Cannabis is a fast growing business fraught with regulatory hurdles and cut throat competition – the right cannabis attorney can help your cannabis business
Why does your marijuana or hemp company need a cannabis lawyer?
A second set of eyes on your offerings that provide sophisticated perspective can make a company more successful. For example, Warren Buffett met a lawyer named Charlie Munger in 1959 and liked his opinions so much that he convinced him to leave the practice of law and join him at Berkshire Hathaway. Cannabis lawyers that own and operate businesses in the industry and have deep knowledge of its risks and trends can help your business gain competitive advantage and mitigate operational risk.
We are going to cover 5 important benefits provided by hiring an attorney for your new cannabis business. Companies hire lawyers to help their business with all sorts of things. Here are five of the most practical benefits a cannabis industry attorney can bring to your team:
- Knowledge of Complex Application and Licensure Processes
- Understanding Compliance with Federal and State Laws
- Understanding Business Contracts for Operations
- Previous Industry Experience and Knowledge
- Managing the Risks the Cannabis Business Encounters
We will discuss these five benefits to hiring the right cannabis lawyer for your business.
Cannabis is steadily growing in usage and popularity across the globe. What was initially considered a taboo is now gaining fame, recognition, and traction in many US states with Washington, DC having legalized the cultivation, possession, and use of marijuana. While hemp is fully legal after being removed from the Controlled Substances Act by the 2018 Farm Bill.
As we speak, more than 33 states in the US have legalized some form of marijuana as a genuine and viable medical alternative.
Although the general public has changed their perception toward marijuana, starting a cannabis business and successfully running, it is an uphill task considering the variations in state and federal laws.
If you are an ambitious entrepreneur with the zeal to break into this growing market, it is recommended that you hire an expert cannabis lawyer. The main purpose for this is to ensure your business is compliant to all applicable regulations in your state.
Today, we are going to explore some of the benefits of hiring a cannabis attorney when it comes to the sale of cannabis, whether hemp, medicinal, or recreational marijuana.
1. Complex Requirements & High Costs to Enter Cannabis Industry
Every state has different laws covering the establishment and oversight of a marijuana business. A lot of states have imposed stringent rules on the number of cannabis businesses that can be established at a given period.
The result is that some states only give out licenses during an extremely narrow application window with very high costs and intense competition for the licenses.
More often than not, applicants are required to pay high application fees with the intention of generating significant profits for the licensing states.
A perfect example is Connecticut, which charges a $25,000 nonrefundable application fee to candidates seeking a license for their marijuana business. With this high expense in mind, a cannabis attorney will help you understand how to meet all regulatory and application requirements to offset the extreme costs of the fees.
2. Cannabis Attorneys Understand Federal & State Laws
Some would-be cannabis entrepreneurs have a basic understanding of marijuana laws in their state and strive to adhere to them. However, for one or two reasons, the federal government may still consider their business illegal and revoke their license.
A specialized cannabis attorney helps you understand the federal and state laws so that you can stand a better chance of realizing long-term success in this lucrative industry.
Having a cannabis attorney onboard proves useful in legitimizing your startup. Determining the products or services you wish to offer is vital as far as establishing a business goes.
Marijuana businesses are classified into three different categories, and each group highlights the different standards and regulations.
An experienced attorney will help you understand the specific category under which your marijuana business falls. The purported marijuana business categories are as follows:
(i) Cultivation – Marijuana cultivation is highly regulated by different states to guarantee a high-quality, safe, and effective product. Growing marijuana plants needs substantial investment and strong commitment. Your attorney will help you get started in this business to ensure horticultural perfection.
(ii) Infusion – Many entrepreneurs are rapidly establishing enterprises dealing with the sale of tinctures and cannabis-infused edibles. This incredible bandwagon is inspired by the increasing scientific studies claiming the valuable benefits of marijuana in medicinal treatments. A significant number of laws have been drafted in various states to govern the ingredients, labeling and appropriate serving instructions for these products.
(iii) Retail – Marijuana businesses that are classified under the category of retail shops include the recreational and medicinal dispensaries. Typically, these collectives sell their products to authorized individuals and patients aged above 21 years. The startup costs for setting up retail stores are the most expensive of all, but they often generate more significant profits than all the other types of marijuana businesses.
3. Cannabis Lawyers Understand Compliance
A lawyer who is truly conversant with both federal and state marijuana laws will help you discern the specific conditions applicable to the particular category of your marijuana business.
Understanding the requirements for applications, licensing and financing your cannabis business is an essential part of building and nurturing a legitimate marijuana company.
Some marijuana or hemp entrepreneurs attempt to navigate these technicalities and only end up losing their investment.
The process involved in applying for a business license and seeking financing may vary extensively depending on your place of residence. Application fees are nonrefundable in some regions and often cost thousands of dollars with little to no acceptance guarantee. Conducting a background check may be necessary in some circumstances to weed out convicted felons whose history revolves around violence or drug-related offenses.
Moreover, many states have laws limiting the number of marijuana businesses that can be set up in a given area. This has given rise to inflated fees and increased competition. Other states even go a step further to inquire about your financial resources to verify whether you have the financial muscle to cover such expenses as rent and utilities.
In Illinois, for example, the state may require proposed marijuana businesses to have the financial resources of not less than half a million dollars to set up and run the business. The state may also demand to see the extensive security measures employed by the business owner to ensure that marijuana produced for medicinal purposes does not end up on the black market – either accidentally or intentionally.
Besides the state regulation, local governments and cities may have their own way of regulating the marijuana business. Some local governments carry out background checks for marijuana business owners and their employees as a prerequisite to applying for a license.
Considering these high costs, hiring a cannabis attorney to help you navigate these seemingly technical details would be the best idea before moving forward. Failure to follow the requirements can lead to fines, revocation of license, and criminal liability among other penalties.
4. Getting Your Cannabis Business Off the Ground
Starting and maintaining a cannabis business can be a demanding endeavor. Besides the normal obstacles like cash flow, marketing, customer relations, and growth, a cannabis business must strictly abide by all laws and regulations – or get ready to face the consequences. With the right cannabis attorney on your side, your business can be premised in the right foundation to ensure future growth and expansion.
A good cannabis lawyer will help you with cannabis business formation & operation, zoning & permitting, and compliance with local & state licensing.
Without a lawyer, it is easy to find yourself walking in a thin line without realizing it because of the ever-changing nature of laws governing the marijuana business. A lot of criminal charges can hit you in the marijuana business including potential prison time, threats of business closure, and exorbitant fines and other fees.
The right cannabis attorney will not only defend you against these charges but also safeguard the reputation of your business. Every business needs to operate within the confines of the law so that the venture can remain operational. In the end, your business deserves a successful operation without the additional stress of tackling legal issues.
5. Limiting the Marijuana or Hemp Business Risk
Hiring a cannabis attorney is a great way to minimize the risk your business could face. On the one hand, marijuana remains an illegal substance under federal law, and no exceptions are made for states that have legalized its use for medical or recreational purposes. On the other hand, individuals whose businesses comply with state laws generally have no risk of arrest or trial by federal authorities.
As a result, all marijuana business owners are advised to strictly follow their state’s regulations in the quest to limit the chances of criminal prosecution and a possible loss of investment. The federal government is constantly on the lookout for businesses that are not protected under state marijuana laws for prosecution.
It is focusing on prosecuting those involved in such crimes as marijuana distribution by organized crime networks, drugged driving, marijuana distribution to minors, and other activities involving unlawful possession of the drug.
With an expert cannabis attorney on board, you can rest assured your business is premised in a way that can dramatically reduce the risk for federal prosecution.
An attorney will be able to structure your business in line with all state laws to avoid the revocation of business license and the fines that accompany it. Also, a cannabis lawyer will be able to keep your business protected and up to date by closely monitoring case laws and changes in policy.
In the marijuana business, a single mistake will likely land you in federal court and liquidate your finances. One of such errors involves hiring of the employees. If you intend to hire new employees, a cannabis lawyer will help you with liability laws and insurance.
Final Thoughts on Cannabis Attorneys
The businesses involved in the cultivation or sale of marijuana pose a significant amount of risk. For that reason, it is in your best interests to consider hiring a cannabis attorney for your business.
A cannabis lawyer not only helps offset the financial risk inherent to the marijuana business but also ensures the business’s paperwork and licensing applications are in order.
Given the high startup costs, the complexity of the rules involved and the risk of federal prosecution, an attorney sounds like a reasonable expense. Trying to interpret the cannabis laws on your own can be time-wasting and confusing.
Contact a cannabis lawyer to discuss your options and secure the longevity of your business. Ours are business owners, just like you.