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In November 2022, California voters approved a dozen cannabis ballot measures making legal cannabis businesses more accessible throughout the state. As part of running a new cannabis business, owners should follow several steps, including planning a budget. However, creating a budget benefits any cannabis or other business owner.
When building a budget for the new year, there are vital factors you should keep in mind: market competition, costs, and revenue.
Market Competition
As a cannabis business owner, knowing where your product is coming from is important. There may now be more cultivators since more opportunities exist to sell cannabis. However, just because one product is less expensive than another does not mean you should purchase the cheaper product. Do your due diligence, ensuring that the product you want meets your and your customers’ standards.
It is also critical to look at data sources to stay on top of market trends, resulting in better purchasing decisions.
Costs
Like all products, costs are on the rise. From purchasing a product to keeping the lights on in your business, you should be prepared to continue paying more expenses in the new year. When making a budget, plan to spend the same or more on any costs you had this year. You can look at past bills to get an estimate of what the annual cost will be in 2023, and always budget for more rather than less.
Another cost to keep in mind is payroll. California’s minimum wage increases in 2023, so you must abide by those rules. You should also consider whether you need to hire more employees or decrease your staff in 2023. Having a solid grasp of your payroll for the new year can give a good foundation for your budget.
Revenue
Lastly, review your revenue for 2022, how it compares to 2021, and what you anticipate it could be in 2023. This will be the most challenging line item to budget properly, as multiple factors could increase or decrease your revenue. As the adage goes, “It’s better to plan for the worst and hope for the best.” Consider what your “worst-case” revenue may look like and make plans from there.
Questions About Your Budget for Your Cannabis Business?
Legally operating a cannabis business takes a significant amount of work. Staying alert about new compliances and local, state, or federal regulations can be a whole other job. That’s why having a cannabis business attorney is in your best interest.
The team at Purdy & Bailey, LLP is ready to help you with all your cannabis business questions. Let us ensure your business abides by all regulations so you can get back to managing other business operations. Reach out to us online or by phone so we can start working together. (858) 360-7080