Cannabis Business Formation in San Diego

Starting and maintaining any type of business is a difficult and demanding endeavor. But starting and maintaining a cannabis business can be even more challenging. In addition to normal obstacles like cash flow, growth, marketing, and customer relations, a marijuana business must maintain strict compliance with all laws and regulations—or face major penalties. With the right legal team on your side, you can ensure that your cannabis business has the right foundation for future growth and expansion.

The team at Purdy & Bailey, LLP is ready to help. Our San Diego cannabis lawyers bring 65+ years of collective insight and experience. Call (858) 360-7080!

Unique Challenges for San Diego Cannabis Businesses

A startup in the cannabis industry faces unique challenges that average businesses do not have to face. In California, it is important to understand what legal obstacles and difficulties may be involved.

Challenges for local cannabis businesses include:

• Public perception
• Compliance with law enforcement authorities
• Compliance with local, state, and federal regulations
• Banking approval and access

Purdy & Bailey, LLP has more than half a century of legal experience and is associated with NORML, Cannabis Entrepreneurial Association, and Cannabis Coalition. We know how to meet these challenges head-on and work to help businesses thrive in this industry.

What You Need to Know About Starting a Cannabis Business in San Diego

Passed in 2016, Proposition 64, the Adult Use of Marijuana Act, legalized the possession and use of up to 1 ounce of marijuana and personal use cultivation of up to 6 plants per residence by an adult aged 21 or older. It also established a license regulation system for the commercial production and sale of cannabis beginning on January 1, 2018.

Before you think about opening a business in this industry, here are a few things you need to know.

You’ll Need a License and a Permit

In order to begin selling cannabis, you will need a permit. All businesses require a Seller’s Permit from the Board of Equalization (BOE). Applying for one is relatively simple. You can use the BOE registration process online or fill out your information in person at one of their offices.

Additionally, you will need a license for commercial marijuana sales. These are not yet available for purchase, but California will begin issuing them next year, in 2018. You will either need a Type 10 or Type 10A license, which can be granted to retailers and dispensaries. The 10A restricts you to no more than 3 cannabis retail sites.

Marijuana Is Illegal Under Federal Law

The U.S. government still lists marijuana, like heroin, as a Schedule 1 Controlled Substance. This means the government could legally enforce the law by arresting people who have possessed, cultivated, or distributed cannabis. However, the Department of Justice (DOJ) issued a guidance memo to prosecutors stating that medical marijuana cases are not a priority. The current presidential administration has made noises about cracking down on recreational marijuana use. 

Its federal illegality also means you will have fewer federal protections. The U.S. government, for example, oversees bankruptcy cases. If you need to declare bankruptcy, you wouldn’t be protected under federal bankruptcy laws. You also can’t deduct business expenses from your revenues for federal tax purposes.

Educate Yourself on the Industry

If you didn’t know there are different marijuana strains, it’s time to get educated. Scientists have been working on adapting different types of cannabis to maximize analgesic effects and minimize psychedelic qualities. Certain strains, such as many in the Sativa category, are more likely to fill you with energy, while Indica strains can put you to sleep. Being knowledgeable about the many different flavors and effects will make you a more trusted seller.

What Kind of Marijuana Business Should I Start?

Now that California has passed Proposition 64, you will be able to receive a license to start your cannabis business in January 2018. However, receiving a license to start your marijuana enterprise is only the beginning. In order to effectively manage your new business, you will need to consider the following:

Marijuana Dispensary or Collective

Most people looking to get into the marijuana industry are hoping to do so in a retail setting, running what is most commonly known as a dispensary or collective. These are stores that generate income by supplying legal consumers with cannabis-based goods and commodities. Generally speaking, dispensaries produce a greater profit than any other type of marijuana business, although they are the most risky and challenging to start from scratch. However, while dispensaries are perhaps the most well-known type of cannabis business, there are other avenues you can take when looking to turn a profit in the marijuana industry.

Marijuana Cultivation Business

You could also start a marijuana business that focuses on cultivation. In a cannabis cultivation business, you stock the shelves of dispensaries and other marijuana businesses. In order to effectively run a cultivation business, you would need to have significant agricultural, especially considering the hefty financial investment that a cultivation business requires on the front end.

Cannabis-Infused Product Business

Creating and selling cannabis-infused products could also generate significant revenue for business owners and investors. Many individuals and marijuana dispensaries purchase cannabis-infused products such as cannabis-infused beer, oils, baked goods, candy, and more.

Getting Your Cannabis Business Off the Ground

Helping countless businesses in San Diego, the legal team at Purdy & Bailey, LLP has a track record of success. We provide invaluable advice for businesses and personalized attention for each and every client's needs. Why venture into the cannabis industry alone? We are committed to helping you and your business succeed in the long run. “On target. On time. First pass.”

Call our San Diego cannabis attorneys to receive a courtesy confidential consultation at (858) 360-7080.