Connect with us

Cannabis

The Best Advice For Starting A Cannabis Business

Published

11 months ago

on


Consumers continue to drive an ever expanding marijuana industry and new opportunities appear at every turn.  While the market is involving, there is still opportunities to make money and start a successful business.  Public opinion is pro-legalization and it is just a matter of time before the government reschedules driving more growth. If you are considering it, here is the best advice for starting a cannabis business.

Lonnie Rosenwald is a partner in Zuber Lawler’s cannabis practice group and shares some valuable insight into starting a business. In the rapidly growing cannabis industry, small business owners face a myriad of challenges, ranging from the typical complexities of business structures and investment to navigating the particular nuances of cannabis contracts, banking, and real estate. Establishing a successful cannabis business requires careful consideration of these areas of law to ensure compliance, mitigate risks, and foster growth. Here’s a brief guide for small cannabis business owners on five key areas for your focus: legal entities, investments, contracts, banking, and real estate. 

dating test
Photo by Luis Llerena via Unsplash
  1. Legal Entities

Choosing the right legal entity is crucial for cannabis businesses. Each state’s cannabis program differs from all other states, and the legal entity you need may be required by your state’s program. Additionally, each structure has advantages and disadvantages. Sole proprietorships, partnerships, limited liability companies (LLCs), and corporations all offer distinct benefits. For example, LLCs are popular structures for new cannabis businesses due to the liability protection they provide their owners (called “members”) while maintaining flexibility in management and favorable tax treatment. Some sophisticated investors prefer corporations. A sole proprietorship is not an entity, but it is simpler than the other business structures in that you, and only you, control the business, but you do not have liability protection.  Partnerships are just that:  a number of partners work or invest together in the business. A joint venture is a type of partnership whereby the partners are committed to a common goal; general partners may not be protected from liability; limited partners typically are.  Corporations have limited liability for the shareholders and employees. A decision on your business entity structure should be made with advice from your attorneys and tax professionals familiar with cannabis other applicable laws and regulations. Your business may also be required to comply with the U.S. Corporate Transparency Act with respect to reporting to the Financial Crimes Enforcement Network (FinCEN) certain information regarding the beneficial ownership of your entity (effective as of January 1, 2024).   Whether you are required to report should be a topic of conversation with your attorney.  

RELATED: Guess What Is Gumming Up The Marijuana World

  1. Investments:

Securing funding by private capital raises, financial institution lending and/or friends and family commitments is often a crucial step in the growth journey of a small cannabis business because of the significant costs of real estate, equipment, and employees. Investors, whether individuals or venture capital firms, are attracted to businesses with a solid legal foundation, clear growth strategies, and compliance with laws and industry regulations. Business owners should be prepared to present potential investors and lenders comprehensive business plans, showcasing not only the financial viability of the venture, but also a deep understanding of the legal and regulatory landscape. The U.S. and state securities laws typically apply to offerings of securities in cannabis entities notwithstanding that your state may have a cannabis program and that cannabis is illegal at the federal level.  These laws are particularly complex, so before issuing shares or member or partner interests in your cannabis business, please seek legal advice from securities-competent counsel.   Businesses should have an attorney review all investor materials to avoid problems down the road. 

5 Amazing Things To Know About CBD Was And Shatter
Photo by Cappi Thompson/Getty Images
  1. Contracts:

Clear and comprehensive contracts are the foundation of any successful business. In the cannabis industry, contracts play a vital role in clarifying and documenting relationships with suppliers, distributors, employees, investors, lenders, and partners. Ensuring contracts comply with state cannabis regulations (as well as other applicable laws and regulations) is critical to avoiding the potential that the contract is unenforceable or worse, illegal. We frequently see clients desiring to buy or sell a cannabis business, obtain loans or investments, and those entering into complex contracts regarding real estate or equipment leases, cultivation, manufacturing, transport, marketing services agreements, and partnership agreements.  Many of these contracts are lengthy, and of course, use legalese that you may not understand.  Some include complex rights and responsibilities, as well as how the parties will calculate various fees and expenses relating to the contract. Seeking legal advice during the contract drafting and negotiation stages is a prudent step. 

RELATED: The Most Popular Marijuana Flavors

  1. Banking:

Accessing banking services remains a significant challenge for many cannabis businesses as the sale and consumption of cannabis remains illegal under federal law, and most financial institutions (banks) are regulated by the U.S. and are required to follow certain regulations applicable to their operations. While some banks are cannabis-friendly, business owners must establish relationships with banks that have experience in the cannabis industry and that understand and comply with state-specific cannabis regulations. It is imperative to maintain meticulous financial records. Exploring alternative financial service providers, such as credit unions or specialized cannabis banking services, can help businesses navigate the financial landscape. Financial institutions such as banks will want to see what collateral your business has, such as ownership of real estate (a lease typically won’t work here), to secure your promises to repay a loan. Most banks will not lend to plant-touching cannabis businesses (even those with real estate assets), nor will they even process your deposits, debits or credits.  Ask cannabis leaders in your state for cannabis bank referrals; caution, most banks doing business with cannabis businesses don’t publicize that fact!   

RELATED: Science Says Medical Marijuana Improves Quality Of Life

  1. Real Estate:

Cannabis businesses must carefully consider real estate issues, including zoning, building, health and safety and other applicable laws and regulations, lease and lending agreements, and compliance with state, county, and municipal property laws, as well as owners associations’ regulations. Zoning regulations can significantly impact the location of cannabis operations, making it crucial to choose properties where cannabis activities are permitted under local ordinances. Often, the cannabis business’ compliance with local zoning codes requires a lengthy and time-consuming review process with a substantial amount of documents, plans, specifications and other costly information, as well as public hearings and numerous conferences with planning staff. Leases should address cannabis-related activities explicitly by including cannabis use (for cultivation, extraction, retail, etc.) in the permitted use provision, permitting limited access to the facility by landlord (and its lenders), allowing early termination in the event of a change in cannabis law prohibiting a cannabis use, and the like, also ensuring alignment with both state and local regulations. Engaging with real estate professionals and attorneys familiar with the intricacies of the cannabis industry can streamline the process of finding and using suitable properties. 

RELATED: California or New York, Which Has The Biggest Marijuana Mess

Small cannabis business owners must be thoughtful and proactive in choosing suitable legal entities, negotiating enforceable contracts, accessing banking and investment and acquiring real estate. Navigating the complex regulatory landscape requires collaboration with legal and financial professionals who specialize in the cannabis industry. By establishing a solid foundation in these five key areas, small cannabis businesses can position themselves for sustainable growth and success in this dynamic and challenging industry. 

Lonnie Rosenwald is a partner in Zuber Lawler’s cannabis practice group. Ms. Rosenwald  is located in Seattle, WA. These comments are general and not specific to your particular business or business situation; these comments are not intended to be legal advice, nor is Ms. Rosenwald or her firm representing you.  We encourage you to seek qualified legal counsel to represent you or your business especially with respect to a cannabis (touching or not) business.  



Source link

Related Topics:
Continue Reading

Cannabis

Panama And Cannabis

Published

12 hours ago

on

January 21, 2025

By


In the news today regarding the famous canal – but what about Panama and marijuana?

Panama is the only place in the world where the sun rises in the Pacific Ocean and sets in the Atlantic Ocean. It is slightly smaller than South Carolina but has more bird species than the continental United States. It’s also home to many natural attractions, including whitewater rafting, snorkeling, and birding. Long a friend, it was the first Latin American country to use the US dollar as its currency.  Now it is the news with the new administration. Considering the talk here, what about Panama and cannabis?

RELATED: Cannabis Can Help With Holiday Stomach Issues

The economy of Panama is based mainly on the tourism and services sector, which accounts for nearly 80% of its GDP and accounts for most of its foreign income. Services include banking, commerce, insurance, container ports, and flagship registry, medical and health.  Enjoy a significant number of travelers who enjoy adventure, outdoor activities and chilling, the country’s stance on marijuana is evolving.

Panama has made significant strides in the realm of cannabis, particularly regarding its medical use. In 2021, Panama became the first Central American nation to legalize medical cannabis when President Laurentino Cortizo signed Law 242, allowing for the medicinal and therapeutic use of cannabis and its derivatives. This law was a response to growing demands from patients suffering from various medical conditions, including epilepsy and chronic pain, who had previously resorted to smuggling cannabis products due to a lack of legal options

In September 2022, the Panamanian government established regulations to support the implementation of Law 242. These regulations created a National Directorate for the Monitoring of Activities Related to Medical Cannabis, which operates under the Ministry of Public Security. This body is responsible for overseeing the cultivation, production, and distribution of medical cannabis products, ensuring patient data protection and product traceability from cultivation to sale. The Ministry of Health (MOH) is tasked with issuing licenses for manufacturing and commercializing cannabis products, with an initial cap on manufacturing licenses set at seven for the first five years. Regulations aim to ensure that all medical cannabis produced in Panama adheres to strict quality standards.

The government envisions creating a robust local industry that not only meets domestic needs but also positions Panama as a potential hub for international medical cannabis trade. While they are making advancements in medical cannabis regulation, recreational use remains illegal in Panama. The law against recreational cannabis is often unenforced, leading to a culture where its use is tolerated among the youth.  Both the public and tourist find it an easy atmosphere.

Panama has one of the fastest growing economies in Latin America and has as stable government. Like the United States, it is a republic and engages the public.  They have evaluated cannabis as a benefits and have moved to integrating into their healthcare.



Source link

Continue Reading

Canada

Does Your Dog Really Care When You Are Sad

Published

15 hours ago

on

January 21, 2025

By


They are more popular than dating apps and are consider a best friend – but are they really there when you need them emotionally?

They are man’s best friend with 38% of Canadians and roughly 50% of Americans having a dog. In the US more men have dogs and in Canada more woman have the furry companion.  While they are fun, loving and play, does your dog really care when you are sad? Dogs have long been known as loyal companions, but recent research suggests that their emotional intelligence may run deeper than mere companionship; they can actually empathize with their owners’ feelings, particularly during times of distress.

RELATED: Can Pets Use Medical Marijuana or CBD

A study published in the journal Learning & Behavior explored how dogs respond to their owners’ emotional states. Researchers found that dogs not only recognize when their owners are upset but also take action to provide comfort. In the experiment, 34 dog-owner pairs were observed in a controlled setting where owners either cried or hummed a cheerful tune. The results showed that while the dogs opened a door to reach their owners at similar rates, those who heard crying did so significantly faster—averaging just 23 seconds compared to 96 seconds for the humming group. This indicates that dogs are more inclined to respond quickly when they perceive their owner is in distress.

Interestingly, the study also noted physiological responses in dogs when their owners cried. Dogs that opened the door displayed lower stress levels than those who did not, suggesting that while they were affected by the owner’s crying, they were not overwhelmed by it. Conversely, dogs  who showed high levels of stress likely cared deeply but were too anxious to act. This highlights a range of emotional responses among dogs, similar to human reactions.

RELATED: When You Use Marijuana To Sleep Here is What Goes On

The bond between dogs and their owners plays a crucial role in these empathetic behaviors. Dogs with stronger attachments to their owners exhibited quicker responses to distress signals. This bond is essential as it fosters a mutual understanding of emotions, allowing dogs to act on their instincts to comfort their human companions. As research continues to unfold, it becomes increasingly clear that our canine companions are not just pets; they are emotionally attuned partners capable of providing significant comfort during our most challenging moments.



Source link

Continue Reading

Cannabis

A Look At Martin Luther King And Cannabis

Published

2 days ago

on

January 20, 2025

By


MLK shared a vision about building a fabric of society, including everyone and working together.  Can this happen with the marijuana industry?

The swearing in a new president always gives hope.  The cannabis industry has seen 3 presidents, none who have helped move the industry truly forward. The public has had a change of heart and now almost 90% believe it should be legal in some form.  The major medical associations and federal agencies (aside from the Drug Enforcement Adminstration) believe it has medical value. And yet, our older, white politicians see it for something it is not. Thousands of mom and pop business are hoping for a change to help them on their ladder to the American dreams.  And tens of millions are turning to marijuana to not only solve medical problems, but to wean themselves off the more dangerous alcohol. Here is a look at Martin Luther King and cannabis.

RELATED: Can CBD Oils Help With Anxiety & Depression

Dr. Martin Luther King Jr. is widely recognized for his pivotal role in the American civil rights movement, advocating for racial equality and justice. Although he did not publicly address cannabis use during his lifetime, his principles resonate deeply with contemporary discussions surrounding marijuana legalization and the broader implications of drug policy on social justice.

The prohibition of cannabis in the United States has roots in racial discrimination and social control. The Marihuana Tax Act of 1937, which effectively criminalized marijuana, was influenced by prejudiced attitudes towards minority communities, particularly targeting Mexican immigrants. This historical context is crucial when examining how the “War on Drugs” has disproportionately affected people of color, echoing the systemic injustices that King fought against.

Many scholars and activists argue if King were alive today, he would likely advocate for an end to the War on Drugs, recognizing it as a continuation of racial oppression. Michelle Alexander, in her influential work “The New Jim Crow,” highlights how the drug war has perpetuated cycles of racial injustice and mass incarceration. Statistics reveal that Black individuals are arrested for cannabis offenses at rates significantly higher than their white counterparts, despite similar usage rates. This disparity aligns with King’s vision of equality and justice for all.

RELATED: When You Use Marijuana To Sleep Here is What Goes On

As discussions around cannabis legalization continue to evolve, figures like Martin Luther King III emphasize the importance of equity in the cannabis industry. He advocates for creating opportunities for marginalized communities to participate in this burgeoning market. This aligns with King’s broader vision of building a “beloved community” where economic and social justice prevail.

A large portion of industry leaders who were involved in the incoming president’s campaign are hopeful. Millions of average people want it, millions more need it for medical issues, and thousands of small business owned by a variety of people want it, will this administration take the step forward?



Source link

Continue Reading
Advertisement

Trending

Copyright © 2021 The Art of MaryJane Media