(This story has been updated to include 2018 adult-use sales and references to Wana Brands and Dixie Brands.)

Colorado launched the world’s first recreational marijuana market on Jan. 1, 2014, and in the ensuing five years, the state’s cannabis companies have experienced booms and busts.

Colorado’s adult-use sales last year are expected to set yet another record, topping $1.2 billion.

But not all cannabis companies have shared in the boom. Some have gone out of business or faced legal trouble – think the likes of marijuana retailer Sweet Leaf.

Others have become multistate success stories with dozens of employees and sizable annual revenues, including two makers of infused products: Wana Brands and Dixie Brands.

Marijuana Business Daily surveyed several Colorado cannabis company owners of both plant-touching and ancillary businesses to suss out the lessons they’ve learned since 2014.

The selected answers focused on:

Preparation

Flexibility

Customer service

Compliance

Here’s their feedback.

1. Line up capital, be prepared to spend more time and money than originally planned, and study the regulatory landscape.

Wanda James, owner of Simply Pure, Denver: “You must be capitalized in order to compete. The ability to raise money for your brand is the No. 1 caveat to success. Raising money as a woman or as a person of color will be massively difficult and, in some cases, impossible. You must find alternative sources of capital because traditional sources run by white men will not be flocking to your door.”

Peter Barsoom, CEO of 1906 edibles, Denver: “The biggest lesson I learned is that running a cannabis business takes more time and money than originally planned. We entered the market with a focus on high-functioning adults for whom cannabis could be an alternative to alcohol and pharmaceuticals – people who weren’t necessarily walking into a dispensary on a regular basis. So we had to devote a lot of time and resources to educating the market, from dispensary staff to media to consumers, about a new way to incorporate cannabis and plant medicine into your daily life.”

Genifer Murray, strategic business development for Drug Plastics and Glass, Denver: “Like any business, a cannabis company requires a well-planned strategy, proper capitalization and a sound business plan to succeed.

“However, unlike some other industries, a cannabis business can also require a precise knowledge of local, state and federal regulations pertaining to topics such as packaging, child resistance, testing requirements, taxation and zoning. Additionally, the tax laws that impact cannabis businesses are different and require a degree of specialization. I would say that entering the cannabis industry requires a great deal of knowledge in areas that may be foreign to some.”

2. Focus on constant improvement, anticipate changes and offer products that can adapt to evolving regulations.

Andy Williams, co-founder of Medicine Man, Denver: “No company can survive long in this competitive market without a commitment to continuous improvement. Without advancement in cost per gram of production of cannabis, new and improved products, compliance, consistent formulations, exacting dosage forms and fulfillment, you will quickly fall behind competitors and eventually be forced out of business. Innovation, growth and continuous improvement will help maximize your competitiveness, profits and valuation of your company.”

Kristi Kelly, executive director of the Marijuana Industry Group, Denver: “Be focused on your goals and objectives, but anticipate change. Institutional chaos is the norm in a rapidly evolving landscape such as legal cannabis. From local battles, to state-by-state policy movement to federal progress, to R&D and innovation, staying dynamic is akin to staying relevant. Just don’t lose sight of your touchstone, whatever that may be.”

Bob Eschino, founder and partner of Incredibles, Denver: “The No. 1 lesson I’ve learned is to be flexible. Nothing in the cannabis industry seems to stay the same for long, so you have to be nimble and embrace change. The landscape is constantly in flux, and you need to be involved with the regulators to help direct those changes and be willing to adapt at a moment’s notice.”

Nancy Whiteman, CEO of Wana Brands, Boulder: “This industry can be frustrating and definitely requires the ability to adapt to sudden and frequent change as well as lots of resilience and persistence. However, that’s the price of being a pioneer in this industry, so stop complaining about it.

“Get involved and try to be a part of shaping the industry into what you think it should become. Don’t assume that someone else will do it for you.”

Kyle Sherman, CEO of Flowhub, Denver: “Create agile products that can adapt to evolving regulations. Flowhub started in Denver, and we saw how quickly compliance requirements could shift firsthand. So when other markets legalized cannabis, we knew we could help manage compliance at scale by prioritizing the extensibility of our software. In an industry as young and volatile as cannabis, change is expected – and way less painful when you’ve built a dynamic solution that can swiftly adjust.

3. Put the customer first and foremost.

Tim Cullen, CEO of Colorado Harvest Company, Denver: “Business is all about customer service and selection. The folks that shop with us have a lot of choices nearby. One way we discovered we could stand out among a crowded field was to provide an environment where people love to shop and have as many choices in as many product categories as possible. We’ve beefed up our employee training programs and selections of flower, edibles concentrates and vaporizers.”

4. Take compliance extra-seriously.

Brian Vicente, attorney, Denver: “Running a marijuana business is all about compliance, compliance, compliance. It’s crucial for these new businesses to understand and follow the law to a T.”

Rachel Gillette, attorney, Denver: “Take compliance seriously. Substantial compliance is not enough; strict compliance with the laws and regulations should be the standard. Until the regulatory environment relaxes a bit, and cannabis is no longer stigmatized, it’s important for business owners to understand they are under the microscope. Strict compliance includes not only regulatory compliance with the rules but compliance with other laws, including tax laws, employment laws, federal worker protection standards, food safety laws, to name a few.”

Interviews have been edited for length and clarity.

Bart Schaneman can be reached at [email protected]