As anyone in the burgeoning cannabis industry knows, running a direct cannabis business is no simple feat.
According to 10buds, a website dedicated to all things cannabis, cannabis start ups "now face the important tasks of hiring, retaining, training, and paying trustworthy, knowledgeable staff in increasing numbers" on top of the typical challenges that befall any new business.
This is why ancillary cannabis businesses—companies that support cannabis producers and retailers without touching the plant itself—are such vital partners to have: They can offer those services your company can’t, like legal, accounting, financial, human resources and other services, in a mutually beneficial way, thereby bolstering your company and the industry at-large.
As one of the only firms in the nation to offer cannabis 401(k)s and retirement benefits, Leading Retirement Solutions (LRS) is a key ancillary partner and one that is well aware of the myriad of benefits ancillary networks provide the industry. In particular, getting involved with strategic ancillary teams can increase your organization’s knowledge, the value of your services, and your market exposure.
Ancillary Partnerships Increase Your Expertise
When it comes to rules and regulations, cannabis is one of the most complex and ever-changing industries. Though cannabis is still illegal at the federal level, several states around the country have legalized cannabis for medical use, or for both medical and recreational use. The gap in federal and state laws as they pertain to cannabis, means that the federal government and each pro-cannabis state handles cannabis oversight differently.
These complex laws can hinder any cannabis businesses looking to grow. After all, the more complex a regulatory framework, the more understanding it takes to establish effective services within that framework—expertise some companies may not be able to gain quickly on their own. This is where ancillary service providers can make all the difference, by increasing expertise and access to services in the industry, and allowing direct cannabis companies to compete for hires in the same way everyone else does.
“It’s well known that the cannabis industry is underserved when it comes to business services. Our team is made up of experts in tax/regulatory compliance, HR, Payroll and benefits; this accompanied with strong business acumen,“ said Marc Rodrigues, CEO of Greenleaf. “In my opinion, that’s what our clients appreciate most about Greenleaf, our expertise and willingness to go above and beyond.”
Greenleaf, which offers payroll and HR consulting services, collaborates with Leading Retirement Solutions in offering benefits for cannabis organizations. This collaboration allows LRS to move beyond the investment management space and add more full-fledged payroll and human resource support to our service offerings. Likewise, Greenleaf benefits from LRS’s expertise in the complex space of legal cannabis 401(k)s. By working together, both companies can proceed with confidence and expertise in those areas they don’t specialize in individually, while also giving their clients access to additional services for their businesses.
“Maintaining industry affiliations continuously allows us to stay up to date with national and state regulations,” says Joshua Mastel, Director of Financial Planning for Twenty Twenty Investment Advisors, and another associate of Leading Retirement Solutions. “What we have found is the industry is maturing and with that comes expectations from regulatory agencies that cannabis companies be held to similar standards as all other industries.”
Ancillary Partnerships Create a Better Value For Everyone
A strategic affiliation with another ancillary service, like Leading Retirement Solutions, which already has expertise in retirement plan administration among direct cannabis producers and retailers, can help your company meet the expectations of a maturing industry without the challenge of administering these services first-hand. Ancillary networks also offer a great value to each individual entity, and ultimately, to the customer.
“Some businesses find that they can save money by using an ancillary business to perform duties that were once performed in-house,” reports the Small Business Chronicle. “For example, it may be less expensive to pay another business to perform risk management, quality control, safety, supply management and food services than to pay employees to do the same thing. In addition to saving on hiring and retention costs, businesses know that they don't have to invest time in training an ancillary business to perform a particular duty.”
In addition, to the value these partnerships offer each entity, ancillary networks provide cannabis customers with a one-stop shop when it comes to access to many of the additional services they need to run their business. And because these entities are already leveraging their network’s resources and capabilities at a reduced cost, customers also save on the services.
For instance, through their strategic collaboration, LRS, Greenleaf Business Solutions, and Twenty Twenty Investment Advisors can offer more robust, efficient, and cost-effective service packages to their cannabis clients.
“In collaboration with a small group of select 401k service providers, we offer investment advisor and investment management services to cannabis company 401k plans,” said Mastel. “We also provide consultation with our cannabis clients to help them find HR solutions, payroll providers, and an array of other business needs. We are also excited to be working closely with Greenleaf Business Solutions to offer [their clients] a... streamlined, cost-effective, pre-built retirement plan solution.”
Ancillary Partnerships Can Expand Your Market
One of the biggest challenges for new cannabis businesses is the steep competition on the market. Hence, it’s essential that new cannabis companies do what they can to stand out and grow their audience—which is another way strategic ancillary partnerships can give your company a leg up.
Strategic partnerships help ancillary and direct cannabis companies grow their customer bases and create new revenue streams, through the sharing of contacts and resources.
“66 percent of senior executives view increased revenue as a primary advantage of successful partnerships,” reports Powerlinx’s blog. “When their strategic objectives align and their resources complement each other, business partners can provide each other new market access and, in turn, new revenue streams.”
What’s more, these sorts of partnerships require limited investment—and don’t jeopardize a brand’s equity—while still affording each company a larger customer base. As Startup Nation reports, “The beauty is that each partner has their own brand equity, but the brands aren’t direct competitors, allowing each access to one another’s existing customer-base and marketing resources that they otherwise would not have.”
Partnerships can also have a legitimizing effect on your brand—particularly in a stigmatized industry like cannabis. Depending on the stature of one or both of the brands looking to partner, partnerships can quickly elevate a brand’s reputation, which holds a ton of value in cannabis. Many customers may still be hesitant or worried about purchasing cannabis or hemp products due to a bad experience with a company, so if a company can align itself with another cannabis brand that is already in good standing with customers and fellow businesses—that can be a major benefit for your business.
Hence, through collaborating with an ancillary cannabis company like Leading Retirement Solutions, your company—whether it’s ancillary or direct—gains expertise in traditional and non-traditional investment strategies, retirement plan administration, and other services that you may not have been able to offer previously. This also bolsters the value of your services and the size of your customer base, giving your cannabis company the tools to grow and profit in a budding industry.
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