Jacob Redmond
Well-Known Member
Marijuana is illegal in Tennessee, but when and if the law changes, the business opportunities will be vast – along with the risks.
The marijuana market is spurring the creation of hundreds of new businesses in marijuana-friendly states, according to Taylor West, deputy director of the National Cannabis Industry Association. Those are the growers and sellers, but also the many ancillary businesses supporting the industry.
"There are quite a lot (of opportunities), given it's a $3 billion industry and growing," she said, speaking to a crowd of entrepreneurs at the Entrepreneurs' Organization's NERVE conference in Nashville on Friday.
Tennessee approved the use of cannabis oil for limited medical purposes this year. With public opinion on marijuana shifting faster than policy changes are being made, it is a matter of time before more states adjust their laws. The Tennessee legislature is expected to consider legalizing some degree of medical marijuana next year, prompting savvy entrepreneurs to consider the potential business prospects should the state law change further.
Once the law is changed, there will be demand for growers, dispensaries, delivery services, data and research. Cannabis-infused edibles, lotions and soaps also represent fast-growing markets and many businesses will need equipment, software, packaging, inventory services, investors, even marketing and real estate.
"Basically, anything that any business needs, the cannabis business needs too," West said.
Legal and financial sectors stand to gain as well. Given the risks still associated with the industry, still illegal at the federal level, marijuana-related businesses need lawyers, accountants and financial advisers to guide them.
Among the biggest challenges for marijuana-related businesses is banking, West said. Banks are regulated at the federal level, causing them to altogether avoid working with the sector. As a result, businesses cannot access bank accounts and deal entirely in cash – everything from paying employees to utility bills.
"You are carrying around large bags of cash," West said. "You are storing tremendous amounts of cash. This is not just logistically difficult, but dangerous."
West said the cannabis association has been turned down for bank accounts or had an account been canceled because of its ties to the industry, even though it is only in an advocacy role. Property owners leasing to marijuana businesses also had have banking issues.
"Anytime you are touching this industry there is a risk," she said.
In addition to financial hurdles, the tax rate is another significant challenge for marijuana-related businesses. Based on federal tax code, businesses that traffic in controlled substances are not eligible for business expense deductions, such as mortgage costs and salaries. While the businesses typically pay about a 35 percent tax on their profit, cannabis businesses pay that on their income, which leads to about an 82 percent tax rate on their profit, West said.
"Think about being a startup and having more than 80 percent of your final profit being sucked away to the federal government," she said.
For those interested in pursuing a cannabis-related business, West recommends hiring an attorney already well-versed in cannabis law and getting educated on the industry as much as possible.
News Moderator: Jacob Redmond 420 MAGAZINE ®
Full Article: Marijuana market: High risk, high reward
Author: Jamie McGee
Contact: Email Author
Photo Credit: Mlive
Website: The Tennessean
The marijuana market is spurring the creation of hundreds of new businesses in marijuana-friendly states, according to Taylor West, deputy director of the National Cannabis Industry Association. Those are the growers and sellers, but also the many ancillary businesses supporting the industry.
"There are quite a lot (of opportunities), given it's a $3 billion industry and growing," she said, speaking to a crowd of entrepreneurs at the Entrepreneurs' Organization's NERVE conference in Nashville on Friday.
Tennessee approved the use of cannabis oil for limited medical purposes this year. With public opinion on marijuana shifting faster than policy changes are being made, it is a matter of time before more states adjust their laws. The Tennessee legislature is expected to consider legalizing some degree of medical marijuana next year, prompting savvy entrepreneurs to consider the potential business prospects should the state law change further.
Once the law is changed, there will be demand for growers, dispensaries, delivery services, data and research. Cannabis-infused edibles, lotions and soaps also represent fast-growing markets and many businesses will need equipment, software, packaging, inventory services, investors, even marketing and real estate.
"Basically, anything that any business needs, the cannabis business needs too," West said.
Legal and financial sectors stand to gain as well. Given the risks still associated with the industry, still illegal at the federal level, marijuana-related businesses need lawyers, accountants and financial advisers to guide them.
Among the biggest challenges for marijuana-related businesses is banking, West said. Banks are regulated at the federal level, causing them to altogether avoid working with the sector. As a result, businesses cannot access bank accounts and deal entirely in cash – everything from paying employees to utility bills.
"You are carrying around large bags of cash," West said. "You are storing tremendous amounts of cash. This is not just logistically difficult, but dangerous."
West said the cannabis association has been turned down for bank accounts or had an account been canceled because of its ties to the industry, even though it is only in an advocacy role. Property owners leasing to marijuana businesses also had have banking issues.
"Anytime you are touching this industry there is a risk," she said.
In addition to financial hurdles, the tax rate is another significant challenge for marijuana-related businesses. Based on federal tax code, businesses that traffic in controlled substances are not eligible for business expense deductions, such as mortgage costs and salaries. While the businesses typically pay about a 35 percent tax on their profit, cannabis businesses pay that on their income, which leads to about an 82 percent tax rate on their profit, West said.
"Think about being a startup and having more than 80 percent of your final profit being sucked away to the federal government," she said.
For those interested in pursuing a cannabis-related business, West recommends hiring an attorney already well-versed in cannabis law and getting educated on the industry as much as possible.
News Moderator: Jacob Redmond 420 MAGAZINE ®
Full Article: Marijuana market: High risk, high reward
Author: Jamie McGee
Contact: Email Author
Photo Credit: Mlive
Website: The Tennessean
