There are great opportunities to be had in Michigan’s legal marijuana industry. Whether you’re considering forming a grow operation, a dispensary or a retail establishment, there is plenty of room for growth.
That said, there are risks involved in any business startup. The legal marijuana industry might be riskier than most because the fundamental rules and regulations are still up in the air. With greater risks, however, come greater potential rewards.
You’ll need to take steps to mitigate the risk. A law firm with experience in the legal marijuana market can help you by tailoring startup and regulatory compliance services to the specific industry in Michigan.
Ready to get started? The first step is choosing the appropriate business entity.
When considering a business entity, you should focus on factors such as the cost of setup, the ease of administration, your management style, how the entity is taxed and limiting personal liability for business risks.
There is no single business structure that is best for everyone, but there are those that limit personal risk more effectively than others.
For example, a sole proprietorship is the simplest business structure to set up and operate. It typically requires no special setup; a tax ID number and any necessary licenses or permits suffice. However, it offers no liability shield. If a sole proprietorship incurs liability, its owner incurs liability. General corporations also do not shield the partners from business liabilities.
Other business structures do offer a liability shield, meaning that only the business is liable for its debts, fines, judgments and the like. These include:
- Limited liability companies (LLCs) and professional limited liability companies (PLLCs)
- Limited partnerships
- Corporations, including C-corps, S-corps and professional corporations
The next step is understanding compliance
All businesses with employees have to comply with some legal rules, such as tax laws, employment laws and OSHA standards for workplace health and safety. Most must carry general liability insurance, workers’ compensation insurance, unemployment insurance and other types of insurance. Some require licenses or permits in order to operate, or in order to be involved in something essential to the business such as handling hazardous waste.
Depending on the type of marijuana business you’re interested in starting, there could be strict rules about security, employment, product purity and potency, waste disposal, advertising and more. The rules are currently under consideration by the legislature, but we can gather some insight from how medical marijuana concerns have been regulated in Michigan.
You will also need to make arrangements for handling large amounts of cash securely, as banking continues to be a problem for the legal marijuana industry.
Get help from a law firm with actual industry experience
Many business law firms can help you choose and set up a business entity and comply with fundamental business law. Very few have actually studied the regulation of legal marijuana in any meaningful way. Before you dive in to this potentially risky but lucrative industry, make sure you’re working with attorneys who know how to minimize the risks and set your company up for success.