How to Start a Legal Marijuana Growing Business

Kelly Weimert

March 4th, 2017

Policy, Top News

With cannabis accessibility being on the rise, more and more people are seeking ways to invest in the industry. And one of the most direct ways to do so is to create a marijuana startup of your own.

If you’re interested in starting a marijuana business, your best bet is to look at medical marijuana. While it’s true that recreational cannabis is on the rise, medical marijuana’s more expansive legality and availability make it a safer bet for your money.

So, how exactly do you go about starting a marijuana business? Start with these steps.

Figure out how many plants you’re permitted to cultivate

First and foremost, you should get to know your state’s legal restrictions regarding how many plants you’re allowed to grow for personal use and for your collective. Different states have different requirements, so familiarize yourself with your resident state’s standard medical marijuana plant count protocol.

That said, you should also keep in mind that as marijuana laws change, so, too, will the policies and standard protocol affecting your business. So keep yourself privy to any policy changes that might impact the legality of your business and its practices.

Acquire proper documentation

If you want to ensure your marijuana startup prospers, it’s imperative that you have the right documentation so that if and when inspection occurs, you’ll pass with flying colors.

The fundamental documentation you should always have on hand includes a collective cultivation agreement and patient recommendations for the number of plants you aim to grow for your collective. For these documents, it’s in your best interest to overshoot the number of plants you intend to grow. If you wind up with more plants than your documents indicate, you run the risk of getting into serious legal trouble.

You should also be sure to keep a copy of the corporate bylaws and grower agreements of all locations that you plan to grow and cultivate the plant.

Keep a copy of all documentation in plain view of your grow sites, and store additional copies in a safe place off-site so that you can easily replace anything that might go missing.

Draft a patient grower agreement

As it pertains to your marijuana startup, the patient grower agreement is the written agreement between you, the person who intends to grow medical marijuana, and the collective they’re growing for.

Thorough details of the agreement should be plainly laid out in writing, including the number of plants you intend to grow, policies regarding record retention, any expense reimbursement protocol, potential restrictions on the project, and any other concerns regarding health. Additionally, it should explicitly state that the marijuana being grown will only be used for the purposes of the collective and won’t be distributed to anyone outside of it.

You should also keep in mind that the patient grower agreement gives your collective the right to inspect your grow site at any time they wish for any reason.

Risks facing growers

Any business startup comes with its risks, but the unprecedented nature of marijuana startups mean that starting your marijuana business will come with a subset of risks all its own. To properly manage these risks, or avoid them altogether, it’s critical that you first make yourself aware of what they are.

Some risks facing marijuana growers include:

  • Supply – Some growers are overzealous when it comes to estimating the demand for their supply. Study the market in your area to ensure you don’t overestimate your population’s needs.
  • Thieves and Raids – A lot of seasoned growers will advise you to stay quiet about your business. While it’s tempting to share your excitement about it, keep in mind that sharing also makes you more susceptible to being burgled or experiencing wrongful raids by authorities.
  • Expenses – In addition to the standard business expenses of rent, water, and basic electricity, a marijuana startup has expenses all its own, such as soil, nutrients, pesticides, growth electricity, clones, and any structural changes that need to be made to the location for growing.
  • Legality – Due to the fact that marijuana has only recently started to become legal and available, you can expect to see a lot of laws shifting back and forth on the matter, which may or may not impact the legality of your business and its practices.

Despite its potential risks, starting a marijuana business has the potential to become quite fulfilling and lucrative with the right amount of research, documentation, and maintenance. But if you’re feeling too hesitant to make the final leap into creating a business of your own, then consider investing in already-established public companies as a less risky alternative.

To learn more about cannabis startups, sign up for our free newsletter using the form on the right.

Kelly Weimert

About Kelly Weimert

Kelly is a full-time freelance writer based in Austin, TX. A happy hybrid of geek and hippie, when she's not nestled into her couch crankin' out crafty prose with her miscreant Chihuahua, you can find her frolicking outside to keep her sanity in check.

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