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This Article is all about the value of Strategic Partnerships in the Cannabis Industry.
Forward-thinking entrepreneurs have jumped into the cannabis industry in recent years as medicinal and recreational marijuana continues to gain legal status throughout the nation. Scientific studies are showing promise for more uses, causing the demand to rise even more.
But it’s challenging to scale a business, even with growing demand, without creating strategic partnerships within the cannabis industry. With evolving technology and innovation in nearly every phase of the manufacturing process, business owners have discovered the value of working with others to achieve greater success.
The cannabis industry is no longer simply about moving the supply from farms to distribution. Now, in the United States and beyond, adults are using cannabis-infused products for health and well-being. The process has grown more complex and can potentially become much more lucrative — with the right partnerships.
What Is a Strategic Partnership?
Also known as a strategic alliance, a strategic partnership is an agreement between two business owners to work together for a common goal. For example, a hemp grower with fields of flowering plants may enter into a relationship with a person who has a laboratory and an interest in distilling the Cannabidiol (CBD) from the buds, leaves, and other fibrous materials.
This arrangement is not necessarily a legal partnership or an affiliate relationship. It’s often less formal. When two companies both have business assets that can work in tandem to produce a cannabis product for sale, it’s a win-win for all involved.
What Is Required to Start?
Your attorney will likely encourage you to formalize your strategic partnership with one or more business contracts, but that’s not required to begin. These types of arrangements often begin with a handshake, although they can evolve into the creation of a joint venture. It depends on what makes the most sense for your combined success.
You also need to have a reason to begin one of these partnerships. Often, one company can provide another with the ability to reach into new markets, either in terms of geography or a different target audience. These types of relationships can often make or break plans for profits in the cannabis industry.
Tips for Successful Partnerships
Before agreeing to work with another company in a strategic partnership, you’ll want to do your due diligence. What kind of experience and reputation does the person have within the industry? The cannabis business has always been a close network of people, so realistic expectations can grow from careful research and consideration.
For example, My Cannabis Accountant has worked in the industry for years to help business owners with their accounting and taxes. Experts can work with you strategically to provide services that cannabis-focused businesses require.
Finally, you’ll also want to discuss the future with your prospective partner. Determine the structure of the arrangement in detail so that responsibilities such as hiring employees, finding business opportunities, and splitting profits are clear.
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Gain Referrals
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A strong network can provide critical word-of-mouth advertising on either an informal or formal scale. You can create a referral program to draw in the members of your network. Or you can create an agreement that acts as a trade, in which you also refer others to new customers.
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