As Pennsylvania is preparing to distribute permits and allow distributors and growers to begin selling their products, many applicants are preparing their applications carefully and hoping to be among those businesses that are granted licenses to sell their products. Unfortunately for the brand new industry, the struggle is still starting. Under federal law, marijuana and its derivatives are still illegal, even if states like Pennsylvania have taken steps to legalize cannabis use.
There is a veritable maze of regulations to navigate for those who wish to receive one of the limited licenses, as well as the more traditional struggles of starting a new business. It can be a difficult process, but mistakes can cost organizations their chance at receiving a coveted license that would allow them to open a dispensary or grow and cultivate marijuana. Financial compliance is one of the most important issues for these organizations to address. Since marijuana is still a controlled substance under federal law, medical marijuana organizations are subject to special banking, tax issues, and accounting that are unique to the industry.
These businesses will be facing strict scrutiny as their applications are reviewed, so it can be in their favor to seek help from experienced attorneys, accountants, and bookkeepers. These professionals can help the new businesses face the challenges of starting a new business as well as the complexities of running a business in the hotly contested medical marijuana industry. Starting a business correctly and setting it up in compliance with regulations can save a lot of money in the future for these companies, and can save them the hassle of trying to correct problems later.
Because of the federal restrictions surrounding the distribution, possession, and use of marijuana, even for medicinal purposes, it can be particularly difficult for new businesses to work with banks and lenders the way other industries are able to. Many financial institutions are reluctant to work with medical marijuana businesses and possibly run afoul of federal regulations. This can leave new businesses struggling to raise start-up capital, and it can also leave businesses unable to accept credit or debit card payments. If these businesses are operating with cash sales, bookkeeping, payroll, and tax issues can be even more complex.
Unfortunately for Pennsylvania dispensaries and growers, there is little that the state can do to help. Many major banks have already refused to work with marijuana-based businesses, citing the lack of protections and the possibility of prosecution from the federal government. As many banks are federally insured, they are bound by federal regulations, as well as states. There may be smaller banks who are willing to work with medical marijuana businesses, but it is still possible that businesses may struggle to find the financial services they require.
There may be relief coming soon for medical marijuana businesses and banks alike. A bipartisan group of representative introduced a bill called the Secure and Fair Enforcement Act in Congress. If passed, this bill would provide protections to banks who deal with marijuana-related businesses. It has been lagging in Congress in past years, but the representatives are hopeful. With more than half of the states in the U.S. having legalized some form of marijuana use, there is mounting pressure on Congress to make efforts to address the issues raised by the $7 billion a year industry.
At Sacks Weston LLC, we are passionate about protecting medical marijuana businesses and patients. We are proud advocates of legalized medical marijuana, and we strive to help those involved in the medical cannabis industry.
If you have questions about your medical marijuana case, contact our firm to request a free consultation.