How To Profit From Weed – Legally

Hundreds of entrepreneurs in the great state of Colorado are ready to invest in cannabis as a cash crop, but becoming a cannapreneur isn’t as simple as applying for a business license. What’s more, there are staggering costs that will bar most smaller players from entry. Many state authorities consider Amendment 64 to be a pilot program for nationwide legalization, and as such, they wish to ensure that only the most qualified are allowed to sell marijuana legally. Basically, this comes down to established business owners with money to spend. Don’t lose hope just yet: in a few years, the costs of entry may fall substantially, and you can familiarize yourself with the complex application process in the meantime.

Medical Marijuana Dispensaries

Before the advent of medical marijuana, scores of critically-ill citizens took to the streets to secure their pain-mitigating marijuana. That’s no longer the case, and there are dozens of businesses that are profiting from it. California pioneered medical marijuana, and the medicinal herb has been available there since 1996. Today, much of the nation is awakening to the medical properties of cannabis despite the fact that the US government still classifies it as a Schedule 1 drug. This means, in a nutshell, that as far as the government is converted, cannabis has no medicinal properties. Whether marijuana’s healing properties are real or imagined, you may be able to get in on the action. Let’s take a look at a few preliminaries:

  • Obtain a business license
  • Establish a business structure: sole proprietor, partnership, LLC or corporation
  • Obtain a Federal Tax ID number and seller’s permit

These three steps will see you to the cusp of operating a medical marijuana dispensary, but there’s a catch: a $2,000 application fee, and you must secure and maintain a license from the city of Denver’s Department of Excise and Licenses as well as Colorado’s Marijuana Enforcement Division. Additionally, there are three types of licenses, and you’ll need to know exactly which you need: the Medical Marijuana Center License, the Medical Marijuana Operational Premises Cultivation License and the Medical Marijuana Infused Products Manufacturing License. Obviously, obtaining all three will afford you the most flexibility in your day-to-day business operations.

In addition to the $2,000 application fee, there is a yearly $3,000 license fee to contend with. While the marijuana business is booming as of 2014, this steep fee could see you out of business if you aren’t careful. There are three additional one-off fees that you might be hit with:

  • Transfer of ownership: $100
  • Modification of Premises: $150
  • Transfer of Location: $750

If you’re leasing your establishment, you are required to furnish written permission from your landlord to cultivate, sell and store marijuana on the premises with your application. Note that you’ll also have to provide a written business plan with your application that includes a description of the products and services that you intend to provide. You’ll also require a detailed floor plan of your intended space, drawn to scale on 8½ x 11” paper. Here are a few other required items:

  • Security plan that details how you intend to comply with city ordinances related to the sale of marijuana.
  •  An area map detailing a one-quarter mile radius from the boundaries of your property that shows the relative position of any schools or child care establishments. This too is to be drawn to scale on 8 ½ x 11” paper.

As you can see, the application is quite extensive, and you will likely require the services of a good attorney to navigate it all. Obtaining a license becomes even stickier if you intend to sell recreational pot. Prior to July 1st, 2014, to even be considered for a license, a resident of the state had to have already been an owner of a medical marijuana dispensary in good standing. After this date, however, entrepreneurs can file a Notice of Intent to apply for a license to sell recreational marijuana. Note that you aren’t required to submit this form, but the Marijuana Enforcement Division will give preference to those who have. If you intend to sell marijuana in any capacity in Colorado, it definitely pays to have prior business experience and a bankroll sufficient to secure expert consultation.