Which Cannabis Business Is Right For You? | Cultiva Law, PLLC


In the states where cannabis is legal, there are several choices concerning which type of marijuana-related business that you can start. While each business is different, there are some commonalities. Whether you start a retail, processing, or growing business, you will first need to craft a plan and conduct research on the current market you plan to enter. To be sure, your background and experience may also play a role in deciding which type of cannabis business is right for you. Here’s more on the different types of cannabis-related businesses and what you should know before you decide to enter the fray.

Perhaps the most visible type of cannabis business is the retail market. This market encompasses dispensaries and shops that sell cannabis-related products. Some retail stores also provide delivery services. This sector of the cannabis industry is highly competitive and requires a series of licenses and certifications to operate. Dispensaries typically do not produce marijuana products, but instead sell products made by other companies to the general public. Because federal law is still unclear surrounding marijuana, it may be difficult to find investors or financial institutions that are willing to do business with retail companies. Still, several states have begun to implement initiatives to help potential retail business owners to establish their enterprises. Retail marijuana businesses often sell both recreational and medical marijuana products if both forms are legal in the state. Depending on the jurisdiction, they may also sell CBD oil or products, or other ancillary marijuana products, such as vaporizers and filters.

Most marijuana products start out as a marijuana plant. This plant produces seeds and flowers that are then used to create a marijuana product. A cultivation business handles the growing of the plant itself. In order to do this, you would need a growing facility and the knowledge of how to effectively and economically grow various types of marijuana. Initial investment into this business may be significant, as you will need professional-grade lighting and irrigation systems. You will also likely need to invest in a high quality HVAC system to control the conditions in which the plant needs to grow. Cultivation businesses typically require a license to operate legally.

Once the marijuana plant has matured, an extraction business takes the plant material and converts it into a concentrate that contains THC and CBD. THC is the psychoactive property in marijuana that causes euphoria, among other sensations, while CBD is the non-psychoactive property that is now often used to treat pain, anxiety, and inflammation. Recently, products infused with CBD have become increasingly popular, as they are considered legal by many states and jurisdictions. Because CBD does not cause impairment, usage is generally not restricted in the same manner as products containing THC. Extraction businesses require specialty equipment that can be expensive to purchase and operate. These businesses are typically highly regulated to ensure safety and accuracy of the extraction.

Cannabis and cannabis-related products that reach the open market generally must be tested for quality control and potency levels. State law may require that cultivators test their marijuana plants for toxins and pesticides. Typically, a laboratory is used to conduct these tests. Starting a cannabis testing laboratory would likely involve large startup costs, as the equipment needed to conduct these tests are expensive and require training to operate. Laboratories must be licensed and have procedures in place to guarantee accuracy.

In order for cannabis products to reach the end user, they must be transported from the cultivator or manufacturer to the testing lab, and then to the retail centers. In many states where marijuana is legal, transporting the drug requires a specific license. As a result, there are companies whose sole business is transporting marijuana. Marijuana distribution companies will typically have lower startup costs than other marijuana businesses since special machinery or equipment generally is not required. Still, there are regulations that will require an ongoing commitment to compliance.

While not directly selling any products that contain cannabis, ancillary businesses manufacture or sell products intended to be used with cannabis. A few examples are packaging, lighting, security, and accessory products. Generally, these business do not need special licensing to operate. However, business and occupancy licenses may be required depending on your business model and location. Startup costs for ancillary businesses tend to be lower.

In some places, licensing is closed and the only way to get a license is to purchase it from a qualified license holder. No matter which types of cannabis business that you decide to start, you will likely need approval from your local government or municipality before you begin operations. Even in states where recreational cannabis is fully legal, there may be areas of the state that do not permit cannabis businesses to operate. This means that zoning, business and occupancy licenses, and certification from your state’s cannabis control board should be acquired sooner rather than later in the planning process to avoid violating any laws or regulations in your area. A marijuana lawyer can advise you on what you will need to legally start your cannabis business. Because the laws are rapidly changing, retaining a marijuana lawyer can be an effective way of staying up to date and ensuring that your business remains in compliance.



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