In 1996, California passed a law that made marijuana legal for adults with a legitimate medical need. It was the first law of its kind in the United States to take effect. For the very first time, businesses could be founded that would grow legal marijuana or dispense that marijuana to patients.
That moment in 1996 feels like a long time ago now. Since then, 32 other states have legalized marijuana for medical purposes, and 10 states, including California, have legalized the drug for recreational purposes as well (marijuana is also legal in Washington, D.C.).
The result has been the massive growth of a business that did not exist just a couple of decades ago. The legal marijuana industry was worth $9.2 billion in 2017; by 2027, it’s expected to be worth $47.3 billion.
It’s easy to see why the growth is happening so fast — marijuana is hugely popular, and the fact that the industry is new has forced it to grow by leaps and bounds to meet the overwhelming demand. And this booming industry is appealing to entrepreneurs and investors, who recognize a gold rush — or “green rush” — when they see one. But before you start your marijuana business, you should know certain things.
You need a business plan
Marijuana is booming, but it’s not as if you can just show up and start printing money. Just as with other forms of businesses, you need to create a business plan. This is your chance to do your research and make sure that you have a customer base that you can rely on and a business idea that works. Whether you’re finding the right location for your dispensary or planning out the unique edible marijuana treats that are going to make you rich, you need to get the details down on paper.
Get the cash you need
Your business plan is what keeps you from making a mistake. It also allows you to get a business loan or investors, which you’ll almost certainly need unless you are independently wealth. Running a business isn’t cheap.
Here’s where things get a little tricky. Marijuana is legal in many states, but it’s still illegal under federal laws. Many institutional investors and major banks won’t touch it, which means that they won’t give your business the cash it needs. You need to seek out the right funding sources through private investors who are willing to play ball.
Of course, setting up investment contracts isn’t easy — and that won’t be the last legally complicated thing that you do as you try to get your marijuana business off of the ground.
Whenever you found a business, you should talk with an attorney. From sole proprietorships on up, you need to consider tax and financial implications when you legally organize your business. A lawyer can provide that information.
But when it comes to the marijuana business, getting an attorney is even more important. That’s because marijuana’s legalization has come with plenty of red tape, the expert marijuana attorneys at McAllister Garfield explain. Marijuana businesses have to adhere to regulations that govern everything from where marijuana can be grown to how it can be displayed within a dispensary. There are laws about advertising, laws about taxes, and laws about quantities that can be sold. If you’re not teaming up with a lawyer who specializes in marijuana laws and regulations, then you’re virtually certain to run afoul of laws and local codes — and, most likely, run your business into the ground.