After long term legislation changes nowadays 29 states in the USA allowed legal sale and use of cannabis for medical purposes and 9 for recreational.
A lot of states benefit from such permits. Their gross incomes have grown ($35 mln in Colorado state, for example). The Largest cannabis market nowadays is at California. It is already 8,5 billion worth. Nowadays it is the biggest agricultural market.
To get your part of revenue due to cannabis business there are some basics before running it you need to know.
LEGAL REGULATIONS
Regulations differ from state to state. Various number of local regulations are also involved. Legal requirements may demand proof of funds or criminal record check.
Be attentive regulations always change so it is always more suitable to deal with specialists at chosen area. It is always easier to discover local regulations and then move to federal because the USA didn’t allow cannabis matters on federal level.
DETERMINE YOUR PLACE AT THE MARKET
Different kinds of activities face different regulations. There are various list of activities that could be done with cannabis. Product manufacturing, retail sales, cultivation.
Cultivation: It is the most expensive at the beginning. It needs land, special knowledges, facing the requirements, proof of funds and expertise.
Retail sales: These type of activities is prohibited to be advertised on social media, thus all entrepreneurs work through their partners in other spheres through their recommendation. Retail is chosen for high profits with lower prior costs needed.
Hemp products manufacturing: Bags, coats, carpets etc. Even foods can be made but ofcourse they should face local requirements.
CHOOSE THE TYPE OF LEGAL ENTITY
- Sole proprietorships and partnershipsare cheaper. In such case owners are liable for all the liabilities and debts of their company.
- Company or LLC. Founders and Shareholders will not be obliged by their entity debts. Registered office and registered agent are obligatory.
Those entities may change their taxation to S type or C type.
Some states require cannabis business to be registered as non-profit organizations. Be attentive.
CHOOSING A NAME
Besides your name which should represent your business and stay away from other trademarks infringement.
There is also an opportunity to work change DBA (“doing business as”) name if you would like to change it for your esthetic purposes.
STARTING UP PRICE
The industry is expensive. States with medical marijuana being legal, you may need to pay a $5,000 non-refundable application fee for starting the business.
Such fees are different from state to state. In Louisiana – $150, in New Jersey – $20,000.
There are a lot of opportunities to be financed by funds of investors, use crowdfunding etc.
KEEPING UP WITH COMPLIANCE
Next step is about fitting in with legal requirements on accountancy, tax reports, used land zoning and obtaining permissions and licenses.