CNBC Make It - My cannabis business brings in $800k a month in NYC — here's how the business was born
Combud was established in 2021 after a brainstorming session aimed at entering the cannabis market. The founders faced significant challenges, including the need for a net profitable business history and a conviction record to qualify for a cannabis license. The business started with four members, including two cousins and a minority stakeholder, Carlos. They raised $1.2 million, partly due to high rent demands from the landlord, who required a $400,000 security deposit. This was necessary because American banks are prohibited from banking cannabis businesses, making financial operations more complex.
Key Points:
- Combud was founded in 2021 to enter the cannabis market.
- The founders needed a net profitable business and a conviction record for a cannabis license.
- The team consisted of four members, including two cousins and a minority stakeholder.
- They raised $1.2 million, facing high rent and a $400,000 security deposit.
- American banks cannot bank cannabis businesses, complicating financial operations.
Details:
1. 📜 Birth of Combud: From Idea to Name
- Combud was conceptualized in 2021 during a phone conversation with a friend from Massachusetts, aiming to explore a new market while retaining some parallels with the gym industry.
- The name 'Combud' emerged after a thorough brainstorming session, focusing on the brand's potential impact and identity.
- Specific challenges discussed included differentiating from competitors and establishing a unique brand presence.
2. 📋 Navigating Licensing Challenges
- To qualify for a cannabis license, applicants need 2 years of a net profitable business and a conviction on their record, presenting a significant barrier for many potential applicants.
- These requirements exclude a large pool of candidates who either do not have the business track record or a conviction, thereby limiting opportunities for new entrants.
- The regulations are designed to prioritize individuals with prior convictions to promote social equity, but they inadvertently discourage new, law-abiding entrepreneurs from entering the market.
- To overcome these challenges, potential applicants should consider partnerships with existing licensed entities or seek legal counsel to better understand and navigate the application process.