Starting a Cannabis Business Legally
The volume of people asking how to legally start a cannabis business has grown substantially over the past couple of years due to the media identifying the industry as the “best start up opportunity in the country” (Forbes), and likening the growth of the industry to “the next gold rush” (New York Times). However, starting a cannabis business legally is not as straightforward as many people think.
The volume of regulations governing the cannabis industry is staggering. Not only are their state, county and city laws directly relating to the cannabis industry, but individuals and organizations looking into how to legally start a cannabis business may also have to have a solid knowledge of such things as packaging laws, employment laws, contract laws and anti-money laundering laws.
Not only that but, under the federal Controlled Substances Act, any business operating within the cannabis industry is doing so illegally. Although laws have been passed in Congress to prevent agencies from pursuing legal action against cannabis businesses acting “legally” within their state laws, it is not inconceivable that a business may still be subject to over-zealous attention from law enforcement agencies – even when starting a cannabis business legally and complying with all applicable laws.
How to Legally Start a Cannabis Business
With the caveat that starting a cannabis business legally is a contradiction in terms as far as the federal government is concerned, the best way of finding out how to legally start a cannabis business is by speaking with a cannabis industry attorney. Speaking with an attorney – rather than researching the Internet – will enable you to obtain information relevant to the sector of the cannabis industry you wish to enter, in the physical location you wish to locate your business.
Many jurisdictions have opted out of state legislation allowing the medical or recreation use of marijuana, or introduced ordinances with stricter conditions for operating within the cannabis industry. Certain jurisdictions may have regulations that affect where, when and how you can operate a cannabis business, while others may insist that you have a particular type of company structure before being able to apply for a cannabis business license.
Away from the legal side of starting a cannabis business, you also have to carefully consider your finances. Many financial institutions are unwilling to provide banking services of provide finance for businesses in the cannabis industry. In addition to having to fund your venture entirely from your own pocket – or the pockets of investors – you may find it difficult to write off your expenses against your tax liabilities under Section 2803 of the tax code.
Speak with a Cannabis Industry Attorney
Due to the complex nature of starting a cannabis business legally, it is in your best interests to speak with a cannabis industry attorney. A cannabis industry attorney will have the knowledge and experience of the industry in your jurisdiction to guide you through how to legally start a cannabis business, and then how to legally continue running a cannabis business once the business is established.
The attorney will be able to advise you of the company formation you will need to comply with local ordinances, how to successfully submit a licensing application and the audit procedures you should adopt to verify the source of any income you receive. Depending on the services offered by the attorney, he or she may be able to help with the compilation of your business plan and with approaching investors looking to take advantage of new opportunities within the industry.
The cannabis industry is a rapidly evolving regulatory environment. Not only may you have to be aware of the current legislation for starting a cannabis business legally, but also an insight into what may happen in the future. Make sure you have all the relevant information you need on how to legally start a cannabis business by speaking with a cannabis industry attorney at the first practical opportunity.