Jan 28, 2016 | Marijuana Legalization, MMJ News
There has been huge growth in the American cannabis industry since 2012, when it dawned on business that the government was going to legalize medicinal use sooner than later. Start-up costs began at less than $5,000 for home growers to over a $1 million for top line extraction equipment. Since then, average time to profit has been little short of phenomenal.
How the Cannabis Industry is Faring
Compared to other start-ups, marijuana is doing better than most, especially given the controversial nature of the product.
– 3% are facing ‘significant losses’
– 15% are ‘losing some money’
– 28% are at breakeven point
– 38% are ‘modestly profitable
– 16% report say they are ‘very profitable’
Where there is profit it comes fast, with 62% claiming success within 12 months, and only 6% taking more than 3 years. Compare that with dot com technology, where some of the biggest names are still bleeding money. Some day you could rue not casting your net, while the fish were running in such numbers.
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Jan 22, 2016 | California Marijuana Laws, Marijuana Legalization, MMJ News
When it comes to legal marijuana and setting up the legal entity for a new medical marijuana business, entrepreneurs need to first focus on what is allowed by their respective state. Some states allow traditional LLC or corporate structures while others require a non-profit or “not-for profit” collective or a cooperative, as you can see from the California non-profit collective collective form. Entrepreneurs should also be careful to follow other small details in the guidelines for marijuana related businesses.
No matter which entity you choose, most lawyers recommend some form of incorporate, largely to protect yourself from personal liability for business debts and lawsuits. Yes, you can go it alone as a sole proprietor or run your business as a partnership. But it places additional obstacles in your way. Please also remember that the liability protection of a corporation or LLC does not extend to criminal activities. As such, you are still subject to arrest (particular from a Federal standpoint) although these prosecutions appear to be decreasing.
There are the questions of whether to take on a traditional incorporation or a limited liability company (or LLC). This question is more difficult to answer – both are useful in particular circumstances. Then there is the issue of whether to become a non-profit or a for-profit company. These rules vary by state, sometimes with fairly dramatic differences and other times with only subtle distinctions. It’s best to find the appropriate code section for your state, typically organized under the Secretary of State’s office.
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Jan 4, 2016 | MMJ News
Maybe it’s time to zero out your marijuana business’s marketing and advertising budget.
The U.S. Postal Service has issued a statement saying that it’s illegal to mail material with marijuana advertising, even in those states that have legalized marijuana. The USPS cited the federal Controlled Substances Act as the legal underpinning for its decision, according to Thomas Marshall, the Postal Service’s general counsel.
Additionally, it’s illegal to use the U.S. Mail to facilitate any act that constitutes a felony, Marshall said.
The Post Office took the step of issuing the statement, after Democratic members of Oregon’s congressional delegaton asked Postmster General Megan Brennan for a more “detailed explanation” of its policy. The delegation’s action followed a warning sent by the Oregon Newspaper Publishers Association to its members, urging them to reject any advertising related to marijuana. Many newspapers are circulated through the U.S. Mail.
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Dec 22, 2015 | Marijuana Legalization, MMJ News
Cannabis extraction is a process that releases essential oils from cannabis flowers, in order to deliver better patient treatment, or to produce a more concentrated high for seasoned smokers. The resulting concentrate variously goes by the name cannabis oil, budder, wax, or shatter depending on the quality of the product and / or the preferences of the consumer. In most instances, the user smokes the product but it can also be used to make edibles.
Common Methods of Cannabis Extraction
Extraction of cannabis oil can be a complex, potentially dangerous activity, with the exception of the dry sieve and water methods we describe shortly. If, for whatever reason you decide to do your own extraction using other methods, we recommend you do significant research first, perform extraction in a well ventilated area, wear flameproof clothing, and have a fire extinguisher nearby. Here are the commonest methods currently in use.
Cannabis Extraction Using Non-Hydro Carbons
– Dry Sieve Extraction Method – Equipment Cost: Minimal
This method for releasing resin involves agitating the raw product over a screen that allows the resin buds through for compression into blocks. Works best with frozen material that snaps easily.
– Isopropyl Alcohol Extraction Method – Equipment Cost: Minimal
Alcohol is highly water-soluble and works by dissolving the heavier oils from the plant matter. The mixture must then be carefully heated to remove the alcohol from cannabis oil.
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Dec 18, 2015 | Collective Operations, MMJ News
Banking on standard tax deductions from your marijuana business? Don’t count on it.
Four states and the District of Columbia have legalized recreational marijuana. While that may be a good thing for state tax collections in Colorado, Washington, Oregon, Alaska and Washington, D.C., the federal level is an entirely different story.
The issue is that the feds still regulate marijuana as a controlled substance. That means it’s illegal, on the federal level, to sell or possess the drug. That legal status also gums up the works when it comes to the application of tax laws.
A memorandum from the I.R.S. chief counsel, numbered 201504011, spells out in more detail the legal position of the feds.
No Tax Deductions for Controlled Substances
The relevant I.R.S. tax code section is 280E, which specifically forbids deductions for any business that traffics controlled substances. The I.R.S., on a regular basis, uses the code language to deny requested tax deductions for marijuana businesses.
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Dec 15, 2015 | Marijuana Legalization, MMJ News
Some investment gurus are comparing medical marijuana investment opportunities to the 1849 Gold Rush that lead to the declaration of the state of California. There were three types of beneficiaries in those days. These were the miners who did the work, the bartenders and ladies that entertained them after dark, and the investors who bankrolled their businesses.
As prohibition fades before relentless challenge for universal legalization, the possibilities are increasingly evident of making relatively large sums of money through direct investment. If California is budgeting $134 million in tax revenue, how much money do you think is changing hands at the coalface? Ten per cent of that through passive investment seems a better prospect than publicly traded shell and penny stocks.
Tracking Down a Good Direct Investment in MMJ
Specialist assessment is required before passive investment in the emerging medical marijuana industry, because the company owners lack seasoned business skills. Many are emerging entrepreneurs who have been growing medical marijuana in their backyards, and in some instances selling. They may lack the skills to promote a good investment that just needs cash to take a positive step.
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