Pot Is Big Business, But Risky
The market for marijuana is only just beginning to open up in the United States, but it is clearly a lucrative product with huge growth potential over the next decade. At present, however, possession, distribution and sale of marijuana is a federal crime. Although the Department of Justice has chosen to prosecute only grossly unlawful practices such as those involved in organized crime or sale to minors, this still leaves the honest business owner with an overload of shifting state regulations to follow; in other words, this is a high risk business. Just the same, if you are careful to follow the regulations of your state and local government, you can successfully operate a marijuana-related business and take advantage of this new gold rush.
Types of Marijuana Businesses
If you are planning a cultivation business, that means you just grow cannabis plants. That may sound like the simplest and hassle free way to gain a foothold in the marijuana industry, but in fact this is the most heavily regulated. You also need to know something about horticulture. If you intend to sell infused products, which are items with marijuana as an ingredient, you will follow a different set of regulations. Infused products include items that are not ingested, such as lotions, salves, and edible products like brownies and cookies. Lastly, you could choose the retail route, which means direct sale of marijuana to customers. Retail stores, often called dispensaries, also sell marijuana-infused products and paraphernalia. In the case of states that only permit the sale of medical marijuana, these stores must sell only to authorized customers. Heavy regulation makes this kind of business the most difficult to start and to run, but this is where the most money can be made.
Once you have decided on what type of business you want to start, you need to meet certain criteria, such as being at least 21 years of age, not having a criminal record, and having a reasonable cash flow. Furthermore, some states will disqualify you for a permit if you are judged to be of poor moral character. You will have to have patience to work with the system and expect a lot of fees. Permits for your business can cost tens of thousands of dollars and take as long as 18 months to acquire, even if you are eligible. You also have to be a resident in the state where you operate. Excise taxes are extremely high, running from 25 to 37 percent on retail sales. Alaska charges $50 per ounce of cannabis sold or transferred from a cultivar.
Licensing Varies by State
Every state is different, but generally speaking, you will need a separate license to grow marijuana and to sell it. In states where recreational marijuana is legal, you will have a separate license for this category of sale. In addition, many regulations will limit the size of your cultivation or the number of dispensaries you can operate, and application fees can be high. Don’t be fooled; just because states allow recreational marijuana and are considered very liberal does not mean you have a green light for everything. Washington requires a separate license to produce, process, and sell marijuana, but a business cannot possess all three licenses. You can be a procurer and a processer, but a retailer can only be a retailer. In Washington, personal cultivation of marijuana is still a felony, so don’t think you can avoid this licensing difficulty by claiming you only grow a private stash.This is a strongly regulated business, but a dynamic one. Rules are in constant flux, so be sure to have an attorney who is knowledgeable and can keep you up-to-date and out of trouble.
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