From Surety Bonds To Accounting: Five Essential Things You Need To Understand Before Opening A Marijuana Business
Over 20 states now have legal marijuana, and several states including Colorado, Washington, Oregon and the District of Columbia have legalized marijuana for recreational sales. However, the laws and regulations in all of these areas are complex, and in most cases, you can't just sell to friends out of your basement.
Instead, you need to start an actual business. Wondering if it is possible for you? The laws vary from state to state, but here are several of the issues you need to be aware of:
1. Start-Up Money
According to the plotline of shows such as "Weeds" (a sitcom focused on a suburban widow who decides to support her family by selling marijuana), old school illegal marijuana dealers could start their business with just a little bit of money. Even if they didn't have cash, they could possibly convince wholesalers to front them merchandise until they had turned a profit.
Unfortunately, the costs to start a marijuana business run into the tens of thousands, and in order to get all of the necessary permits and retail space, you need start up money. As many banks may be reluctant to help, you need a high-balance credit card, a savings account or a loan from a family member.
2. Surety Bonds
One of your start-up costs is going to be surety bonds. A surety bond is a special type of insurance policy that guarantees the bond holder will follow through with something. If the surety bond holder fails to follow through with their obligations, the affected party can make a claim to the bond underwriter.
For example, Colorado requires its marijuana dispensaries to have a surety sales tax bond. If the owner of the dispensary fails to pay his or her taxes, the state's department of revenue can make a claim, and the underwriter of the bond pays out the value of the bond.
Similarly, Illinois requires its medical marijuana growers to have a surety production bond. If the growers fail to produce enough product or if they sell anything illegally, the state can make a claim on the bond.
Before you open a marijuana business, you have to understand the surety bond requirements for your state, and you have to have enough money to pay for your surety bonds from places like http://www.laprescali.com.
3. Extensive Product Tracking
Understanding surety bonds is just one of the extensive paperwork elements involved in opening a marijuana store. You also have to be prepared to track every crumb, seed and stem of your marijuana. This can be labor intensive for beginning business people, and you may want to hire a consultant who can help you set up a tracking system.
4. Accounting
In the past, if someone decided to open a black market marijuana business like the protagonist of "Weeds", they simply needed to know how to set bulk pricing and how to do divide quickly by eight (marijuana is usually sold by eighths of an ounce or multiples of eighths).
Someone who opens a legal dispensary also needs to set bulk pricing and be able to factor everything by eight, but they also need to be able to compute taxes. For example, in Colorado, marijuana salespeople need to levy excise taxes and sales taxes on their products.
In addition to being able to compute that, you need to know how to handle all other types of business accounting, or you need to prepare to outsource this job.
5. Green Thumb
In some states, you can buy marijuana from a producer or grower, and you can sell that. In other states, however, you also need to be able to grow your own product. For example, in Colorado, dispensary owners are required to grow at least 70 percent of their own product.
If you haven't gardened before, you may want to learn about that before launching your business.