When it comes to starting a cannabis business, you have to know the rules and regulations…
Over the last month, I’ve shared what it takes to open and run a successful cannabis business.
I also answered a member question about the amount of money you’ll need to get started.
But there’s one more critical piece of this puzzle that you need to know: This is the cannabis industry – and in the cannabis industry, regulations are everything.
Step 1. Get a Lawyer
Before you even start on this venture, go find yourself a good lawyer who specializes in cannabis.
They aren’t cheap, but they’re worth it.
Cannabis regulations change so much that it’s hard to keep track. A lawyer can keep you informed, allowing you to pay more attention to running your business.
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A lawyer will also help you navigate any legal issues that come up.
There are a lot of interesting people in the cannabis industry. Many are honorable. But in my experience, more than a few are a nightmare – and they’re looking to squeeze you out of money any which way they can.
Whether it’s a vendor or a landlord, you just never know.
I’ve heard more than one story of unscrupulous landlords who allow growers to build out the facility – sinking upwards of one million dollars in upgrades, in some cases – only to kick that person out and re-lease it (at a much higher rate) to someone else.
A lawyer will help you avoid that kind of situation and many others.
Step 2. Know Your State’s Rules
In Oregon, a set of rules called Division 25 lays out all the regulations for the recreational cannabis industry.
It’s a 94-page behemoth filled with more than 35,000 legal-sounding words.
As an Oregon dispensary owner, I can’t tell you how many times I’ve read it.
Every state with a medical or recreational cannabis program has its own set of rules. You can usually find them at a state’s liquor control commission or health department website.
So, before you ever start a cannabis business, here are the things you’ll want to know:
- How the licensing process works. Each state is different when it comes to licensing. Some require that you get local zoning verification while others require you to take a competency test. And still, others have rules so relaxed that opening a facility is a simple matter of sending the state a couple of thousand dollars.
- License caps. Some states and cities limit how many licenses they’ll issue with an explicit cap. Once the cap is reached, the only way to get a license is to buy someone else’s (if it’s allowed). Other states allow anyone to get a license at any time.
- Local regulations. It’s not enough to know your state’s regulations. Some cities have their own set of rules to deal with. For example, in Oklahoma City, grows are highly regulated. Once you get outside of city limits, regulations nearly disappear.
- Where you can place a facility. States love to limit where a cannabis facility can operate. They do this through tight zoning rules along with setback requirements. For example, some cities require you to be 500 feet away from parks, churches, schools, and other facilities. Other cities may ask for 1,000 or 2,000 feet. It’s important you understand your state and city requirements regarding where you can have a facility.
- Required financial qualifications. Another way a state will limit applicants is by requiring certain financial qualifications. Some states want you to show them at least $500,000 in a savings account just to get a store open. Meanwhile, other states simply require you to outfit a facility to meet all current regulations regarding cameras, vaults, etc.
- Residency requirements. Most states have residency requirements. These rules limit who can run or invest in a cannabis business. Again, each state is unique, and a few states have no requirements whatsoever.
I can’t stress how important it is to know how your state does cannabis before you ever sign a lease.
Ask as many questions as you need. Sit down with the city planners. Speak with the regulating agencies or others in the industry. I’ve been known to send random questions to our inspectors and they’re always happy to help clarify anything.
The last thing you want to do is sign a lease and start a build-out, only to find out that your location doesn’t meet regulations.
By having a full picture of your state’s rules, you will be best positioned to successfully get through the licensing process.
Advisory Board Member, National Institute for Cannabis Investors
P.S. You can find part one of this series here and part two of this series here. And remember – if you have any questions, I would be happy to answer them. Simply post them in the comments section below.
5 responses to “Follow These 2 Steps to Run Your Own Multi-Million Dollar Cannabis Business”
June 01 2020