Cannabis Law

Entering the cannabis industry may present high rewards and high risks for business owners.

Loans from banks may not be available, but businesses may pursue funds from private investors.

Employees may receive substantial benefits but must comply with strict rules governing the industry.

Rapid growth and unpredictability make this sector an attractive target and a financial gamble.

Frequently Asked Questions
  • What are some examples of cannabis businesses?
    Common examples of cannabis businesses include cultivators and harvesters of marijuana plants, processors of raw cannabis materials, and retail facilities like dispensaries that sell products to consumers. Less mainstream types of businesses include companies that make products used to consume marijuana, delivery services that transport marijuana products to consumers, and testing facilities.
  • Why is it hard for cannabis businesses to get services from banks?
    The cannabis industry remains illegal under federal law, and banks must comply with federal regulations that make it challenging to lend to an illegal business. A bank may need to file a suspicious activity report for each transaction involving a marijuana business, for example, and they may not be insured by the Federal Deposit Insurance Corporation if they issue loans to these businesses.
  • Can I smoke marijuana on the job if I work for a dispensary?
    Probably not. Most dispensaries and other cannabis businesses impose rules regarding employee drug use and drug testing that resemble rules at other businesses. Some businesses in this industry may monitor employee drug use even more carefully than the average business, since they are especially concerned about preserving a clean image.
  • Can a cannabis business ignore federal laws protecting employees from discrimination?
    No, a cannabis business cannot ignore federal laws protecting employees from discrimination. Laws such as Title VII of the Civil Rights Act apply to these workplaces, even though the cannabis industry is illegal under federal law. The Equal Employment Opportunity Commission even has pursued litigation to assert the rights of employees at marijuana businesses.
  • How does a marijuana exchange-traded fund work?
    A marijuana exchange-traded fund can hold the stocks of many companies in the cannabis industry. Investors then can buy shares in the ETF rather than a specific company. This can be an attractive alternative for an investor who is interested in entering the cannabis industry but does not want to commit to a single target.
View More FAQs ›
Popular Topics
  • Licenses for Cannabis Businesses
    A cannabis business owner must get and maintain licenses from state and sometimes local agencies, which may require complying with rules specific to cultivation, manufacturing, or retail sales.
  • Taxes for Cannabis Businesses
    States often heavily tax cannabis businesses, and the income that they generate is subject to federal income taxes, although they do not qualify for federal tax credits or tax deductions.
  • Delivery Services in the Cannabis Industry
    Marijuana delivery services may need to get specific permits and comply with tight restrictions in areas such as GPS tracking, record-keeping, and the quantity of cannabis in their vehicles.
  • Unions in the Cannabis Industry
    Some states require or incentivize cannabis businesses to refrain from interfering with the organizing efforts of unions, while unions refrain from interfering with business operations.
  • Buying Cannabis Seeds
    A business usually should purchase seeds from a local seed company or dispensary, since bringing seeds across state lines or international borders can lead to confiscation and criminal charges.
View More Topics ›