Entrepreneurs in Nevada who want to open cannabis businesses must take account of the legal issues that apply to the industry in their contracts, financing, and other matters. Paying attention to the legal considerations of the cannabis industry can help keep businesses from running afoul of the regulations and laws that govern this highly regulated industry. Businesses will need to do some of the same things that other types of businesses do, including choosing a legal entity structure, securing funding, and drafting contracts for their suppliers. However, they will also need to take a few extra steps because of the nature of the cannabis industry.
Preliminary Steps For a Cannabis Business
Before people engage in a cannabis business, they need to familiarize themselves with the laws and regulations that govern the industry in Nevada. People should recognize that cannabis is still illegal under federal law and ensure that they set up their companies in a way that stringently follows Nevada’s requirements to be protected. Entrepreneurs should choose a legal entity structure under which their companies will operate for liability protection. They will also need to secure all of the licenses that are required to operate the business and secure funding. Entrepreneurs will need to find banks that will agree to enter into banking relationships with them. Many banks refuse to work with cannabis businesses, so this may take some research.
Contracts for cannabis businesses should include language stating that both parties understand that cannabis is illegal under federal law. The parties should agree that they will operate strictly in compliance with state regulations and laws. The contracts should also include indemnification and dispute resolution clauses and provide that the jurisdiction to handle disputes lies with the state courts to avoid the federal courts from deciding cannabis contract disputes. Contracts will need to be drafted with the company’s suppliers and distributors with a careful review by a cannabis law attorney to ensure the business is protected.
Real Estate and Zoning Issues
If the business will acquire real estate, the owner will need to research zoning issues to ensure that the proposed location will allow a cannabis business to operate. The owner will also want to ensure that the lease term will last for the entire licensing period so that business operations will not be disrupted because of the expiration of the lease. This process also necessitates approval from local municipalities.