Florida Medical Marijuana: What to Do Now to Have a Cannabis Business Later
Over the past month, I’ve received dozens of calls and emails from Floridians looking to take advantage of the new Amendment 2 if and when it passes in Florida this November. As we’ve previously written, Florida has a love/hate relationship with its marijuana law and rule making. But this time, for a number of reasons (see this), I’m confident Floridians will vote to implement a comprehensive medical marijuana program in 2016.
The number one question I get from Florida callers and emailers who want to start a medical marijuana business in Florida after a successful vote is: “is there anything I can do now to get my business lined up for the new Amendment 2?” My response is a lot, actually, including the following:
- Read the initiative and then read it again. The initiative is everything at this point and it’s imperative all prospective Florida MMJ operators read and thoroughly understand it because it provides the directions to the Department of Health regarding future rule making and it sets the baselines for what’s going to be allowed for patients, physicians, and operators. Just because the initiative is short doesn’t mean it doesn’t contain important information about the future of this program. Read it until you are sick of it. And then a few days later, read it again.
- Get to know the campaign. Getting to know the people behind the campaign now will do you a ton of good with informing your own future business plans. The Department of Health will likely look to the campaign for interpreting the ballot initiative and to assist it with rule making. Those behind the campaign will be putting on educational events, and attending these will likely be the most cost-effective networking available to you — way better than a marijuana airport seminar, trust me. If you are serious about having a Florida cannabis business, start making friends with United for Care now.
- Figure out where you might want to operate and learn about that local government. I cannot stress enough the importance of this. The initiative is silent regarding whether local governments will be able to opt of the new law should it pass, which, in most states, has meant local governments are free to ban if they so wish. Some Florida cities have already prepared themselves for changing state marijuana laws by enacting municipal zoning and permitting laws. Other Florida cities and counties are (and will remain) opposed to MMJ businesses. Instead of spending dollars and time planning for a marijuana business in a Florida city that will never allow one, you should instead get a handle on friendly versus non-friendly local governments. As for those local governments without a clear idea on what to do about cannabis, this is your chance to step up and help educate the local authorities about what their local industry should look like. Our cannabis lawyers have done this in countless cities and counties in multiple states and believe me when I tell you that this can profoundly impact which way a city or county will go on cannabis commerce.
- Study other state regulatory models, including the super strict ones. You can learn a lot about what to expect from Florida by looking at other states’ regulatory models. Look at states like New York, Illinois, Nevada, and Minnesota, all of which have fairly limited and heavily controlled MMJ regimes. If Florida’s 2014 Charlotte’s Web law tells us anything (and I think it does), Florida’s new medical cannabis regime is going to be a lot more like these states than, let’s say, California, where (until the implementation of the MMRSA) the “cannabis friendly doctor is always in.”
- Review the Florida corporate structures available and figure out now which makes sense for you. Medical Marijuana Treatment Centers (MMTC) will be the “entities” that cultivate, process, and dispense cannabis to qualified patients. However, since MMTCs aren’t defined in the initiative beyond the term “entities,” that means we could be looking at either non-profits or for-profit entities. This means you should learn about the various corporate structures available to you, how they operate, and what you’ll need when you’re ready to file for your entity.
- Start figuring out your budget and pace yourself. In anticipation of a fee-laden, probably very expensive application process for registering an MMTC, you need to start thinking now about your budget and from where you are going to get your funding. In all of the states in which our cannabis business lawyers have operated, one thing always holds true: those with secure funding before the application process even starts have a huge advantage in competing for a cannabis business license over those still patching together their funding when the application window opens. You should plan for more than just start-up costs (inventory, employees, operational costs, etc.); you will also need funds for the application process itself which demands legal oversight, expert advisory input, contracting with architects for floor plans, and all sorts of other expert assistance. Budget accordingly and pace yourself. Just because the initiative mandates Florida’s Department of Health come up with all of the MMJ rules within six months of the effective date of the law doesn’t mean it will actually issue licenses or register MMTCs by that time. It’s Florida, people, and that means there will likely be a whole host of lawsuits to delay this process. Get your budget in sufficient shape to weather these delays.
- Choose your partners wisely. Consultants and so-called cannabis experts are a dime a dozen. Take your time in choosing who you will be using to help you navigate what is sure to be a complicated application process. Ask lots of questions, especially about whether they will require you to give them equity in your company and whether their relationship with you will be exclusive. For more on why this choice can be so important, check out Buyer Beware: Pot Colleges and Canna Consultants.
- Choose your legal counsel wisely. Lawyers claiming to be marijuana business attorneys are also a dime a dozen and you need to proceed with caution in choosing your legal counsel as well. Make sure you choose a law firm with extensive experience in navigating robustly regulated application processes, the more states the better. Make sure your law firm also has corporate lawyers experienced in forming cannabis businesses and in dealing with state cannabis laws and regulations. Make sure to get clear on whether your law firm will be representing just you in seeking a particular license, or ten of your potential competitors as well. Make sure your law firm also has experience with commercial leaseholds for the cannabis industry. For why this matters, read Marijuana Commercial Leases: This Industry Is Different, You Know. And, given the wild west nature of this industry, no matter how regulated it is by a given state, make double-sure your attorney is an ethical one.
- Don’t forget about federal illegality and get comfortable now with what that means. Those of us with years of experience in the state-regulated marijuana industry know all too well how the federal illegality of marijuana makes day to day business difficult and you need to start educating yourself on this as well. It’s not too early for you to start figuring out how you will deal with the difficulties of opening a bank account due to federal anti-money laundering laws or protecting your trade name and your brands without being able to register trademarks with the USPTO. It also makes sense to start navigating how you can best mitigate against federal income tax laws that prohibit all normal business deductions under IRC 280e, and that bankruptcy isn’t a likely option in the event of failure. And, finally, how will you advertise your new cannabis business when Google and most major social media platforms will not allow you to do so?
Waiting and watching until the new Amendment 2 passes is fine, but, if you’re really serious about getting out ahead, you can do a lot right now in order to prepare yourself and your future marijuana business entity for the Sunshine State’s grueling application process.
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