And yet, there is a fair bit of good news on the horizon for new pot shop owners.

The marijuana legalization movement continues to gain significant ground both in the U.S. and abroad. Investors, manufacturers and researchers are paying close attention, with more than a few continuing to take on the potential risks. The legal marijuana industry was estimated to be worth some $10.4 billion last year, employing more than 250,000 workers nationally. There are now 33 states that have moved to legalize the plant for medicinal purposes and 10 states – including California – have legalized the drug for recreational sales and use.

These gains are unlikely to slow significantly, considering the growing swell of public support. The percentage of Americans who support legal marijuana has doubled since 2000, now at 62 percent, according to a recent Pew Research survey. Further, the percentage of adults between the ages of 50 and 64 who use the drug also also doubled over the last 10 years (to 9 percent) and the number of adults over 65 who use the drug has increased seven-fold. Analysts say that by 2030, the industry will be generating nearly $18 billion just in tax revenue.

Our Los Angeles marijuana business plan attorneys know that with the right strategy in communities primed for growth, cannabis companies can expect to thrive. Having a solid plan that accounts for as many contingencies as possible will give business owners the best shot.

Reformed Policy

Although the future of marijuana sales seemed uncertain a few years ago with staunchly anti-cannabis Jeff Sessions at the helm of the U.S. Department of Justice, U.S. Attorney General William Barr has taken a far more lenient stance than his predecessor, saying he prefers national legalization of cannabis. He’s referred to the current disconnect between state and federal laws to be “untenable.” Plus, Democrats now have control of the House. While Democrats have historically favored more pro-pot incentives than Republicans, these issues are becoming increasingly bipartisan in nature anyway. Numerous presidential candidates for 2020 have also expressed support for legalization of cannabis.

The House did pass the SAFE Banking Act, which would bridge a critical gap between state and federal laws for marijuana businesses desperately in need of banking and credit services. With banks pressing for greater clarity, passage appears increasingly likely.

CBD in Demand

The growing demand for medicinal marijuana is thanks in large part to cannabidiol, or CBD, which has been used as a legitimate option for treating seizures, chronic pain and other conditions. Although the U.S. Food and Drug Administration has only approved CBD for limited uses, it does seem likely those approved uses will be expanded. The industry is expected to have some staying power too. Hemp-derived CBD is expected to balloon to a $1.3 billion market in the next two years. That would be three times what it was last year.

Big Business in the Budding Industry

It’s almost certain that the demand for marijuana products is going to continue to expand. The question for many is whether the large corporations are going to largely box out the small mom-and-pop pot shops that dominated the medicinal market for years.

States can play a significant role in addressing this. California, for instance, has put caps on the sizes of marijuana agriculture sites. This, in turn, spreads the benefits to as many players as possible.

It’s also likely we’re going to see technology firms gaining a significant foothold in the industry too, with everything from product testing to delivery services.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

The Future of the Marijuana Industry in America, Oct. 3, 2019, By Deborah Dsouza, Investopedia

According to an article from Forbes, California cannabis business owners are projected to make $5.2 billion in revenue in 2018, with about $1 billion in tax revenue lining state coffers.

But for every new road that is paved on the way to full legalization, there are numerous bumps along the road. California business owners expect plenty of marijuana regulations, with local governments in the state being given a great deal of jurisdiction over whether or not to allow commercial marijuana production and sales.These marijuana regulations and many others were recently discussed during the Marijuana Business Convention & Expo (MJBizCon), according to the Sacramento Bee. Topics included local ordinances, mandates to test and track marijuana, packaging, and potency standards (such as serving sizes).

New regulations have also increased oversight through licenses and fees, as well as recommendations for inspections and advertising, speakers at the event said. All of that in addition to California state and local taxes of up to 45 percent have many in the industry concerned about the potential detrimental effects on profit margins.

Also on the minds of many at the convention was the issue of overproduction in California, which could continue to increase now that the state has decided not to cap growing sites at one acre. The California Growers Association says this disadvantages smaller farms. It also raises questions about where exactly the crops are traveling, with some estimates claiming only one-sixth of marijuana produced on California farms is actually consumed in the state.

Some in the cannabis industry are concerned these regulations and taxes make honest businesses vulnerable to unfair competition with the black market. While legitimate businesses are burdened with red tape and costly tests and reports, businesses operating illegally can disrupt the market. Panel members at the conference said they are hopeful, however, that as sales numbers start coming in and negative perception is quelled, regulations will ease up at least at the local level.

Once a company can get beyond those challenges, they may find profits are difficult to manage when a vast majority of banks will not take on known marijuana business clients due to the risk of losing their federal charter, according to the Forbes report. This is costing businesses extra money in safes and security measures. There are workarounds on the horizon, including systems and programs that keep banks in compliance with the 2014 Cole Memorandum, which was intended to protect cannabis companies who follow state laws from federal prosecution.

However this protection is not guaranteed. Everyone along the chain of California marijuana businesses feels a target on their back as the federal government continually threatens to crack down on states by enforcing national bans on cannabis. Speakers at the convention pointed out that comments by U.S. Attorney General Jeff Sessions have caused large companies to be cautious about investing.

Such marijuana regulations and burdens can make starting a cannabis business very costly. Even worse are the fines that can follow should these regulations not be implemented. Nevertheless, in the face of all of these obstacles, the sheer volume of potential customers, and thus profits, has many clamoring to join the marketplace.

With the proper guidance and full understanding of the marijuana business in California, there is plenty of room to thrive and profit. This is why is it essential to talk to a marijuana business attorney, who will make sure all regulations are addressed in the most cost-effective way possible, while avoiding future penalties that could prove very costly, or worse, ruin your business altogether.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

California regulations could snuff out profits for marijuana businesses, Nov. 21, 2017, By Brad Branan, The Sacramento Bee

California Weed Entrepreneurs Will Make $5.2B in 2018 With Almost No Banks To Put It In, Nov. 26, 2017, By Julie Weed, Forbes.com

Jeff Sessions Hints at a Coming Crackdown on Recreational Weed, Nov. 30, 2017, By Adam K. Raymond, New York Magazine

Proposition 64, Nov. 8, 2016, Prepared by Attorney General, ca.gov

More Blog Entries:

New California Marijuana Regulations Finally Released, Nov. 26, 2017, Orange County Marijuana Business Attorney Blog

Patents, Generally The United State Patent and Trademark Office provides a helpful overview of the patent process:

1. Determine what type of protection is most appropriate for your intellectual property. There are many resources available to holders of intellectual property, including: patents, trademarks, servicemarks and copyrights. MArketing plans, business plans, and trade secrets can also offer protection for intellectual property held by a business entity.
2. Determine whether your intellectual property is able to be patented. IP which has been publicly disclosed cannot be patented. A search of public disclosures must therefore be performed prior to applying for a patent. Literary, dramatic, musical and artistic works can only be protected with a copyright – not a patent. Laws of nature, physical phenomena and abstract ideas cannot be patented, nor can ideas which are not useful or offensive to public morality.
3. Determine which type of patent you require: utility, design or plant.
4. Prepare and submit the written application and fee.

Marijuana, Specifically In spite of marijuana’s classification as Schedule I drug, the Patent Office has been issuing cannabis-related patent since 1942. Forbes reports that fifteen hundred applications for cannabis-related patents have been submitted. After rejections and expirations, approximately 500 cannabis-related patents remain in effect in the United States. There are two main types of patents which will most benefit cannabis entrepreneurs. Plant patents narrowly protect a single “parent” plant and its direct descendants. Utility patents, by contrast, are more broad, and therefore more powerful. According to David Cohen, Ph.D., ninety-five percent of all patents issued in the United States are utility patents. These can protect such intellectual property as: compositions, formulas and methods of cannabis preparation; the method by which a particular strain interacts with human cannabinoid receptors; and methods of treating symptoms with various forms or strains of cannabis. The conflict between federal patent law and federal criminal law creates yet another complication for cannabis entrepreneurs looking to patent their marijuana-related intellectual property. All documents submitted to the United States Patent and Trademark Office can be introduced as evidence in criminal proceedings against a cannabis business or business owner. Thus, if the description of the product constitutes an admission of violation of federal law, the patent application could form the basis of a federal criminal indictment. Cannabis entrepreneurs should carefully have any patent filings reviewed by both a patent attorney and a criminal defense attorney prior to submitting them to any federal agency. Despite the fact that marijuana is still classified as a Schedule I narcotic under federal law, patents can still be obtained for cannabis products pursuant to federal patent law. An experienced cannabis lawyer can protect the financial interests of cannabis business owners through patent establishment and defense. The Los Angeles Cannabis Law Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 949-375-4734. Additional Resources: U.S. Patent Office Issuing Cannabis Patents to a Growing Market, July 24, 2017 by Julie Weed, Forbes More Blog Entries: Pending Marijuana Ruling Could Limit Federal Prosecutions, May 6, 2016, by Cannabis Law Group