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2 considerations when forming a California cannabis business

Forming a new business comes with many challenging considerations. For example, you must decide how to fund your operation and determine its ideal location.

Those interested in joining the lucrative California cannabis industry have even more considerations awaiting their attention. The steps you take when forming your business can prevent trouble from plaguing you later.

Financial services

Cannabis remains illegal on the federal level, which may pose problems convincing financial institutions like banks and insurers to work with you. It is wise to address this potential issue while forming your business, ideally before you open your doors to the public.

The California Department of Cannabis Control (DCC) regulates marijuana operations and will have detailed records about your company. Authorizing the DCC to share this information with banks and other institutions may help you obtain financial services. 

Safety tip: Consider seeking a legal opinion before authorizing any information sharing.

Business structure

You may have intended to structure your cannabis business as a limited liability company (LLC), but do not be too quick to rule out other structures. Instead, weigh the advantages and drawbacks of your choices to find the structure that offers the most benefits and protections.

Ideally, your business entity should protect your personal assets from liability and provide the best possible tax breaks. Discuss your business entity options with a law professional to uncover more about their risks and benefits.

More to learn

Nationally, the cannabis industry is still an infant and will continue evolving to meet the needs of consumers. At the same time, the legal side of marijuana operations is subject to rapid change as it also continues to evolve. Securing counsel in the planning stage of your company can help ensure your business remains compliant with the law.