May 07, 2020 11 min read

By Laura Newcomer

Legal cannabis is spreading across the U.S. To date, 11 states have legalized recreational cannabis use, while 33 allow for the use of medical marijuana.  

That means if you’re looking to start up a cannabis-related company, you have more locations to choose from than ever before. It was less than a decade ago that cannapreneurship required a  move to either Colorado or Washington, which were the only two states to legalize recreational cannabis back in 2012. Now, states and cities across the country are opening their doors to this budding industry. 

All that choice creates more opportunity, but it also creates a challenge: How do you narrow down those options and settle on the best place to plant your new company’s roots? 

In our view, the best city to start a cannabis business is one that:

  • Has legalized your intended niche within the cannabis industry (for example, some municipalities allow for cultivation while limiting retail dispensaries, and vice versa)
  • Has a residential and/or tourist community that’s interested in cannabis and cannabis-related products
  • Has an overall vibe that suits your company’s brand and aesthetic 
  • Ideally, has programs and funding options in place to uplift cannapreneurs of all stripes 
  • Isn’t insanely saturated already 

With those criteria in mind, we set our sights on hunting down some of the top weed-friendly cities in the U.S. for starting a cannabis business. 

A Note on Methodology

Before we dive into our roundup of weed-friendly U.S. cities, we wanted to take a moment to familiarize you with our reasoning behind the selections you’ll find here. 

In this roundup, we ruled out a lot of the best-known cannabis industry hubs, because they tend to be some of the most competitive places to start a new company. Here’s looking at you, Boulder, Denver, LA, Portland, San Fran, and Seattle!

We also ruled out locales in Massachusetts and New York, even though cannabis is legal in both states. That’s because Massachusetts is undergoing a notoriously slow rollout at the moment, and a lot of young companies are finding themselves tangled up in bureaucratic gridlock. If you’re patient enough to ride that out, by all means go for it! But you might not find the warmest welcome from Massachusetts cities at this point in time. Meanwhile, New York is known for having strict limitations on the cannabis industry and is outrageously competitive as a result. 

You might also notice that we haven’t selected any cities in the state of Washington, even though it has one of the longest-running cannabis industries and boasts plenty of consumer demand. That’s because as of the time of writing, many new licenses are not being accepted. While Washington might be a great place to run a cannabis company, the state as a whole is not currently super welcoming to newcomers.

Capeesh? Now that we’ve got that out of the way, let’s dive into our picks!

The 14 Top Weed-Friendly Cities in the U.S. to Start a Business

1. Bangor, ME

In 2016, Mainers voted to legalize the recreational use and retail sale of cannabis, but it’s taken some time for the legal industry to get up and running. While municipalities have the option of voting to ban recreational marijuana, the industry is now mushrooming across the state, with the first legal marijuana businesses slated to open their doors this spring

In Bangor, demand for cannabis and cannabis-related products is especially high. The small northern Maine city ranked #7 on Medical Marijuana Inc.’s listof cities most interested in cannabis, and it’s home to a number of annual tourist events that temporarily enlarge the city’s population (and client base). 

Medical marijuana stores are already up and running in the city, but there’s a huge opportunity to get in on the ground floor of the nascent rec market. Maine marijuana businesses will also enjoy less competition and lower taxes than companies that try to set up in already saturated states. 

2. Chicago, IL

Compared to most of the other states represented here, Illinois’ legal cannabis market is barely out of the fetal stage. As of January 1, Illinois consumers aged 21 or older can purchase cannabis from licensed sellers. For now, medical marijuana dispensaries are the only businesses legally permitted to sell rec, but the state plans to issue additional licenses by the middle of this year. 

All told, hundreds of dispensaries are expected to open their doors between now and 2022. Not only does this open up retail cannabis opportunities, but it also creates a huge landscape of other business opportunities, from cultivation and processing to transportation and ancillary product sales. 

Anyone looking to hop in on the ground floor of Illinois’ cannabis boom will find a welcoming home in the Windy City. The legalization bill included strong social justice reforms that aim to undo some of the wrongs caused by the War on Drugs. (To wit, the bill expunges the records of hundreds of thousands of Illinois residents who were convicted under previous laws.) In Chicago, any aspiring entrepreneur from an area that was disproportionately affected by the War on Drugs will enjoy a leg up when applying for a cannabis business license. 

No matter where you hail from, the city is open to business from all members of the cannabis trade, from dispensaries and craft growers to infusers, transporters, and cultivation centers. 

3. Chico, CA

In general, California is a land of rich opportunity for anyone looking to make a career in the cannabis industry. The Golden State was the first state in the country to legalize medical marijuana way back in the 1990s. Since then, Cali has gone on to legalize recreational cannabis in 2016, and it remains one of the major hot spots for cannabis enthusiasts and cannapreneurs alike. 

Chico is a smaller Northern California city that boasts high demand for cannabis and related products. It ranked #9 on Medical Marijuana Inc.’s survey of U.S. cities that are most interested in cannabis, and it’s home to Cal State University Chico — all but guaranteeing weed-friendly patronage.

Even though recreational cannabis has been legal in California for several years, Chico is still sorting out its entree into the world of rec. This means there’s an opportunity to be one of the businesses that will pioneer the presence of legal cannabis in Chico. Competition for dispensary permits will be fierce, as the town intends to hand out a mere four licenses. But there are no limits on businesses that are focused on delivery, distribution, manufacturing, or testing. 

Anyone seeking to open up a weed-related business in Chico must comply with both state and local regulations. At the state level, laws are handed down from Cali’s Bureau of Cannabis Control

4. Eugene, OR

Eugene has long had a reputation as a hippie enclave, so it probably comes as no surprise that its residents are known for their affinity for cannabis. The third largest city in Oregon is also home to the University of Oregon, so the college student demographic is well represented.  

Retail marijuana is already a thriving industry in Eugene, and the city’s cannabis-related laws are much more lax than in a lot of places. Case in point: Recreational Retail Marijuana Stores don’t even need to obtain a business license from the city. 

So if you’re looking to set up shop in a relaxed business environment and in an area where a healthy client base is all but guaranteed, Eugene is a very safe bet. Bonus: Oregon’s tax rate for cannabis businesses is significantly lower than that of its Washington neighbor up north. 

5. Eureka, CA

While cannabis businesses are thriving in urban centers across California, aspiring cannabis business owners shouldn’t rule out smaller cities in the state. Case in point: Per the survey from Medical Marijuana Inc., the residents of the small city of Eureka, in Northern California, have demonstrated the highest interest in cannabis of any city in the U.S. 

Translation? This town has a guaranteed interest in cannabis businesses. 

Perhaps not surprisingly, Eureka is situated in Humboldt County historically and currently one of the largest hubs for cannabis production. The County is also the recipient of a cannabis equity grant that funds equity programs in the industry, which makes it a more inclusive environment for folks who might not be entering the industry with a ton of privilege behind them.

As it does pretty much everywhere, opening up a cannabis business in this county requires a highly involved application process. You can learn more about that process on the Humboldt County government website

6. Fairbanks, AK

Looking to start a cannabis business that’s a little off the beaten path? Consider Alaska, which legalized marijuana back in 2014. 

While The Last Frontier doesn’t promise high population density, the state’s cannabis industry is nevertheless on track to hit $100 million this year. All cannabis business types are welcome, and they’ll benefit from the absence of income and sales taxes

Not only does Fairbanks boast plenty of local demand — one survey found that nearly 15% of the local population owns up to marijuana use — but it’s also a tourist hot spot that draws in crowds of would-be cannabis users. 

You can find a detailed explanation of the marijuana business application process on the state’s Alcohol and Marijuana Control Office site. Also be sure to check out the state’s answers to its most frequently asked marijuana-related questions.

7. Fort Collins, CO

Colorado has long been a site of pilgrimage for cannabis enthusiasts and entrepreneurs. As one of the first two states to fully legalize recreational marijuana back in 2012, Colorado’s cannabis industry is far more established than in virtually any other state. While Denver is the state’s cannabis hot spot, there are tons of opportunities (and cheaper real estate) to be found in cities just a bit further from the beaten path. 

Case in point: Research from Cheat Sheet suggests that more than 13% of Fort Collins residents — which include students at Colorado State University — enjoy partaking of the ganj. And that’s to say nothing of the more than 7 million tourists who traipse through the city each year. 

With all that demand, it’s a good thing the city permits recreational cannabis licenses! There’s just one catch: Only existing medical marijuana businesses can apply for retail marijuana store licenses at this time. But that still leaves plenty of opportunity for cannabis companies of all other types to sprout up within the Fort Collins ecosystem. 

Learn more about the cities’ marijuana-related rules and regulations on the City of Fort Collins website.  

8. Grand Junction, CO

Grand Junction is a Colorado town on the Western Slope with approximately 63,000 residents. It’s starting to draw comparisons to Boulder before Boulder became huge, which is another way of saying that it’s got a pretty 420-friendly population. The town sits at the heart of Colorado’s wine country and offers tons of access to the great outdoors, making it a desirable locale for long-term residents and short-term visitors alike. 

Grand Junction is so friendly to cannabis businesses that Colorado’s Marijuana Enforcement Division (MED) has opened up an office in town. Check out our comprehensive guide to starting a marijuana growing business in Colorado, or head to MED’s website to learn more about what it takes to launch a different kind of cannabis business in the Grand Junction area. 

9. Klamath Falls, OR

Like Eugene, Klamath Falls residents have demonstrated remarkably high interest in marijuana use. This means the southern Oregon town of approximately 21,000 people offers up a built-in client base for any cannabis enterprise. It’s also located just 56 miles from the small town of Medford — another town with a reportedly high interest in cannabis — and not much farther from Gold Hill, the home of Oregon’s first medical marijuana dispensary. 

While Medford does not permit the retail sale of cannabis, Klamath Falls has several authorized dispensaries. No matter the type of business you’re hoping to operate, this region is ripe with demand for cannabis and cannabis-related products. 

When opening up a business, you’ll need to adhere both to local laws and state licensing requirements. As a general rule, Oregon marijuana laws — which have permitted recreational marijuana use since 2014 — tend to be fairly friendly to cannabis businesses. 

10. Oakland, CA

Oakland is home to a burgeoning startup scene, and that includes emerging businesses in the cannabis space. It’s also one of the most progressive cities around when it comes to cannabis business regulations and supportive programming. 

The city boasts a robust equity program to support aspiring cannapreneurs who might otherwise lack the social or financial capital to start up a business on their own. Depending on the business in question, the city’s equity programs might provide technical assistance, employee training, and more. It’s also home to multiplecannabis incubators

Those looking to start up a cannabis-related business in Oakland will need to adhere to both local and state regulations. Learn more about the licensing process on the City of Oakland website

11. Redding, CA

If you like the idea of operating within a smaller Northern California city but are looking to enter a more established market than you’ll find in Chico, then drive about 1.5 hours north to the small city of Redding. 

There, you’ll encounter a population filled with cannabis enthusiasts. (Redding tied with Chico for the #9 spot in Medical Marijuana Inc.’s roundup.) You’ll also find a government that’s already got some cannabis industry experience and a clearly defined ordinance under its belt. 

Under various circumstances, Redding allows for retail cannabis sales as well as cannabis distribution, manufacturing, processing, storage, and testing. Fill out the 14-page application and submit a non-refundable $5,000 application fee, and you’re on your way to being in business.  

12. Reno, NV

Sales of recreational weed became legal in Nevada in 2017, and business has been booming ever since. As of 2019, Nevada wasn’t collecting income tax on cannabis, which makes the state especially appealing to cannapreneurs. 

Las Vegas is the epicenter of the state’s cannabis industry (perhaps in part because it allows social use venues), which means it’s pretty saturated. If you’re looking to start up a Nevada cannabis company with a little less competition, consider heading north to the town of Reno, which is growing in popularity both residentially and as a tourist attraction. 

The city government already has an established process for vetting and approving cannabis companies. It starts with obtaining a provisional or issued license from the state’s Department of Taxation and then walking through the city’s application process, which is laid out here.  

13. Sacramento, CA

The Golden State’s capital might not have quite the same weed-loving reputation as San Francisco or Los Angeles — and that’s exactly why you shouldn't overlook it as a possible site for your cannabis business. 

The city has invested in several initiatives to make it more attractive to cannapreneurs, including issuing low tax rates on gross receipts for cultivation and manufacturing and uncapping the number of available cannabis business licenses. What’s more, the city was awarded funding to support cannabis equity programs. You’ll also enjoy an easy commute whenever you want to advocate for cannabis-friendly policies at the state capitol. 

14. Traverse City, MI

Michigan residents voted to legalize the possession and sale of recreational marijuana in 2018. Because the state’s cannabis industry is still in its infancy, there’s a big opportunity for businesses to get in on the ground floor of the state’s legal cannabis surge. 

Traverse City might be just the place to do that. The largest city in Northern Michigan, Traverse City is packed with over 15,000 residents who, per that same Medical Marijuana Inc. survey, have collectively expressed high interest in cannabis. The town is also a hotbed of tourist activity thanks to its location near Lake Michigan. That means any cannabis business in Traverse City will benefit from both local and tourist patronage. 

Competition for dispensary licenses in Traverse City is fierce, as there are limited licenses available and they’re selected by lottery. But as of 2019, the city wasn’t limiting other types of marijuana businesses, including growers, processors, transporters, and testing facilities. If your business falls under one of those categories (or another ancillary category), then you could be in luck. 

Learn more about opening up a cannabis business in Michigan on the Michigan Marijuana Regulatory Agency site

Weed-Friendly Cities in the U.S.: They’re Everywhere! 

Here’s the moral of the story: If you’re planning to start up a cannabis business in the U.S., there’s no need to limit yourself to highly competitive and saturated markets. 

By looking beyond some of the cannabis industry’s major epicenters, you’ll discover a variety of exciting locales that welcome cannapreneurs and provide more varied opportunities. From Maine to Alaska, cities of all sizes and vibes are opening their arms to cannabis startups. So go ahead and blaze your own path! 

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