From the Canadian border in Washington to the Mexican border of California, the entire West Coast has passed laws to legalize recreational marijuana. That green wave is moving east, with eight states and Washington, D.C. legalizing recreational marijuana and 30 states in total legalizing marijuana in some form. While the industry looks like the Wild West from the outside, it has taken years to grow to the point where it is today. As of early 2018, there are plenty of opportunities to profit from pot. If you live in a state where marijuana is legal, follow this guide to see if you have what it takes to earn some green from this green plant.
Where is marijuana legal?
Recreational marijuana, which is only legal for those 21+ and sold under a system similar to alcohol, is big business. With the additions of several states at the start of 2018, the legal marijuana market is expected to pass $31 billion. That’s a pittance compared to the $1.3 trillion+ alcohol market, but also offers a big opportunity to get in on the profit as this industry grows.
Recreational and medical marijuana is legal in mostly Western, Northeast, and Northern border states, with much of the South treating marijuana like the last update on the topic came in the 1936 film Refer Madness. According to Governing.com, recreational marijuana is legal in Washington, Oregon, California, Alaska, Nevada, Colorado, Maine, Massachusetts, and Washington, D.C. Medical marijuana is legal in 22 additional states.
But keep in mind that while these states have legalized marijuana, the Federal government still considers possession and use of marijuana a crime. This puts marijuana in a legal limbo between state and national laws that don’t match. Any investment or participation in the marijuana industry may be considered a crime, even if not locally, so proceed with caution and seek local, legal advice from the start to ensure you don’t wind up with your business assets seized, behind bars, or in court facing fines.
Lawyer up
If that last sentence didn’t put the fear of the law into you, this section should drill in the importance of legal issues when it comes to the marijuana industry. According to United States law, marijuana is a schedule one drug. This means the government does not recognize any potential medical value or legal use of the drug at the Federal level. That makes marijuana more strictly regulated than heroin in many ways, as heroin is related to a family of medications used for pain management.
So even if your state’s voters said yes, the FBI can and has shown up at marijuana businesses in legal states to crack down on the “illegal activity.” Hope for the best and plan for the worst. Get a lawyer to help guide you through the process of opening a legal marijuana business so you don’t make any huge mistakes that cost you big down the road.
Raise capital
Next, you’ll need a lot of money to open and fund your business. But because you are in the green industry, you may find it hard to get green from investors (sorry, I just can’t help myself with these bad weed jokes). Depending on how you structure your business and your state’s laws, you may need to build and operate a greenhouse, run your own transportation, and staff and operate a retail storefront. That’s a lot to pay for up-front, particularly when you may not be able to open a bank account because of your industry.
Only invest yourself what you can afford to lose in this business. Just like in Las Vegas, your fortune can turn in a moment. But if you can build a sustainable business model around legal marijuana, there is a lot of money to be made. With billions of dollars up for grabs, you’ll certainly have competition as well.
Be prepared for a business minefield
How do you run a business when you can’t open a bank account? How do you deal with Federal taxes when they consider your business illegal? What should you tell your father-in-law you do for work at Thanksgiving dinner? There are many questions and risks when going into the marijuana industry, but with the right preparation and legal guidance, you can navigate this business minefield.
When you can manage the risks, there is plenty of profit to be made. There’s nothing wrong with getting your slice of the pie… or brownie.
