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Cannabis business is booming. More than half of the states in the U.S. now allow for medical marijuana usage, and several now allow for recreational use. Businesses are finding that there is a great deal of money to be made selling cannabis and cannabis related products to customers in many different states.

But despite state laws, at the federal level cannabis is still considered a dangerous drug. Laws at the state level are frequently challenged, and businesses need to stay up to date on regularly changing rules and regulations around operating, creating, and selling cannabis products.

Here’s how you make sure and avoid any legal stumbling blocks for your cannabis business.


Medical Marijuana Buds

Know Your Local Laws

It’s important to note that despite what states have enacted, marijuana cultivation, possession, and distribution are all still considered federal crimes. That said, as long as you’re following state laws, you are unlikely to run into any legal trouble.

State laws are exactly that – state based. This means they will vary from state to state, and you can’t assume that just because something is allowed in California it will be allowed in Vermont. There are strict regulations in place, even in places where cannabis is legal, around who can grow, sell, and use these products. You can find some rules and regulations online, but it’s always bests to check with your specific state as you begin the process of licensing your business. It’s better to do this before you start investing money, just in case you will be unable to obtain appropriate licensing for some reason.

Stay Involved in Local Politics

Even in states where cannabis and cannabinoid products have been made legal, regulations are constantly evolving. Efforts to roll back legality have been made, for example. In California, new labelling laws went into effect on July 1 and dispensaries slashed prices on old, non-compliant products to avoid needing to discard or relabel them.

Companies need to know what’s going on with these sorts of regulations so that they can advocate for the ones that most benefit them, be outspoken about the ones that will harm their businesses, and be aware of the ones that are truly beneficial for the public good. But many small business owners – across industries – sometimes seem to forget that they are businesses, no matter how small. In highly monitored and controlled industries, small companies need to be especially careful to get all the details right.

Be Cautious About Branding

While marketing and other rules are still evolving, it seems one thing is clear: companies are going to need to be very careful about whether their products are considered appealing to children. This is especially important as many of the ways that edibles are sold – candies, brownies, and other treats – already appeal to kids. A company in Colorado had to completely redesign its packaging on several products in order to make them childproof.

Some companies also seem to get a kick out of creating branding that winks at how cannabis products were until very recently illegal. Others focus on advertising the product’s potential benefits and creating packaging that mimics other pharmacy supplements and products. These items have a more mature appeal. This can both keep companies away from the concern of being child-friendly and expand the audience beyond the traditional market.

Insure Your Business As Best As Possible

In most states, cannabis based businesses are still considered high risk, and companies may struggle to find appropriate insurance. Most businesses are safest when they maintain at least basic insurance coverage. This often includes property insurance, liability insurance, and workers compensation insurance. And some insurance companies may be willing to work with a dispensary or other cannabinoid related business, especially if the owners have a history of successful business operation, in either this or other industries.

Be Aware Of Funding Issues

When an average business runs into trouble, one of the options it may consider in order to keep the doors open is a loan. Due to the federal illegality of cannabis, however, dispensaries and growers may not have that option.

Lots of companies operate without traditional lending opportunities, bootstrapping their companies from the beginning. While this can certainly work, business owners often max out their own credit to do so. They may pay for most expenses with credit cards, take out an extra mortgage on their home, or use a home line of credit to get the capital they need to create and expand their business. This puts them at great personal risk if the business ultimately fails.

Running a legal cannabis business is now possible in many states, but in such a high risk and developing industry, owners need to pay extra attention to rules, regulations, and legal implications of their company.

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