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On Becoming a Responsible, Cannabis Health Focused, Entrepreneur

[headline]A well-rounded, comprehensive Cannabis education is your prerequisite to success.[/headline]

Cross roads, right turns, speed bumps and highways. Sound like directions? Perhaps but this isn’t the yellow brick road. The bricks are green and navigating the road to marijuana ventures holds its fair share of roadblocks.

Neville Nel via Compfight
Neville Nel via Compfight

If you have travel plans to enter the licensed and regulated cannabis industry, be prepared to hit a few pot holes. But understanding the do’s and don’ts of the industry should be your first stop.

It’s not only important to find your area of interest or niche but your area of expertise. What you don’t want to do is start a business without any business experience. The fact that your main commodity is something once and is still sold on the street, doesn’t make business management or dispensary operations any easier. In fact, the challenge is greater as you have far more regulations and far less tax breaks. This is often when a grower and businessperson may choose to partner their skills.

Today we will focus on four aspects under the umbrella of cannabis enterprise; law, business, dispensary operations, and horticulture.  


Before you do anything in this industry, it’s imperative that you understand your local, state and federal laws. Keep in mind that federally cannabis is illegal. Whether you’re talking about one plant, one seed or one flower and by flower, I mean bud or inflorescence; cannabis is federally illegal. So take this moment to give yourself a pat on the back for helping legitimize, monetize and materialize this nascent enterprise.  

If you’re entering this industry, you should have a number of legal questions for an attorney. Have your questions prepared so you can get as many of them answered before your four hundred dollar hour expires. It’s important that you also understand your rights as a patient, citizen and business owner. Keep in mind that it’s not just important to know your rights but know how to exercise those rights.

If your state has medical marijuana laws and you operate within those laws, that doesn’t mean you cannot be arrested. Remember that anything can happen when you have a law enforcement encounter. Not all politicians, police officers, dispensary owners, or even marijuana doctors know the law in its entirety. It’s often open to interpretation and left for the courts to sort out.

Having a medical marijuana card doesn’t make you exempt from arrest. So how do these cannabis laws help you? The difference is prosecution vs. arrest. You can still get arrested in this endeavor but if you follow state law you should be safe from prosecution. But because cannabis is federally illegal, you are technically still subject to federal mandatory minimum sentences. Do study those guidelines. The good news is that recently the federal government has backed off on interfering in state affairs, but remember that it doesn’t mean it cannot happen.

Do retain both a business attorney and criminal defense attorney for your team. Here’s a tip, generally all state marijuana initiatives that passed were partially written by or assisted by these two types of attorneys. Seek them out. Working with them assures you that you’re working with very experienced industry experts.

[quote]Don’t just invest your money but invest your time into as much research and education as you can.[/quote]


Do you want to work directly with cannabis or prefer an ancillary business? You don’t have to work with marijuana to work in the marijuana industry. Do figure this about before speaking with your attorney so you know what questions to ask.

Do plan your business name and DBA. Do not use cannabis heavy names for your legal business name. You may run into issues when retaining a bank. Do research banks and merchant services that will work with cannabusinesses. Do know that even if you have an ancillary business that has nothing to do with marijuana, you can still have issues with banks and merchants services if you have the word marijuana in your business name. If big banks won’t take your money you can always try small, local banks or credit unions.

You can and should know which legal business entity works best for you and your portfolio. A corporation, LLC, sole proprietorship, or partnership. A mutual benefit corporation works well for an individual that will be the sole board member. Works well, for example for a one person delivery business. Cooperative corporations require three board members, cost more to form but offers greater protection.

accessible_resourcesIf you have assets, then generate an asset protection plan. Do understand asset forfeiture. Study recent case history and discuss best entities alongside a potential trust with your CPA and or attorney.

Do you know section 280e of the IRS code? It states the following:

  • No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted.

Do know that cannabis is a schedule 1 substance, which means that it has no medical use, however the United States government owns patent 6630507 B1 registering cannabinoids as antioxidants and neuroprotectants.

In business, it’s important to get out of the red and into the black. In this business it’s important to get out of the grey area first.

Dispensary Operations/Ownership

cannabis pharmacy buttonDo know that the moment you open up a dispensary that law enforcement will pay you a visit? You just may not know when they do. They will pass judgement on your operation the moment they walk in. Do you operate a professional, even clinical patient facility or it is less serious, safe, or secure?

Do you remember the last time you went to the store? Were you treated well, good customer service, will you go back? Law enforcement will judge you the same way you judged the store. A dispensary is no different. Give them a reason to believe you are providing a quality and much needed service to the community.

Don’t just sell dried cannabis. Provide cannabis in other methods of ingestion. Provide sublingual tinctures, topical applications, edible medicine, or even inhalers. Provide literature, resources and patient education. Use proper labels on your medicine and have your medicine lab tested. Doing so show that you are less concerned with cash and more concerned with patient care and compassion.

Do train your staff on the different type of medicine, strains, genetics, and terminology. Don’t use words like weed, or street terms like zip to reference quantities. Do take your time with customers. As you often need to exercise patience with new patients.

Remember when you move into a neighborhood, your neighbors may be uneasy. People fear what they don’t understand. Prove them wrong. Don’t allow your patients to resell their medicine or medicate in your parking lot. Do have your security guard circle the block. When you clean outside your entrance, clean to the left and right of your neighbors entrance. Have your staff patronize the local restaurants.  There will be public hearings regarding your dispensary. When there are, rather than calling you a nuisance, they will say that the block is cleaner, crime has gone down, and business is better.  

If you’re planning on opening a dispensary, you still need to understand the basics of growing cannabis. This is for two reasons. The first is that many states are requiring that dispensaries produce their own medicine. You can of course partner with an experienced grower. The second is that the dispensaries that purchase cannabis, need quality assurance via an educated conversation with their suppliers. Do ask your growers what type and wattage lights they use for growing, what medium they use and how they treat pests and pathogens or mold and mildew. Do they use organic or veganic nutrients or neither? This will also help you grade and price your product for retail.  


David Lipton, managing partner, and Ian Calandro, a production manager at Advanced Grow Labs, walk through one of the company’s flower rooms. (Photo: Michelle McLoughlin for The Wall Street Journal)
Photo Credit: Michelle McLoughlin for The Wall Street Journal

Just as there are many ways to grow cannabis, there are just as many ways to keep your grow safe, your medicine safe, and yourself safe. The first is security. Security starts with silence. Do not talk about your grow no matter how excited you are about your flourishing garden. Do not go on camera and show your location or size of operation. Do not poke the bear.

Do exercise safe and responsible practices. Make sure that your electrical is set up by a licensed electrician. Do not steal electricity. Do exercise proper waste disposal of chemicals and nutrients. Do not empty contents into the sink. Do not place you trim in your garbage. Keep in mind that your outside garbage is public property and anyone can go through it once it’s on the curb.

Transportation is a big concern for growers. Before you transport your medicine, have a friend help you with your vehicle check. Check to make sure your break lights and signal lights are working. Do you have bald tires, do you have a tassel hanging from your rear view mirror, how about bumper stickers? Law enforcement can use any of those reasons to pull you over. Keep your medicine in the truck, in a locked container. It is best not to speed, cross state lines, or medicate while driving. Don’t give law enforcement a reason to pull you over.

HiRes 500 pixelsNow you might say, why should I be concerned with these things when I am following local and state laws? The answer is just because you are following the law, that doesn’t mean that every law enforcement officer knows it. It doesn’t mean that you cannot be hassled or arrested. You can win your argument in court but exercising these practices can avoid the headache all together.   

Your best GPS in navigating a marijuana venture is an EDU, an education in higher learning. Don’t just invest your money but invest your time into as much research and education as you can. And remember, if you don’t follow the rainbow you won’t find the pot, of gold, that is.


This article has been republished with kind permission from Marijuana Venture magazine.   This article was written to address a United States-based cannabis business audience; please refer to your corresponding legal guidelines if your business endeavours are in another country.