Ancillary cannabis businesses: beyond the plant-touching boundaries

Last updated on: 
April 10, 2024
Created on: 
October 10, 2023
Rebecca Lowe, Founder of Joyflo
Images collage of various ancillary cannabis businesses.

The cannabis industry has undergone a remarkable transformation in recent years, moving from the shadows of prohibition into the mainstream.

As more states and countries legalize the use of cannabis for medicinal and recreational purposes, an entire ecosystem of businesses has emerged to support this snowballing industry. Among these businesses, ancillary cannabis businesses, often referred to as "non-plant touching" companies, play a crucial role.

So, what are ancillary cannabis businesses, exactly?

Well, just in case the title of this article doesn't speak for itself, ancillary cannabis businesses are companies that provide products or services to support the cannabis industry but do not directly touch or handle the cannabis plant itself. Unlike licensed cultivators, processors, distributors, or dispensaries, ancillary businesses do not grow, process, or sell cannabis products. Instead, they focus on various facets of the industry that are essential for its operation, growth, and compliance.

The importance of ancillary cannabis businesses

Ancillary cannabis businesses are the unsung heroes of the cannabis industry, playing a pivotal role in its success and growth. Here are some reasons why these businesses are essential:

  1. Legal and regulatory compliance: The cannabis industry is heavily regulated in most jurisdictions. Ancillary businesses provide valuable services that help cannabis companies navigate these complex regulatory frameworks, ensuring compliance with local and state laws.
  2. Innovation and technology: Ancillary businesses often pioneer innovative technologies and products that enhance the efficiency and quality of cannabis cultivation, processing, and distribution. These innovations drive the industry forward.
  3. Ancillary revenue streams: For investors and entrepreneurs looking to enter the cannabis industry without directly handling cannabis, ancillary businesses offer lucrative opportunities. They allow individuals to participate in the industry's growth without the risk associated with plant-touching operations.
  4. Job creation: Ancillary cannabis businesses create jobs in various sectors, including software development, marketing, legal, and more. As the industry expands, so does its job market, benefiting local economies.
  5. Diversification: Ancillary businesses provide diversification within the cannabis industry. They mitigate risk by offering products and services that cater to various aspects of the supply chain, from cultivation to consumer education.

Examples of ancillary cannabis businesses

Now that we understand the significance of ancillary cannabis businesses, let's delve into some examples of these companies:

1. Software and technology providers:

  • Seed-to-sale tracking systems: Companies like Metrc offer software solutions that help cannabis businesses maintain accurate records of their inventory, sales, and compliance with regulations.
  • Dispensary management software: Businesses like Flowhub provide software tools that streamline dispensary operations, including inventory management, customer relationships, and compliance tracking.
  • Digital growth platforms: Companies like Tymber help grow cannabis businesses revenue and stand out from competition with a beautiful website, integrated e-commerce and powerful marketing.

2. Packaging and labeling companies:

  • Custom packaging design: Businesses such as KushCo Holdings offer creative packaging solutions that meet regulatory requirements and enhance brand visibility.

3. Payment providers:

  • Fintech and Web3: Startups such as Stronghold® provide a trusted solution to cannabis businesses to eliminate the hassle of physical cash handling and experience the benefits of offering electronic (ACH) payments. Stronghold's Rewards Program offers their partnered merchants a point for every dollar transaction processed through their platform, which can be redeemed for Stronghold’s SHx digital tokens.

4. Security services:

  • Alarm systems and surveillance: Security companies like Solink provide state-of-the-art security solutions to protect cannabis facilities from theft and unauthorized access.

5. Testing and quality assurance:

  • Cannabis testing labs: Facilities like High North Laboratories analyze cannabis products for potency, contaminants, and quality. They help ensure consumer safety and compliance with regulations.
  • Quality control equipment: Manufacturers like Agilent produce laboratory instruments used in cannabis testing, including gas chromatographs and mass spectrometers.

6. Marketing and branding agencies:

  • Digital marketing: Agencies such as Cannabis Creative Group specialize in digital marketing strategies tailored to the cannabis industry.
  • Brand development: Creative firms like Wick & Mortor help cannabis businesses establish strong, compliant branding that resonates with their target audience.

7. Legal and consulting services:

  • Compliance consulting: Firms like Vicente Sederberg LLP provide legal advice and consulting services to cannabis businesses, helping them navigate complex regulatory landscapes.
  • Financial services: Cannabis-specific banks, such as Safe Harbor Financial, and financial advisors assist with banking and financial needs, as traditional banks often hesitate to work with the industry.

These are just a few examples of ancillary cannabis companies. And even though these businesses may not cultivate, process, or sell cannabis products, their impact on the industry is undeniable. These companies provide essential services and products that ensure regulatory compliance, drive innovation, and contribute to the overall growth of the cannabis sector. As the industry continues to evolve and expand, ancillary businesses will remain a vital component, offering opportunities for entrepreneurs, investors, and job seekers while advancing the cannabis industry as a whole.

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