Complex Laws Surrounding Marijuana Sales
With the expansion of the marijuana industry, complex laws surround the growth, sale, and use of these products. In short, cannabis law is confusing, and it varies between states. Sometimes, state and federal laws appear to be in opposition to each other, leaving potential businesses bewildered and in desperate need of legal counsel.
Federal Marijuana Laws
Even if you live in a state that legalized medical or recreational marijuana use, it may come as a surprise to learn that possessing, buying, or selling marijuana is still a federal crime. The problem is that, despite the liberalization of state laws across the country, federal law still treats marijuana as a controlled substance, just like cocaine or heroin. This creates potential legal violations for entrepreneurs who attempt to start the process without seeking legal counsel as their first step.
Virginia Marijuana Laws
As of July 1, 2021, adults in Virginia who are 21 and older are allowed to possess a small amount of recreational marijuana and to cultivate a small number of marijuana plants in their homes. The Virginia General Assembly approved a bill that legalized adult possession of up to one ounce of marijuana. The bill also provides for the sale of recreational marijuana. However, keep in mind that retail sales are not scheduled to begin until 2024. State laws surrounding the use and sale of marijuana are constantly changing, so it is critical that you consult with an attorney with knowledge of both marijuana and business law before creating any type of entrepreneurial plan.
The Marijuana Industry
The marijuana business can be broken into three general categories: cultivation, infused product manufacturing, and retail sales. Each business model varies depending on if they are for recreational or medical use. Other industries include testing facilities, delivery services, devices for consumption, and software or other online services.
- Cultivation — The growing and harvesting of marijuana. This arm of the industry is heavily regulated.
- Infused Cannabis Products — Edible marijuana, tinctures, salves, and other infused products.
- Retail Sales — Generally referred to as “dispensaries,” this includes stores that sell cannabis-based products. These typically are the most difficult and expensive to start, but also the most lucrative.
Challenges To Consider
Opening a legal cannabis farm or dispensary is more complicated than starting many other kinds of businesses, mainly because of the regulatory environment and its uncertainties. State laws tend to vary for cannabis companies and the cannabis entrepreneurs trying to start them. The following factors should be considered before deciding whether the cannabis industry is right for you:
- Cost — Although highly profitable, starting a marijuana business can be a top dollar investment. Costs vary by location, state laws, and type of business. You will want to consider the costs of licensing, rent, utilities, equipment, supplies, marketing, security, and employees.
- Residency — Virtually all marijuana business licensees (and investors, in some cases) must be state residents. Colorado, for example, requires a two-year residency prior to getting a license.
- Criminal Record — Most states prohibit felons with drug crime (or violent crime) convictions from applying for a marijuana business license.
- Risk — The industry is very risky due to its fledgling status and the ever-changing regulatory environment, but the rewards are potentially very high.
- Timing — Make sure you are willing and able to wait several months for the application process to get a license.
- Investors and Partners — As with any other startup, you will need capital to get up and running. Keep in mind that some investors remain wary about investing in something that is still illegal under federal law. Most funding for marijuana ventures comes from private investors, not banks.