With the passage of the Michigan Regulation and Taxation of Marihuana Act (MRTMA), the billion-dollar recreational cannabis market expected to flourish in Michigan is attracting a bumper crop of entrepreneurs seeking to join existing medical marijuana businesses in this “green rush.”
All of these growers, processors, transporters, retailers, and microbusinesses need to obtain licenses, set up operations and locations, and meet a host of other legal and regulatory requirements before they can begin harvesting the rewards of this burgeoning industry. But these businesses, like every company in every other industry, need plenty of other things as well – office supplies, equipment, construction, and engineering services, IT support, packaging, and legal and financial services, just to name a few. This is in addition to needs specific to the cannabis business, such as the resources required to grow, harvest, test, and process marijuana.
This means that there are plenty of businesses outside of the cannabis industry that stand ready to service and supply those within it. But the still-evolving legal landscape and lingering cultural perceptions about marijuana can present some sticky challenges for those servicing cannabis businesses.
Cash Is the Only Way to Get Paid – For Now
Perhaps the most frustrating and disruptive aspect of doing business with cannabis industry players is the fact that marijuana businesses currently have no access to banking or other financial services. Since marijuana is still a prohibited controlled substance under federal law, banks that service cannabis businesses face exclusion from federal insurance and national electronic payment networks, as well as potential federal prosecution.
Congress is considering legislation such as the SAFE Banking Act to give banks and financial institutions legal cover to do business with state-authorized cannabis businesses. At the moment, however, these companies can’t pay with credit cards, write checks, or make electronic payments to cover their bills. If you do business with them, be prepared to get paid in cash.
Weighing the Reputational Costs and Benefits
There is no question that public attitudes about marijuana have shifted dramatically over the past two decades, fueling its legalization both in legislatures and through ballot initiatives, as was the case in Michigan. But some vendors serving the cannabis industry may not want to promote their involvement, fearing a negative backlash or disapproval from their customer base.
But those reputational costs and the possibility of rubbing some customers the wrong way need to be weighed against the very lucrative benefits of working with an industry experiencing exponential growth.
Kreis Enderle: Michigan Cannabis Industry Attorneys
At Kreis Enderle, we help participants and those wishing to become part of Michigan’s cannabis industry move forward with their businesses with confidence and clarity. Our cannabis law attorneys understand the business challenges and legal complexities of this new and evolving market, and can shepherd you through every aspect of application, licensing, operations, and compliance.
Please contact one of Kreis Enderle’s marijuana law attorneys at (800) 535-4939 to arrange for a consultation.