How to Legally Start a Marijuana Business

If you’re interested in cashing in on the booming marijuana industry, now is a great time to do it. More than half the states in the US have legalized cannabis in one form or another. That number may be expanding soon with new legislature, and it’s not surprising that the industry brought in more than $6 billion in 2016.

But even though marijuana is more widely accepted, you can’t just set up shop anywhere you want and start selling your product. Even in states where cannabis is legal, there are some guidelines you need to follow.

What type of cannabis business will you operate?

There are many ways to cash in on the marijuana business, and you need to decide which one works for you. One sector in the industry is production: where marijuana is grown for selling the cannabis flowers, harvests, seeds, or clones, like in the hemp farms in Colorado. Or you could run a dispensary — these are typically locations regulated by the government where shoppers can buy marijuana products. Whether they sell it for medical or recreational use depends on the laws in that state. You can also start a company for edibles. Edibles, such as brownies, candies, and cookies, are a popular commodity in states where recreational use is legal. They are more discreet than smoking, so they can be consumed anywhere.

Understand the legal procedures

Opening a marijuana business is not as simple as opening a coffee shop down the block. While you still need to obtain the appropriate city and state business licenses and permits, cannabis sales come with a little more red tape. To start with, it’s important to speak to your attorney to help keep your business within the law. Then you’ll need to obtain the proper licensing for the industry. For example, in California, you need to apply for a specific California marijuana license. Since California is among the states where marijuana is legal for recreational use, you can usually start any type of business you like there. But if you live in a state where it’s only legal for medicinal use, your only options are probably to produce it or open a dispensary.


Starting an edibles business might be the least expensive cannabis venture to get into. But it doesn’t come without its red tape, either. The only states where you can currently sell edibles are the ones with legalized marijuana for recreational use. As of 2018, that includes ten states. A few of them are Colorado, Nevada, Maine, Washington, California, and Alaska. If you do live in one of these states, you’ll face fewer issues with selling edibles, but you must comply with state and local regulations. For example, the state of California requires you to obtain a city license before applying for a state license. This is important to know because not all cities will issue a license for the sale of marijuana products.


Opening a dispensary requires special permits. It also requires that you hire or partner with a qualified team of professionals. These may include physicians, managers, security personnel, and engineers. Your state also requires particular facilities, specific locations, capital, and a solid business plan. The exact requirements tend to vary from state to state, but it’s important to note that these types of businesses carry a lot of risk and require a lot of work upfront. This is why it’s always important to hire an attorney to help you through the process and educate you on the laws and rules applicable in your location.