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Expert Answers to Biz Questions
Listen in! Pick up some expert advice to a reader's question that we selected from CyberSchmooz.
4 Ways Legal Marijuana Could Affect YOUR Business
Whether or not you live in a region where recreational marijuana consumption is legal, marijuana’s legalization will eventually touch your business—and sooner than you think, too! Whether you are a baker, an entrepreneur, or are just making a name for yourself in the sharing economy, recreational marijuana could change your business—for better or for worse!
Fortunately, there is still time to chart course and get in the ground floor of something momentous. Knowing the risks and rewards the recreational marijuana can offer is the first step to protecting yourself and boosting business. Here are 4 ways legal marijuana affects you and your company.
Millions of Dollars in Tax Revenue
Legal marijuana stands to bring in over a hundred million dollars in tax revenue, as well as countless jobs in direct and ancillary industries. This influx of cash should surely (hopefully!) yield great results in the form of small business grants, tax breaks, and other goodies that can even benefit businesses that aren’t marijuana adjacent.
If you don’t live in a state where recreational marijuana is legal, that might be changing in the near future. Legalization fever is spreading fast.
You Need to Be Careful
The fact that recreational marijuana is still illegal on a federal level means that most--if not all--players in the supply chain are in a precarious position. In some cases, there seems to be no rhyme or reason concerning when the government selectively enforces federal laws when it comes to growing and selling marijuana.
Even in legal states, employers may have the right to terminate employee contracts because of the employee’s use of recreational marijuana. (That said, I would suggest that employee consult with an employee rights attorney.) Recreational marijuana will rake in a ton of cash for early investors, but it does carry some sizeable risks with it.
There are other, stranger, and more costly restrictions that affect growers and sellers in legal marijuana states. For example, businesses that touch the cannabis plant in any way—such as growers or dispensaries—cannot write off business expenses in their taxes. Further, federal banking systems cannot be used in the investment, sale, or purchase of plant-touching companies.
And the worst part? The hurdles these businesses face are always changing. The legal landscape for recreational marijuana shifts on a monthly, if not daily, basis in a lot of newly legal states. For this reason, retaining some sort of legal counsel is advisable for nascent businesses—but these services don’t come cheap.
There are Plenty of Ways to Get In On the Action
Ancillary businesses like finance services, compliance software, and so on, have all become increasingly important to maintain the infrastructure of the budding (get it?) cannabis industry. It’s sure to be a behemoth, so getting in on the ground floor while there is still room for growth would be a smart investment for any company. If you have the tools to help navigate or document the cannabis supply chain, you should make good use of them.
There are other ways to capitalize on the marijuana boom divorced from the world of technology. Attractions such as “bud and breakfasts” have turned traditional bed and breakfast models on their heads. Similarly, the nascent popularity of paint and sips has been overshadowed by the explosion of “puff and paints.” They both follow a deceptively simple model: customers are guided through painting as they partake in libations. It’s genius!
These businesses all have one thing in common: it’s a tried-and-true business with a twist. It makes end users think, “Why didn’t I think of that?” These businesses are so successful because they are just novel enough without reworking the wheel. Entrepreneurs are set to make millions from these types of companies.
And it could be your business raking in the dough, too, if you have the stomach to go for it.
Don’t Underestimate the CBD Market
Cannabidiol (CBD) is a non-psychoactive chemical found in the cannabid sativa plant. Restrictions on the sales of CBD products are much lower and, in some cases, non-existent on a federal level, so long as they contain a negligible to non-existent amount of THC. Thus, consumers around the United States have much freer access to CBD products for medicinal, therapeutic, or recreational purposes.
But even in states where recreational marijuana is legal, demand for CBD products is growing. Many people prefer daily use of CBD compared to daily use of THC found in marijuana, because CBD is not psychoactive.
If you are eager to cash in during the legal marijuana gold rush but the uncertain status of marijuana on a federal level makes you uneasy, investing in CBD-centric businesses could be your ticket.
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