Cannabis Law
Not that many years ago, cannabis law only existed in the context of criminal charges. However, cannabis law now also covers business, licensing, and compliance. It is often called cannabusiness or cannabiz.
With the state-by-state legalization of marijuana since 2012, cannabis is now a full-blown industry. However, when deciding to enter the cannabis business, there are things you must consider to stay on the right side of the law. Cannabis laws vary by state. Business procedures and protocols will vary even among those states where cannabis is totally legal.
An experienced cannabis lawyer will be able to answer your questions and offer legal advice on the cannabis business.
A Brief History
Marijuana was legal and widely used for pharmaceutical and recreational use during the 1800s. However, states began to regulate it early in the 20th Century. In 1937, the Marihuana Tax Act made possession or transfer of cannabis illegal in the U.S.
The Controlled Substances Act of 1970 reduced simple possession of the drug from a felony to a misdemeanor. The regulatory climate has been changing ever since.
States then began to decriminalize cannabis. California was the first state to pass medical marijuana laws. In 2012, Colorado and Washington became the first states to legalize it for recreational use. By April 2024, 2019, 24 states and the District of Columbia have adopted laws legalizing its use for recreational purposes. The majority of states allow varying degrees of medical use.
Medical Use of Marijuana
Most states have legalized cannabis for medical use. Medical cannabis laws allow patients with qualifying conditions to possess and consume marijuana. This generally requires a prescription or doctor’s recommendation. The processes for qualifying patients to obtain medical cannabis vary significantly among U.S. states. The medical conditions appropriate for medical marijuana use may include:
- Epilepsy
- Multiple sclerosis
- Glaucoma
- Chronic pain
- Parkinson’s disease
Marijuana for Recreational Use
Recreational marijuana use is legal in 24 states and Washington, D.C., as of April 2024. Recently, Illinois, Maryland, and Michigan have established markets where adults 21 and older can purchase cannabis from licensed retailers. The adult use of marijuana is a highly regulated business. These states have implemented varying systems for taxation and cannabis regulation.
In states where marijuana is legal, violating any of the rules or regulations could result in serious consequences.
Decriminalization of the Use of Cannabis
Several states and municipalities where recreational marijuana is not legal have decriminalized possession. States have reduced penalties for marijuana possession for personal use. It may be a civil infraction or a low-level misdemeanor.
Federal vs. State Laws
Cannabis remains illegal under federal law. The Controlled Substances Act (CSA) still classifies it as a Schedule I substance. In 2005, the Supreme Court said that the Interstate Commerce Clause of the U.S. Constitution allowed the federal government to keep the use of marijuana illegal even if state laws made recreational cannabis legal.
This discrepancy creates a legal gray area for businesses operating in the cannabis industry. These businesses have limited access to banking services. A cannabis lawyer can explain how to set up a business that follows state and federal laws.
Operating a Cannabis Business
The marijuana business is growing. For example, in Maryland, recreational marijuana was legalized in July 2023. In six months, marijuana dispensaries sold $330 million in recreational marijuana. By January 2024, the state had issued 179 additional licenses to start new recreational marijuana dispensaries.
Cannabis-Adjacent Business
The first commercial transactions occurred in medical and pharmaceutical settings. Cannabis medical dispensaries began to open in several states following voter initiatives. Since then, a growing industry has emerged. In large part, the industry can be divided into two spheres: plant-touching and ancillary.
Plant-touching enterprises include growers, processors, distributors, and dealers. Ancillary businesses include equipment and device manufacturers, marketing, financial advisors, and social media platforms.
The industry also includes businesses that sell edibles and beverages containing cannabis products. There is a broad range of products containing cannabidiols (CBDs) and cannabinoids. CBD compound in cannabis does not produce a high, like tetrahydrocannabinol (THC), but may provide other health benefits.
The U.S. Food and Drug Administration (FDA) has not yet approved cannabis for treating diseases. The FDA has approved certain cannabis-derived and related drugs. The FDA emphasizes the importance of the drug approval process for ensuring the safety and effectiveness of new medicines, including cannabis-derived drugs.
Get a Lawyer’s Help To Start a Business
The first step involves making a business plan. However, you must also be aware of preliminary considerations. This includes the legal status in your state, getting a license, and how to fund your business. Talk to a local and experienced cannabis lawyer who can help you make your cannabis dream a reality.