When Do Cannabis Business Owners Need a Lawyer?

Although many states have legalized the sale and use of marijuana, it is still an illegal drug under federal law. Under federal law, it is unlawful to use, grow, possess, or distribute marijuana. It does not even recognize an exception for medical marijuana.

The good news for cannabis operations is that the federal government generally defers to state law when it comes to cannabis regulations. At the same time, cannabis businesses must abide by state regulations regarding the manufacture and sale of medical marijuana and recreational cannabis.

For this reason, cannabis business owners and operators should have legal counsel on hand. They need an attorney with extensive experience in the cannabis practice and will also want to consult attorneys from other practice areas.

Here, we’ll explain when cannabis operations owners should talk to an experienced cannabis attorney and discuss events that may trigger the need for legal services.

High Application Costs and Complex Regulations

Anyone interested in opening a marijuana dispensary or a store that specializes in CBD and THC products should understand how daunting the application process can be. It can be tough to get state approval for your business. It can also be costly.

Cannabis laws vary from state to state. State laws regarding cannabis legalization range from decriminalization to outright legalization of marijuana. Some states make exceptions for medical marijuana, while others approve full recreational adult use.

While most states have legalized cannabis in some way, that doesn’t mean it’s easy to open a dispensary. Many states have firm limits on the number of marijuana businesses that can exist at one time. To maintain these limits, some states only issue cannabis licenses during narrow application periods.

How Expensive Is It to Open a Marijuana Business?

Joining the cannabis industry is expensive. Not only do you have the costs of corporate formation, but you also have to pay high license application fees.

For example, New York charges a $10,000 application fee for a medical cannabis dispensary license. States also charge thousands of dollars for license renewals.

Many state regulations require that prospective cannabis business owners endure strict security and financial measures. 

For example, the State of Washington requires that owners and employees of cannabis operations undergo extensive criminal background checks. These background checks can become expensive and cumbersome.

It’s not just state governments that have strict cannabis laws. Many municipalities have regulations on marijuana businesses. In Colorado, cannabis businesses must obtain licenses from the county or municipality. 

Obtaining a license is expensive and time-consuming. The application process can take a lot of time and has pressing deadlines.

Any entrepreneur interested in entering the cannabis industry should consult a cannabis lawyer. If a potential owner of a cannabis operation fails to follow state cannabis laws, they may lose their cannabis license.

A Real Estate Lawyer Can Help with Zoning Issues

Cannabis businesses face unique real estate challenges, such as zoning restrictions. Many states regulate the locations where you can operate your cannabis business. A property suitable for a grower or processor may not be ideal for a dispensary or ancillary cannabis company.

One way to avoid issues with zoning is to hire a real estate attorney with experience in your state’s land use and cannabis laws. They can help with the following:

• Ensure regulatory compliance with state and local zoning regulations

• Negotiate land or building lease terms unique to cannabis businesses

• Engage in dispute resolution with municipal or state agencies

How Can an Intellectual Property Attorney Help?

As the cannabis industry grows, business owners are starting to design new products and unique packaging. With the rise of cannabis companies, competitors may try to steal ideas from each other.

An intellectual property attorney with a focus on cannabis law can:

• Establish a trademark to protect your brand and cannabis products

• Enforce patent and trademark rights against infringers

• Create policies and procedures to maintain confidentiality and enforce trade secret rights

Protecting your company’s intellectual property can also help avoid commercial litigation with other cannabis operations. If other players in the marijuana industry know you have an attorney willing to fight to protect your intellectual property, they’ll be less likely to infringe on your trademarks and copyrights.

Corporate Formation and Corporate Governance

Many business owners, especially startups and entrepreneurs, are not well-versed in business formation, corporate governance, and corporate mergers. However, with the marijuana business growing so rapidly, the type of business you form becomes paramount.

Before you apply for your marijuana license, you should consult a business law attorney to help with the formation of your company. The type of company you choose will impact the number of customers you expect to visit your business. It will also determine the size and location of your company.

An experienced business attorney can help with your business plan and iron out any legal issues with prospective partners, co-owners, and investors.

Specifically, a business lawyer can help with the following:

• Number of owners and employees at your business

• The levels of liability protection and risk mitigation you need

• Tax implications of different types of business structures

• Legal and regulatory requirements

• Compliance with any local or state marijuana laws

Will You Need a Product Liability Lawyer?

Most people who open a new business can never imagine why they would need a product liability attorney. However, even if your cannabis company only sells products made by other manufacturers, you could still be legally responsible for consumer injuries.

When consumers get hurt using products or services, they may have a legal claim for damages. They typically hire a personal injury lawyer to file a suit against the manufacturer, distributor, and retailer. This means that the courts may fine owners and operators of a cannabis dispensary or other retail outlet liable for civil damages.

If this happens to you, talk to a product liability attorney as soon as possible. They’ll handle your defense and, more than likely, negotiate a settlement of any legal claims.

There’s a Chance Your Company May Need a Criminal Defense Lawyer

One of the biggest fears of dispensary owners is that they may face criminal charges for running their businesses. The state may accuse them of selling cannabis products to underage customers.

Law enforcement may arrest an owner or employer for allegedly selling illegal controlled substances.

If you own a cannabis company and find yourself the subject of a criminal charge or investigation, contact a criminal defense attorney immediately. Your attorney will devise a strong legal defense and help fight the charges. They may also be able to negotiate a favorable plea bargain.

Getting Legal Advice

Although marijuana is legal in some states, running a marijuana business still comes with risks. Consulting a cannabis business attorney at the start of your foray into the cannabis industry is a reasonable investment. You should also become familiar with attorneys in other practice areas to help your business along the way. You never know when you might need them.