How to Start A Cannabis Business – The Legal Stuff You Need to Know
This article originally appears on Black Enterprise and is written by Lydia Blanco.
If you are anything like most entrepreneurs looking to get in on the green rush, you’ve probably been doing your research for quite some time now on the ins and outs of the cannabis industry. While there are hundreds, if not thousands, of people speaking on what it takes to enter the industry and grow a successful business, it is not every day that one gets advice from a cannabis attorney on how to start a cannabis business (legally)!
For that reason, we spoke with Neil Juneja, founder and managing partner at Gleam Law Firm, a cannabis-focused firm, who works diligently to help people understand the best legal options for cannabis businesses while assisting them as they navigate the evolving industry.
What are the steps to establishing a cannabis company?
If the company is directly touching the plant, each state’s laws and regulations are different. Some states have an open application period and will provide a large number of licenses. Other states have limited the total number of licenses to single digits and require an extensive application requiring proof of large amounts of capital and competency.
How can entrepreneurs learn the cannabis laws as they seek to enter the growing industry?
The first step is to reach the state’s regulations on the matter. Subsequently, join local cannabis industry groups and speak with attorneys focusing on the local cannabis markets. There is also a Minority Cannabis Business Association.
What kind of lawyer should entrepreneurs seek when trying to establish a cannabis company?
If the state’s license number falls below the requisite number to support cannabis-focused attorneys, a business and admin attorney is best. A cannabis-focused intellectual property attorney should also be consulted. As intellectual property is federal, the intellectual property attorney can come from any state.
What are some of the opportunities and risks of entering the industry?
While most states have some form of cannabis legalization, the DEA still considers cannabis illegal. While the risk is very low, it does exist.
From a business perspective, the larger states are hyper-competitive and many of the businesses are capitalized. This can result in very thin margins.
According to a report by the New York Times, people of color are being arrested at 10 times the rate as white people. Are there ways that cannabis business owners can legally protect themselves and their customers?
As the DEA is not currently pursuing the regulated cannabis industry, the important communication bridge is with local and state authorities. As regulation increases, all sides are beginning to see the tax revenue and as a result, have been treating cannabis use in parity with alcohol use.
How can cannabis business owners make sure that their product doesn’t end up in the wrong hands?
Proper security is advised. After the sale to the consumer, unauthorized use can be mitigated utilizing child-proof packaging.
Where can people who are interested in working in the cannabis industry find jobs and what kind of background do they need to have in order to qualify?
Each state varies. For instance, all employees and contractors of cannabis companies in Hawaii must submit to an extensive background check whereas many other states have no requirement. For experience, most skills are applicable to any business and cannabis is no different. The only unique position would be the master cultivator and those trimming the flowers. The industry has need for management, HR, compliance, sales, chemists, labor, etc.
A criminal record may preclude cannabis business ownership. To counteract this, Oakland, California is providing preference and assistance to minority cannabis business owners. Florida, Ohio, and Pennsylvania also have equity programs currently.
To learn more about how you can enter and navigate the cannabis industry, Join us and Neil Juneja at the Entrepreneurs Summit for a timely conversation with Dasheeda “The Weed Head” Dawson, and Hope Wiseman led by Eboni K. Williams.