The Risks of Running a Medical Marijuana Business
The medical marijuana business is not an easy one to get into and to stay in, even though 17 states and Washington D.C. now have MMJ programs.
Attacks come from all angles; from state legislators who don’t like medical marijuana to groups that say MMJ attracts a bad crowd to the massive federal crackdown that utilizes several federal agencies like the DEA and the IRS.
Aaron Smith, the executive director of the National Cannabis Industry Association, says that there are over 1,000 medical marijuana dispensaries in California, more than 500 in Colorado, and "an untold number" of businesses that benefit from the industry, including packagers, software businesses and accountants.
Many of these business owners, Smith said, are "driven by a sense of compassion and desire to help people in need. They could be doing other things that are far less risky frankly and more lucrative, but they choose to help patients."
Dale Sky Jones, the executive chancellor of Oaksterdam University, an Oakland, California-based school offering training for the cannabis industry, said getting into the medical marijuana business requires "guts or insanity." In April 2012, the university experienced the ultimate risk for medical marijuana businesses: a DEA raid. "A school teaching about a plant that has never killed anyone was raided by over 100 federal law enforcement officers," Jones said of the event.
"Regardless of individual state laws, as far as marijuana facilities, growing and distributing marijuana is illegal under federal law," said Michael Rothermund, a DEA spokesman. "If you're in a business and selling marijuana, you run the risk of being raided or investigated federally."
But Jones believes the raids are part of a bigger message. "They have specifically gone after the oldest and the best," Jones said. "There are a lot of illegal growers running around -- why are you cutting down reputable groups? Because we're the easy targets. If you go after the most respected players, not only are you undercutting the financial practices of the industry, you're also striking fear in the hearts of people who want to do it well. There's a psychological war in addition to a multi-front attack."
While the DEA raids tend to get the most spotlight, many more marijuana businesses have been shut down quietly. According to Smith, the federal government -- mostly through asset forfeiture threats to landlords -- closed over 400 medical marijuana facilities in California and 57 in Colorado in the last year.
And the risks don’t look like they will be lessening anytime soon.
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