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Cannabis legalization can be difficult to follow because the laws are in a constant state of evolution, and there is a lack of uniformity between the states and the federal government. This can make starting a cannabis business confusing and risky.

This section contains general information on issues such as the history of marijuana legislation and which states have decriminalized marijuana, as well as information tailored to cannabis business owners and entrepreneurs, including explanations of how to invest in marijuana stocks, marijuana delivery service laws, dispensary banking issues, cannabis business ideas, and how to legally purchase cannabis seeds.

State vs. Federal Marijuana Laws

As of publication, 33 states and the District of Columbia broadly permit the use of medical cannabis, and most other states permit limited use of cannabis for certain medical conditions. Currently, 11 states broadly permit the recreational use of marijuana. Legislatures in nine states are expected to vote on new legalization bills in 2020.

States that broadly permit medical cannabis States that broadly permit recreational cannabis States that could see new cannabis legalization in 2019
Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Hawaii, Illinois, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Utah, Vermont, Washington, West Virginia Alaska, California, Colorado, District of Columbia, Illinois, Maine, Massachusetts, Michigan, Nevada, Oregon, Vermont, Washington Arizona, Arkansas, Florida, Idaho, Mississippi, Nebraska, New Jersey, North Dakota, South Dakota

However, the federal government has not taken any steps toward legalization. In fact, marijuana is currently considered a Schedule I drug under the federal Controlled Substances Act of 1970, meaning there is no acceptable use under federal law, and the government believes there is a high potential for marijuana abuse and dependency.

That means federal agencies like the Drug Enforcement Administration (DEA) could prosecute individual marijuana users, growers, or retailers for violating federal law, even in states where the activities are legal.

Notwithstanding, the DEA has said individuals and small marijuana cooperatives or collectives are a low priority. Instead, the federal government more commonly targets large-scale marijuana growers and dispensaries, especially if business activities cross state lines.

The Cannabis Industry Is Buzzing

An industry responsible for generating $10.4 billion in the U.S. in 2018 and creating more than a quarter-million jobs is illegal under federal law. But that's not stopping investors, who put more than $10 billion into cannabis in North America in 2018.

While investors bet on cannabis, lawmakers are also taking note. As public opinion continues to evolve on the issue (two out of three Americans now support legalizing cannabis), a growing number of states are deciding to make cannabis legal.

Problems Marijuana Business Owners Face

The contradiction between state and federal law has caused a major headache for cannabis business owners and entrepreneurs.

Larger cannabis operations could be shut down by the DEA, and legal cannabusinesses must compete with a significant black market. Marijuana businesses also face more pragmatic issues like not being able to open a bank account, problems finding insurance, and the inability to deduct expenses on federal tax returns — all because marijuana is illegal under federal law.

Hiring a Cannabis Attorney Can Help

The cannabis industry is one that business owners and entrepreneurs need to enter with as much knowledge and guidance as possible.

Assistance from an attorney well-versed in cannabis law is crucial in order to protect business ventures and to stay out of trouble with the federal government.

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