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Cannabis Law Blog

Key Takeaways from the Spring 2016 Marijuana Business Conference & Expo

Cannabis Law Blog

News and analysis focusing on the full spectrum of cannabis-related issues facing businesses, investors, financial institutions and all levels of government throughout the United States

Key Takeaways from the Spring 2016 Marijuana Business Conference & Expo

1. The Marijuana Industry is Thriving

This week, Dykema professionals attended the Spring 2016 Marijuana Business Conference & Expo, hosted by Marijuana Business Daily. With more than 3,000 cannabis-related professionals from across the United States and Canada, we were amazed by not only the number of attendees at the conference, but also the diversity of their backgrounds and businesses. Not only did we meet individuals who own and operate businesses that are directly involved with marijuana plants, such as dispensaries, infused products manufacturers, and cultivation centers, but we also met individuals from many ancillary businesses, such as agricultural and laboratory
manufacturers, equipment suppliers, security and banking consultants, data analysis firms, insurers, and others who see the long-term potential of the cannabis market.

What is most striking is the sophistication of many of these businesses. Many of the dispensary owners that we spoke with are on the cutting edge of using technology to manage inventory and data analytics to do market research. Moreover, many cannabis-related businesses are developing or using innovative technologies to grow, process, and prepare marijuana. The conference drove home that this is a rapidly evolving and vibrant industry that is marked by a very high level of sophistication. As entrepreneurs seek to start marijuana-related businesses, or businesses look to expand operations in new areas, it is important to not only understand the risks associated with such businesses, but also to have a clear business plan and well-developed strategy.

2. New Marijuana Laws will Create New Opportunities

In the coming year, it is very possible that we will see recreational marijuana ballot initiatives pass not only in California, but also in Arizona, Maine, Massachusetts, and Nevada, potentially bringing the total number of recreational states to nine. Moreover, we may also see medical marijuana laws enacted in Arkansas, Florida, Louisiana, Missouri, and Ohio, meaning that 29 states will have such laws on the books. As keynote speaker John Morgan stated at the conference, the country has reached a tipping point with regard to marijuana laws, and as more states legalize either recreational or medicinal marijuana, more opportunities will exist with regard to business development and expansion.

However, as several panelists noted at the conference, as the industry seeks to expand, it also needs to continue to actively engage in political activity at the federal, state, and local levels. Whether through lobbying efforts or ballot petition initiatives, the cannabis industry must continue to be involved in the political realm in order to help shape new and better laws and regulations.

3. Banking Continues to be the Industry’s Biggest Concern

Time and again, we heard from cannabis-related businesses at the conference that access to financial services was their biggest concern and one of the issues holding their business back. Even with guidance from the United States Department of Justice and the United States Department of Treasury that sets forth reporting requirements for financial institutions that accept marijuana-related deposits, a growing number of banks in the country decline to accept business from the marijuana industry. Consequently, marijuana-related businesses are sitting on large piles of cash, which not only makes them targets for crime, but also presents logistical issues in terms of paying bills, wages, and other expenses.

However, in several discussions that we had with businesses around the country, it became clear that, despite the reluctance of most banks, some financial institutions are choosing to provide services to marijuana-related businesses. While doing so presents a tremendous opportunity for those institutions to access a very large market, it also presents a number of risks, and in order to minimize those risks, these institutions must create robust compliance procedures that conform to federal guidance.

4. Operating a Marijuana Business is Difficult

In talking to a number of marijuana-related business owners, it became clear that operating a cannabis business is incredibly challenging, but something each of the owners is incredibly passionate about. Not only do these businesses have to deal with all of the issues that any business must face, but they must also navigate a confusing and shifting world of local and state regulation, while also being mindful that their operations are still illegal under federal law. Moreover, cannabis-related business owners are engaging in an emerging industry whose future is very much unpredictable and uncertain. Nevertheless, industry participants remain confident that marijuana laws will continue to expand and evolve, giving the industry much more stability and permanence in the future.

Conclusion

As the cannabis industry continues to evolve and expand, individuals and businesses wishing to participate in the industry should be mindful of the risks involved in this rapidly-changing environment. The experienced and knowledgeable professionals that are part of Dykema’s Cannabis Practice Group are excited by the prospect of this growing industry and of serving clients in this space for many years to come. To keep up-to-date on emerging issues in the cannabis industry, check back to Dykema’s Cannabis Law Blog.