issues so that you can avoid them.


Check with an attorney and local laws regarding the legality of your potential cannabis business location. There are area-specific laws in place that prohibit marijuana businesses within a specific number of feet from educational facilities and other establishments.


It is crucial that you ensure that the owner of the building you lease is aware that your business is within the marijuana industry. Not all property owners are okay with these operations. Being dishonest with the property owner would be a poor decision that could potentially result in large financial losses.

Record Keeping

The IRS is aware that it is difficult for cannabis industries to secure financial solutions through traditional banks. For this reason, the IRS specifically targets these businesses and searches for indiscretion. It is critical that you keep extensive records regarding all sales. An audit that discovers dishonest financial transaction records would result in excessive fines with the potential to destroy your business.


Effective marketing is another common issue for the industry. It is illegal to broadcast advertisements for marijuana on television and the radio. Business owners have to be creative and develop a marketing plan that reaches the maximum consumer base.

Successful cannabis marketing campaigns should include:

  • SMS and Email Marketing
  • Social Media
  • SEO Focused Website Design and Content
  • Encourage Customer Reviews
  • Reward Loyal Customers
  • Word-of-Mouth

You should also evaluate the marijuana market in the area you are considering to establish your business. Evaluate the demographics to get an idea of the demand in the region. You should also visit the websites of local competitors for ideas and information that can potentially help your business stand out.

Payment Solutions

Obtaining payment processing is another barrier that makes it difficult for dispensaries to succeed. Customers seek a variety of fast and reliable payment options that many dispensaries are failing to provide. This is an avoidable barrier that must be combated for businesses to succeed.

There are industry-specific services, such as the financial services provided by Paybotic, which provides their clients with custom-designed payment solutions for their unique business needs.

Combating These Barriers

Cannabis Business Entry Barriers

The most important thing that those who are interested in opening a dispensary need to do is to develop a business plan that accounts for all of these barriers. Financial barriers must be accounted for, including licensing fees, renewal fees, taxes, etc.

Hire a Cannabis Account

The excessive tax rates that the government places on marijuana dispensaries are the top reason that businesses fail.  It is critically important that dispensary owners hire an accountant who specializes in the cannabis industry. These professionals are experienced in location-specific tax laws and can help business owners find legal tax loopholes to reduce their tax burden.

Acquire Legal Assistance

It is also important to hire a lawyer who is experienced in the industry. This will help you remain compliant in all aspects of your business, which is crucial to avoid hefty fines that could result in grave financial loss.

In conclusion, the best way to combat these barriers is to acknowledge that they do exist and prepare yourself to combat them. Many of these issues can be avoided with adequate preparation and acquiring the services of experienced professionals to assist you in your venture.

Contact Paybotic Today

cannabis payment processing system

Paybotic provides their clients with fast, effective, and affordable payment solutions that meet their specific business needs. They use their in-house developed advanced tools and services to make cannabis payments easy.

Contact Paybotic today if your start-up or an established business needs financial solutions. You can visit them online for more information about their services.


Post date: 10/17/2021
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