How to start a pre-roll company

Getting your foot in the door of the cannabis business is a twisted path, ridden with regulations, razor-thin margins, and a customer base that expects premium quality and consistency every single time. But it isn’t that you can’t do it successfully.

If you’re planning to enter the marijuana pre-roll scene in the United States, there’s a way to hit the ground running. Below is a clear guide on how to start a pre-roll company from scratch.

Decide on the type of pre-roll business you want to build

Do you want your brand to be on dispensary shelves across California? Or are you planning to produce white-label joints for other cannabis companies? The type of pre-roll operations you launch will determine the licenses you need and your startup costs.

There are typically two main routes: becoming a branded marijuana pre-roll company or a contract manufacturer. A branded business creates its own product lines and does all the sourcing and packaging. A contract manufacturer handles bulk production for other cannabis brands. 

Decide what your company will be as soon as possible. You can’t proceed without figuring this out first.

Dig deep into the legal and licensing landscape

You don’t get to power up a single machine or roll a single joint until the paperwork is handled. The challenge here is that every state plays by its own rulebook. What works in Colorado is prohibited in Arizona and vice versa. This applies to licensing, zoning, and facility inspections. 

The cannabis world in the US is built on layers of approvals and forms that stack up faster than your pre-rolls ever will. Take Michigan, for example. To legally operate in this state, you have to apply for a pre-roll production license and a local business permit. California? You may need multiple overlapping licenses depending on the size and scope of your business.

And don’t assume these licenses come cheap. You could be looking at thousands of dollars before your business even exists on paper because of:

• The costs of hiring legal specialists
• Background check fees
• Zoning approval fees
• Application costs

Before you start a pre-roll company, a smart idea is to scrutinize cannabis regulations in your chosen state. There’s no way around the rules here. You should get familiar with marijuana licensing and other requirements without assuming that Google or ChatGPT will cover all your bases.

Rent a compliant location

Your cousin’s empty warehouse won’t cut it unless it’s properly zoned for cannabis processing. In every state where marijuana is legal, pre-roll companies are restricted to specific zoning areas. Some municipalities require multiple areas for distinct operations, while others will force you to invest in odor control systems or keep a certain distance from schools and churches.

Once you’ve found the right property, make sure it meets your state’s environmental and operational guidelines. In some US territories, you have no other choice but to submit site plans and undergo inspections carried out by multiple government agencies before you can even paint a wall. 

And don’t forget that your lease must explicitly allow for marijuana processing. Some property owners may be reluctant to rent out their facilities to pre-roll companies because of federal risks.

Buy equipment

We’re getting closer to the actual pre-rolls. But before your joints get filled, you need fully equipped facilities. The machinery you choose will shape your output. If you’re producing at scale, expect to pay $30,000 to $100,000 on:

• Commercial-grade filling machines
• Cone loaders
• Grinders 
• Packaging systems

Additional investments may be necessary to ensure quality control and put your pre-rolls to the legally required potency, mold presence, and other tests.

Source high-quality cannabis and define your product line

Even the best equipment can’t save you from bad flower. In the marijuana pre-roll industry, quality starts and ends with the input material. Your source flower determines:

• Flavor
• Burn quality
• Smoothness
• Customer satisfaction

Do you want to produce 100% flower joints or go the mixed route with trim and shake blends? Are you infusing your pre-rolls with rosin or kief for a supercharged effect? Make those decisions early, as they’ll shape your entire brand and price points.

Once you know what pre-rolls you’ll make, assess suppliers and their growing practices accordingly. Make sure they willingly provide COAs and other certifications. Remember, you’re launching a company, the success of which depends on product consistency. One batch of moldy weed and your reputation crumbles. You should find a supplier that realizes that and can provide you with consistently high flower quality.

Launch, distribute, and adapt

Getting your pre-rolls into dispensaries is a grind. You’ll need to work with distribution partners (they must also be licensed) and retailers. Besides, you’ll have to ensure rock-solid inventory management to facilitate your distribution processes.

Depending on the state, sales may require tracking through a state-mandated seed-to-sale system. In other words, you’ll have to scan your inventory into Metrc or BioTrack and keep real-time audit records. 

Be prepared to adjust because the demand will fluctuate. Buyers may ghost you at some point, as other companies will try to push you out with price wars.

Budget for taxes, slow pay cycles, and banking hurdles

The moment you start a pre roll company, you’ll balance between your legal business and federal illegality. This brings many headaches unknown to other industries. 

Most banks won’t accept your money. You’ll probably have to work with a cannabis-specific credit union while paying fees for the privilege.

Taxes are brutal. Due to IRS 280E, pre-roll businesses can’t deduct many normal business expenses. Factor that into your pricing model early. 

And don’t expect dispensaries to pay on delivery. Many operate on net-30 or even net-60 terms. If your cash flow is tight, you’ll need financing, but cannabis lending is still immature.

Start a pre-roll company and turn to MYLARMEN

Unfortunately, MYLARMEN is not a legal team, so we can’t walk you through company registration and license application procedures like legal experts. What we can do, though, is to make the presence of your newly established marijuana pre-roll company felt in the industry.

Once you’ve set things up, take advantage of our branding, product design, and packaging services tailored to cannabis businesses.