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So you wanna start a cannabis business in 2022... (part I)

Helpful Tips and FAQs for the Cannabusiness-curious

  • Has your state or municipality recently elected to allow cannabis businesses?

  • Do you think you may be eligible for a social equity license?

  • Are you considering a career change?

  • Evaluating an investment opportunity?

There are a number of reasons why you may be considering entering into the business of regulated cannabis as an entrepreneur, investor, landlord or advocate. At RZA Legal, in addition to serving our existing clients in Colorado, New Jersey, and Florida, we regularly field inquiries from people who are just getting started on their canna-business journey. These are calls we love to get! We truly enjoy helping people to navigate each stage of cannabusiness, from applications to operations to exit strategy, in an efficient, compliant, and cooperative manner. Therefore, we have compiled a few tips and FAQs to serve as a springboard to the next phase of your cannabis journey.

Is RZA Legal a Law Firm or a Cannabis Consulting Firm? What’s the difference?

RZA Legal is unique; we are a cannabis law firm comprised of licensed attorneys and paralegals who also have experience as operators and consultants within various aspects of the cannabis industry. In fact, last year we established a sister company, RZA Solutions, in order to better leverage our team’s expertise and to expand our service offerings to more states in the U.S. So, when you decide to work with RZA, you can get the best of both worlds to support your cannabis business needs.

  • Cannabis Law Firms:

The most significant aspect of being a cannabis law firm is that you are working with licensed professionals who can lawfully provide legal advice and who are held accountable via standards of professional conduct in order to keep their license to practice law. Attorneys must undergo the rigors of law school to earn a J.D., complete an extensive background and fitness investigation in each state they are licensed, pass the bar exam, pass an ethics exam, and complete hours of continuing education in order to maintain their law licenses. In turn, that license can hang in the balance if ethical or professional malpractice concerns arise. Therefore, attorneys are compelled to provide a certain standard of service. Furthermore, attorneys are required to provide transparency in their fees for services rendered, allowing for more clarity in business expenditures.

  • Cannabis Consulting Firms:

Unlike attorneys, cannabis consultants are not required to hold any license or hold specific credentials or ongoing continuing educational requirements in order to render services. This can provide a significant benefit - individuals with more field experience can provide consulting services without needing to complete years of costly schooling and difficult exas (and indeed, many consultants also have degrees and impressive certifications). Additionally, clients can sometimes benefit from cost savings when comparing consultant fees with attorney fees. However, because most consultants are not also licensed to practice law, they cannot legally provide legal advice or legal services. Thus, in a highly regulated industry like cannabis, lack of understanding for legal nuance or procedure can give rise to costly fines or even civil and criminal violations.

Why do I need legal and other professional services?

Too frequently, clients have come to RZA Legal for help after getting into a sticky situation that could have been avoided if they had sought legal advice sooner. These sticky situations can turn up in the form of unfair contracts, predatory operating agreements, employee problems, tax violations, license investigations and violations, or other issues surrounding ongoing compliance and reporting requirements. The potential for problems to arise becomes exacerbated when clients have chosen to work with a purported professional without completing due diligence research into their relevant background and experience (we aren't saying all lawyers are better than all consultants - many lawyers have no clue about the regulatory nuances that govern cannabis businesses, and some consultants have seen it all in this industry and can help you avoid common pitfalls better than anyone else). This is why it is crucial to seek the help of true professionals with proven experience when it comes to things like licensing, taxes, compliance, and contracts.

Furthermore, if you’re going into business with partners or investors, it is even more important to make sure you have a team of professionals looking out for your business but to also have a team who represents you and your personal interests. Doing this will ensure that you understand the implications of working with others and can protect you from being ousted without recourse.

How do I choose a service provider?

Choosing the dream team of service providers to support you in your cannabis business can be difficult for some. This makes sense, given that the regulated cannabis industry is a new and evolving space; some providers have more experience operating in the illicit cannabis market and some have no experience with cannabis, but understand the business and bureaucratic side of the industry.

Fortunately at RZA Legal, our team can leverage experience from all sides. But, in order to choose the service provider that is right for you and your business needs, it is important to do your own research and “vet” the provider’s experience. For example:

  • They can grow cannabis, but does it pass testing and can they sell it?

  • They can perform extraction processes, are the products any good?

  • Has that consultant successfully won any licenses?

  • Does that tax professional understand 280e and the unique tax liability for cannabis businesses?

  • Does your attorney understand ongoing licensure and renewal requirements?

  • Do I understand this provider’s contract?

RZA is currently accepting clients for legal services in Colorado, Florida & New Jersey, with more states on the horizon as our team grows. If you are not located in one of these states, RZA Solutions can still work with you for your cannabis business consulting needs, but we cannot offer legal advice. If you are unsure what type of services you may need, do not hesitate to schedule a free introductory consultation.

In part II we'll discuss the need for legal and professional services once you've obtained a cannabis business license, and what to expect to pay in legal services annually.


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