Written by attorney Elizabeth Anne Padula

Setting Up a Legal Marijuana Business

Now that voters in both Washington State and Colorado have passed initiatives legalizing recreational marijuana use, many entrepreneurs are looking into what it would take to grown and/or sell the drug. Like private liquor sales, being licensed to sell marijuana legally could be a major economic opportunity. The biggest question that remains is whether the fact that marijuana sales is still a federal crime will impact would-be sellers.

Licensing in Washington

Although the Washington State Liquor Control Board will be determining many of the regulations for marijuana growing and selling over the next year, certain basic rules have been established for licensing. Growers and sellers must apply for a state license, which is only issued to individuals 21 and older who have lived in Washington for at least 3 months. Licenses will allow an individual to grow marijuana in his or her home and to sell it within the state of Washington. Separate licenses will be required for each seller, each location and, in some cases, for separate products. Retailers will have restrictions, as well. For example, you may not establish a shop that sells marijuana within 1,000 feet of places that minors regularly congregate, such as schools, public parks, and community centers. Retailers are also prohibited from installing flashy signs on their establishments.

Licensing in Colorado

In Colorado, a task force has been created to figure out the nuts and bolts of legal growing and selling for recreational marijuana use. The biggest change in Colorado is that licensing will be on the state level instead of locally, as is currently the case with medical dispensaries. For now, licensees must be 21 or over, not be in default on government-issued student loans or in arrears for taxes or child support, and have been a resident of Colorado for two years or more. Background checks will be performed on all applicants, and a felony within the last five years or a felony drug conviction at any time will disqualify you. Dispensaries must grow at least 70 percent of marijuana they sell themselves. In addition, although growing and selling is legal statewide, cities and counties have the ability to ban dispensaries locally. Licensing fee range from $7,500 to $18,000.


One major problem that people in business related to medical marijuana have experienced is that banks and credit unions won't work with them, which means a cash-only business. Having to run a business with cash makes it incredibly difficult to do payroll, order supplies, and pay your taxes. Banks, however, are shy about having customers in the cannabis industry as customers because it is still a federal crime to grow, distribute, and use the drug. This is likely to change over time, especially if the federal government chooses to respect state law and ignore legally licensed growers and sellers.

Federal Law

After the November election that made marijuana use legal in Colorado and Washington, the U.S. Drug Enforcement Agency released a statement that said, "Enforcement of the Controlled Substances Act remains unchanged. In enacting the Controlled Substances Act, Congress determined that marijuana is a Schedule 1 controlled substance. The Department of Justice is reviewing the ballot initiatives and we have no additional comment at this time." Medical marijuana dispensaries have not experienced any threat of prosecution from the federal government, and medical sellers hope that the DEA will look the other way for recreational sellers, too. Many experts say, however, that even licensed and regulated marijuana businesses could end up in the federal government's crosshairs and would be subject to shutdown at any time. In a recent interview, President Obama stated that the federal government would not pursue users in states where the drug is legal, but he didn't address whether or not growers and sellers would be targeted by the Justice Department.

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