Considerations For Establishing A Business In Todays Marijuana Legal Landscape
Things have been looking up for the marijuana business, especially in Colorado which raked in $14 million in tax revenue within the first month. Now the DEA has asked the FDA to investigate marijuana and the different platforms through which people can buy weed online. In doing so, the DEA will consider whether or not to change marijuana’s designation as a schedule 1 substance; under federal law, marijuana is aligned with more dangerous substances like cocaine and heroin.
Almost half the country has passed medical marijuana laws, including 24 states and Washington D.C. Many more states are sure to follow. Besides Washington and Colorado, there are three states that may pass recreational laws in November, along with D.C. and perhaps Oklahoma. For enforcement, the federal government has generally looked to state and local governments to enforce marijuana laws.
So for a business surveying the legal landscape before establishing a marijuana-based operation, what is the atmosphere like now? Is this the time to jump in?
President Obama and Attorney General Eric Holder have said that they’ll back off marijuana businesses where it’s legal to operate them. They changed the banking laws to be more marijuana business-friendly, though banks are still too scared to dive into the market. The House has passed two laws, allowing banking for marijuana-based businesses and telling the DEA not to raid businesses where it is legal, making it a state’s rights issue.
It is important to be cautious. Note that these are relatively new laws in states and technically federal law hasn’t changed either. Next, read the Treasury Department’s and Justice Department’s guidelines carefully and consider what they say. FDA regulations are another aspect to understand well. Certainly, marijuana businesses are lucrative.
Colorado dispensaries, despite the big investment and all the beaurocratic hoops, have said that they’ve made a brisk business month-on-month. But if you are serious about jumping into the marijuana business it’s best to acquire legal counsel right away. Some state bar associations will not allow attorneys to provide legal services that violate federal law. Be sure to have a compliance program built into your business that all partners adhere to that take into account FDA rules and regulations, as well as advice extended through the Treasury and Justice Departments.
The legal landscape for marijuana could change quickly when a new president enters the office. This could subject the business to federal prosecution. Follow all Justice Department and FDA pronouncements. The DEA, depending upon the results of the FDA’s research, may conclude that it recommends moving marijuana from a schedule I drug to a schedule II. Though this would change the calculus of the market dramatically, there would still be regulations to follow in terms of manufacture, sale, and distribution. As for now, businesses, even in states that have deemed it legal, still face federal prosecution under the Controlled Substances Act.