5 Points to Consider Before Venturing Into Cannabis Business

5 Points to Consider Before Venturing Into Cannabis Business

With the cannabis industry rapidly growing, more and more people are interested in investing their hard earned money into the business. But before you make a move, it is important to consider the points that we will outline below. Although the business may look promising at first, there are some things that you need to look at in order to secure your investment. While there is great potential in the cannabis industry, there are risks that are involved in the trade.  

Although many states and countries around the world have legalized the use of cannabis for recreational and medical reasons, the laws are bound to change in the future. As a result, there is a need to plan the future of your business on the same. If you are considering getting into the cannabis business, then you need to take the following points into consideration. 

Expect to have challenges with your bank

Since dealing in cannabis is illegal in many countries, very few banks will be willing to give your company an account. And in the worst case scenario, your current bank may decide to close your account if they discover that you are dealing in cannabis. These issues cover companies that don’t even touch cannabis. Such companies get their accounts closed, payments flagged and extra charges made on their accounts simply because they are associated with cannabis. As a remedy, you need to either clear with your current bank or switch to a cannabis friendly bank.  

Your business expenses are not deductible

In 1981, the US congress passed a law banning companies dealing in illegal goods from deducting anything other than the costs of goods sold when filling for their taxes. Therefore, it important to note that a company that is dealing in cannabis can be taxed 70% or more. If you are in a business that is dealing in cannabis, the idea is to attach as much of your expenses to the costs of goods sold. If your business is not dealing in cannabis directly, you should be aware of the partners and other customers that does. This will help you in making taxation plans for your business.

You can get into trouble by crossing state boarders

One of the things that you need to note about trading in cannabis is that crossing state boundaries is illegal. This is even when you are operating in states where cannabis is legal. On the other hand, it is illegal to transport funds that are aimed at furthering activities that are deemed illegal in a state. You should therefore be aware of Marijuana Dispensary Laws when starting a cannabis business. 

You need to consider each state as a micro-industry and thus, plan your cannabis business based on a specific state’s law. Your situation can become complex if you are operating in multiple states. 

Your business name and trademark may be in jeopardy

Another hurdle that you will face while starting a cannabis business is that the company registrar may fail to approve the name of your business. And if you are already registered, your business name and trademark may be in jeopardy. Although you may be able to register a cannabis business in one state, you may find that it is illegal in the others. 

You can however bypass this rule by registering a company that is not cannabis specific. In this case, you can register a company stating that it is dealing in other products and services that are not related to cannabis. However, this can change when cannabis becomes legalized. As a result, you need to make contingency plans on how to protect your business and assets when cannabis becomes legalized.  

You will not be able to advertise on big platforms

Another thing that you need to note is that, big advertising platforms will not allow you to advertise cannabis. Platforms such as Google, Facebook and other may allow you to post about your products but when it comes to paid advertisements that are off limits. And although cannabis is a big business, these companies are not willing to jeopardize their operations by getting into legal problems.


With the above, I hope you understand the issues surrounding the cannabis business. However, if you get the details right, are able to manage your risks and conform to the rapidly changing environment, you can reap the benefits of the cannabis business. 

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