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Did you know that Justia offers numerous free resources to make the law more accessible and help people better understand the foundations of a variety of legal areas? In this post, you can learn more about the information available in Justia’s Cannabis Law Center.
Among the many free resources that Justia provides to the public are Justia Legal Guides on dozens of diverse practice areas. In a series of posts, we will continue to explain how someone coming to our site might use each of these guides to understand their rights and options.
This post outlines a handful of hypothetical scenarios involving “Phil,” “Olivia,” and “Thomas,” who are exploring various activities in the cannabis industry. While the federal government continues to consider marijuana illegal, many states have legalized it for recreational as well as medical use. This offers opportunities for entrepreneurs, employees, and investors, among others, but it also presents risks. The Cannabis Law Center at Justia describes some of the distinctive issues in this industry.
Starting a Cannabis Business
Phil is considering forming a marijuana dispensary in a state that has legalized cannabis for recreational use. However, he is concerned about the legal implications of entering an area that was criminalized until recently. Phil explores the discussion of starting a cannabis business at Justia to learn more about this process. He finds that a business owner in this industry may need to meet certain requirements related to residency and criminal record, and they may face additional hurdles related to licensing and financing.
Phil reads more about the licensing process in the cannabis industry. He learns that he may need licenses from local as well as state agencies, and that just because his state allows commercial cannabis activities does not necessarily mean that any city in the state will allow them. Phil also finds that holding a license for a retail cannabis business may involve ongoing compliance with specific rules imposed by the licensing agency. He makes a note to carefully review the process in his city and county as well as his state to ensure that he files all the appropriate applications with the necessary documentation.
Next, Phil explores financing issues in the cannabis industry. He had assumed that he would get a loan from a bank to help him launch his business, but he finds that banks are often reluctant to lend to businesses in an industry that remains illegal under federal law. Instead, he may need to pursue funds from private investors or other less conventional sources. Phil also finds that he may need to use cash for many transactions, which can be risky and onerous. Phil decides to take some time to consider the pros and cons of his plan to start a marijuana dispensary before moving forward. He may want to consult a cannabis lawyer as well.
Working for a Cannabis Business
Several marijuana businesses have opened in the area around Olivia, who is looking for a new job after leaving her previous employer during the COVID-19 pandemic. She supported the legalization of recreational marijuana in her state, and she wonders what it would be like to work in the industry. Olivia imagines an easygoing atmosphere with loose rules and broad tolerance. She explores the Justia discussion of working in the cannabis industry for more details.
Olivia finds that she probably will need to pass a criminal background check, but this does not bother her because she has a clean record. However, she learns that the work environment may not be as relaxed as she expected. Employees in the cannabis industry are tasked with following many precise rules and may face harsh consequences for violations. Marijuana businesses also may impose strict workplace policies and enforce them vigilantly as part of their efforts to avoid compliance concerns.
An employee who works in this heavily regulated industry could suddenly lose their job if their employer breaks a rule and is forced to shut down. In addition, precarious financing can interfere with payments to employees. Olivia is still interested in pursuing jobs in the cannabis industry, but she is thankful to know more about the possible downsides as she weighs her options.
Investing in a Cannabis Business
Thomas does not work in the marijuana industry and is not very familiar with how it functions. Recently, he has heard friends talking about the investment opportunities that it offers. Thomas scans the Justia discussion of investing in the cannabis industry to find out more. He learns that the rapid growth in the industry may offer substantial rewards, but volatility is greater than in most sectors. Risks can arise from financing challenges and other uncertainties. Thomas decides that he should limit any initial investment in the industry and monitor it carefully so that he can withdraw if needed.
As a means of reducing the risk, an investor can buy shares in an exchange-traded fund that focuses on the cannabis industry. Thomas is not sure that he has the time to research specific marijuana businesses in enough detail to make a wise investment, so he feels that this alternative may be worth exploring.
Final Thoughts
Phil, Olivia, and Thomas now have a basic understanding of what to consider as they explore the possibility of entering the cannabis industry in various ways. Like the other Justia Legal Guides, the Cannabis Law Center helps ordinary people understand their rights and options so that they can make informed decisions. It aims to present laws, procedures, and related issues in a transparent and accessible form.
