280e Tax Code Insight

280e Tax Code Insight

Section 280e is notorious in the cannabis industry. This tax code inhibits most cannabis businesses to report their profits and gain recognition from the IRS.  

Section 280e has been a roadblock for many operators in the industry. It has made it hard for these businesses to succeed. However, it’s certainly not impossible.

Despite cannabis’s status as a Schedule I Controlled Substance, it’s possible for cannabusiness owners to write some cannabis business costs off. The internal revenue code is a hindrance for cannabis entrepreneurs. But it’s possible to reveal deductible costs with the right insight.

In this article, we provide insight into Section 280e. We explain what it is, what cannabis businesses should expect, how to avoid an IRS audit, and more.

Looking for expert financial services to maximize your tax deductions? Northstar is here to guide you!

Contact us now for more information on how we help cannabusinesses relieve the tax burden of 280e.

section 280e impacts cannabis money

What is Section 280e?

Section 280e is an IRC that dictates how the cost of goods sold and other business expenses work for the cannabis industry. It serves as a legal basis for the IRS to tax dispensaries on their profits because they believe it’s a trade or business without ordinary income or loss.

What is the History of the 280e Tax Code?

The 280e tax code was created in 1982. It was a time of intense public debate over drug laws. The 1980s War On Drugs prompted the implementation of stricter laws for marijuana and other substances.

The Reagan Administration created Section 280e after a court case during which a convicted cocaine trafficker claimed he should be allowed to deduct ordinary business expenses under federal tax law. Then, in 1982, Congress implemented 280e to ensure other drug dealers from doing the same. Through this law, no deductions are allowed “in carrying on any trade or business if such trade or business consists of trafficking in controlled substances.”

This was before the legal cannabis industry existed; a time when drug smugglers and kingpins were earning millions of dollars through the black market drug trade daily. The federal government used the 280e Tax Code to ensure that an illicit operation involved in trafficking could not obtain tax deductions.

However, some members of Congress now believe the government has taken Section 280e too far. They feel that it has had an “adverse effect” on legitimate cannabis businesses. But the bill is still in place.

What is the Controlled Substances Act?

The Controlled Substances Act (CSA) is the law that paves the way for 280e. It’s one of the federal government’s most commonly used tools to criminalize cannabis.

Through the CSA, the federal government regulates the manufacture, possession, use, and distribution of certain drugs. This system considers cannabis in the same category as heroin and LSD.

The Act created five schedules to classify controlled substances based on their risk for abuse: Schedule I drugs are deemed highly addictive with no medical value; whereas Schedule V drugs have a low potential for addiction and accepted medical uses.

Cannabis, however, has been placed in the most restrictive category: Schedule I. This puts every legitimate cannabis business in violation of federal law. And with Section 280e in place, legitimate cannabis business owners have accounting difficulties that stem from what would normally be considered ordinary business expenses.

What Does Section 280e Do?

Section 280e prevents cannabis businesses from deducting business expenses when filing taxes. This includes cost of goods sold. In short, it taxes cannabusinesses on their gross profit.

This is different from a normal business. A normal business can deduct its operating costs and other expenses under section 162 of the internal revenue code (IRC). Although cannabis cannot be deducted, section 280e allows for some cost deductions. However, it’s not ideal for most businesses and comes with a risk of an IRS audit if the federal tax isn’t appropriately accounted for.

state legal cannabis dispensary 280e damages

Why Is 280e Harmful to State-Legal Cannabis Businesses?

One of the biggest reasons why marijuana businesses would rather not have 280e in place is because it taxes them at a higher rate than normal businesses. This makes it difficult for legitimate cannabis business owners to compete with unlawful operations and other industries in the marketplace.

There’s a relatively simple formula to determine federal income taxes. You begin with gross income, minus business expenses to determine taxable income, and then pay taxes on this money.

However, for a cannabis business, the operations must pay taxes on gross income. Generally speaking, this results in legitimate cannabis industry business operators paying tax rates of 70% or more. This is nearly double the amount the business actually earns in some cases.

How Does 280e Tax Code Apply to Cannabis?

Section 280e makes it harder for legitimate marijuana businesses to succeed. It prevents legal cannabis business owners from deducting expenses for producing, purchasing, or distributing their product.

In most cases, this results in a higher tax rate than the normal 25%. Because of this, some cannabis industry leaders have begun pursuing legislative solutions to change the code and allow deductions.

Tax Code 280e for a Legal Cannabis Business

Legal adult-use or medical marijuana operations are working with a controlled substance. At least, according to federal law. But just because cannabis companies work with cannabis does not mean they cannot avoid the tax court.

How to Avoid a 280e Tax Code Violation

Avoiding a tax code violation as a state legal operation means a cannabis company must stay in compliance with its state’s laws. Because federal law takes priority over state law, this means companies must determine whether a  violation exists in their respective states.

In many cases, cannabis operations are complying with the 280e tax code by splitting their marijuana companies in half. By operating two entities under one roof, some deductions are achievable.

Business One owns or rents the building. This involves handling the storage and transportation. It also offers employment benefits, hosts company events, and covers maintenance services. Non-cannabis products like t-shirts, keychains, and pipes can also be sold by this business.

The second related business handles cannabis directly. This can involve growing, curing, and packaging cannabis. It also should include minimal overhead-related expenses. The main expense that should be included in this operation should be the inventory itself.

Steps to Resolve 280e Tax Code Violations

To ensure your taxable year has as many deductible expenses as possible, your cannabusiness should avoid incorporating as an S-Corp or an LLC. This is because of the unique restrictions this code pushes on these U.S. operations.

Cannabusinesses in the U.S. should reduce their corporate tax liability and facilitate accounting by incorporating as a C-corporation. C-corp business operators get taxed on their salary and/or dividends. Since this is a different structure, you can reduce how your cannabusiness pays taxes. But you might only need to use this strategy for the second business if you use the split strategy.

How to Avoid Paying Taxes from Gross Income Under 280e

You cannot completely avoid paying taxes under this code. But a deduction or credit shall be possible if you know how to calculate goods sold COGS (Cost of Goods Sold).

Cost of Goods Sold

What is Cost of Goods Sold?

Cost of goods sold is a business expense that applies to most retailers. It’s an important accounting measure for companies like Canna Care Docs. COGS helps cannabis businesses keep track of how much they pay for individual products and materials.

COGS allows business operators to handle the indirect costs of doing business while bypassing some of these tax limitations.

Which Expenses Are Deductible Under 280e the Tax Code?

COGS are deductible under this code. But this varies throughout the marijuana industry.

Expenses directly related to your operations can be deducted. For instance, as a cannabis cultivator, raw materials and supplies are directly related to your operations.

But inventory costs should also be considered for cannabis entrepreneurs.

You can deduct COGS. But this is limited to the cost of the product and the costs related to obtaining your merchandise. You can deduct electric bills for inventory areas, too.

However, everything else is subject to this code’s limitations. You cannot deduct employee salaries, advertising costs, rental fees, etc.

Financial Services to Handle IRC 280e Issues

We recommend getting professional assistance. The right financial services have the potential to save some marijuana operations thousands, hundreds of thousands, and, yes, even millions of dollars.

Appropriately handling taxes and documenting everything gives marijuana operations the ability to scale successfully. But, most of the time, it’s easy for cannabusiness owners to push their obligations to the back of their minds until the season comes along.

This is why we recommend using our fractional CFO services. These services are especially beneficial to operations that don’t need a full-time CFO in-house and would prefer the flexibility we offer.

Looking for expert financial services to ensure your net income gets the best effective tax rate possible? Northstar is here to guide you!

Contact us now for financial services that will scale your marijuana business and guarantee your success in case of a tax audit.

Cannabis Financing Ideas to Scale

Cannabis Financing Ideas to Scale

Whether you’ve recently decided to start a cannabis business or have been in the industry for years, raising capital can be one of the most challenging aspects of the entrepreneurial experience. However, it’s particularly difficult to finance cannabis businesses because the industry is still gaining its footing.

But why?

The cannabis industry is still very young, and there are ways that entrepreneurs are getting creative with financing ventures. In this article, we explain how you can use cannabis financing effectively, cannabis business lenders and investors, loan types, and more.

Looking for expert assistance managing your cannabis business’s financials? Northstar is here to guide your success!

Contact us now for the help you need to ensure consistent cash flow and successful scaling.

cannabis financing flower notes

How to Use Cannabis Financing

Cannabis financing is just now taking off in this young industry. Funding is essential for development, and for those who don’t have deep pockets, finding a source of cannabis business funding is crucial for success.

But acquiring a cannabis business loan is only part of the complexities surrounding this topic.

Cannabis business owners that obtain a cannabis business loan need to have a plan to become profitable. Or, if the operation is already turning a profit, how to increase those profits to ensure any cannabis loans can be paid back while scaling those profits.

Have you considered how to effectively utilize your cannabis business loan to ensure success? Here are some ideas marijuana businesses can utilize:

cannabis facility construction

Facility Construction

Whether cannabis businesses focus on recreational marijuana, medical marijuana, or operate as one of the many ancillary cannabis companies, facility construction can play a role in operational success.

Cannabis business owners are unlikely to find a facility that’s completely ready to operate. While the facility might come close to perfection, some investment will be essential to ensure it’s ready to operate – unless it’s an M&A for an established operation, of course.

However, if you’ve already found your property and need to build a facility, this will cost money. Your facility will need to meet the needs of your cannabis business, and allocating some – or even all – of your business loan may be essential to ensure your business can begin operating.

hiring more staff with cannabis financing

To Hire More Staff

Solopreneurs aren’t common in cannabis. Most of the time, financial institutions willing to offer a small business loan to cannabis business operators will want to learn more about your team before offering to finance your cannabis business.

However, even with a winning team in your corner, hiring more staff can facilitate multiple areas of growth for your business. With this in mind, it may make sense to obtain a loan and use some of the proceeds to hire staff – particularly, technical staff if it’s not an area you’re familiar with yourself.

social media marketing using cannabis loan

Marketing & Advertising

Cannabis business loans are also allocatable towards marketing and advertising cannabis businesses.

Even if you have a marketing budget, think about how your business will spend its dollars wisely – and whether it’s necessary to pay for all of that marketing or if attracting more customers can be done with less investment out of your business’ budget.

This can also apply to any ancillary cannabis-related businesses. Pushing business financing towards marketing and advertising has the potential to give a cannabis business the fuel it needs to succeed, and if it results in an excellent ROI, it becomes easy to justify the expense.

improving cash flow with a cannabis business loan

Manage Cannabis Business Cash Flow

Business cash flow is a concern for any business owner. But for cannabis business funding, it becomes even more essential to consider.

Cash flow is the money that comes in and out of a business on a regular basis. For businesses operating in this space, this can be especially useful when it comes to paying for inventory – and if you have trouble funding your business with your current revenue, managing your business cash flow may become even more important than making strategic investments to grow your cannabis business.

open a new location ribbon cutting ceremony

Open a New Location

Your cannabis business might be doing increasingly well with each passing month. But at some point, there’s a chance you’ll want to open a new location.

This is where business loans can remove some of the wait time for business owners in the process of scaling their cannabis companies.

Rather than saving money to expand marijuana businesses, savvy ganjapreneurs obtain business loans to finance their new location. This has the potential to increase revenue significantly while the cannabis business pays back the business loan over time.

equipment leasing cannabis industry

Equipment Financing and Leasing

Equipment financing has become commonplace in the cannabis industry. Rather than investing thousands of dollars to obtain the necessary equipment to conduct business, these financing solutions allow business owners to pay for the tools they need over months or even years.

For example, a cultivation operation lacking cannabis business funding can use equipment financing to pay for the cannabis grow lights, cultivation equipment, and irrigation systems they might need to start their business.

Equipment leasing works similarly. Rather than purchasing equipment outright, many businesses go with an equipment leasing option to obtain the necessary tools and machinery they need to get started.

hiring lawyers, accountants, and other professionals specializing in cannabis

Lawyers, Accountants & Other Professionals

Hiring a lawyer or someone to handle cannabis accounting can be essential for any cannabis business – especially if it’s your first time operating in this industry. However, engaging the services of a professional doesn’t always come cheap.

While a lawyer or CPA can help you avoid cannabis compliance-related legal trouble, they also charge fees for their time. If your cannabis business is just getting started, it might make sense to obtain business loans and use the funds to hire professionals who can assist in areas that aren’t up to par with industry standards.

Software & Security Systems

Compliance is crucial in the cannabis industry, and many states require cannabis businesses to use specific software and security systems, especially if they’re a hands-on operation. For example, METRC is essential if your business operates in one of the legal cannabis states that use it.

Using cannabis business loans for software and security systems can be ideal if you don’t have cash on hand. It’s also important to consider long-term planning and how using a business loan for this type of investment can result in savings over time.

cannabis business loan

Cannabis Business Loans

Where to get Cannabis Business Loans

Cannabis businesses might find it challenging to get small business loans. However, options for business loans exist. While cannabis business funding might take some creativity, business owners can acquire the capital they need to scale their operations in the cannabis industry.

The federal government has made it increasingly difficult for cannabis industry participants to obtain loans, whether for medical marijuana operations or business owners handling recreational cannabis.

Here’s are some of the most common sources for cannabis business loans:

Financing Company

Cannabis business financing options are available to this elevated space. But cannabis business financing solutions are still quite limited.

Business owners can check with several traditional lenders to see if that will work. But a financing company willing to offer cannabis business loans is usually one of the best methods for business funding.

Diamond Business Loans is one financing company operating out of California. This business helps cannabis startups and established operations find business funding through three main programs. The company offers an unsecured capital program, an equipment program, and a commercial real estate purchase program.

Other financing companies offer cannabis business loans, too. Some of these include Dynamic Alternative Finance, GoKapital, Small Business Funding, and United Capital Source.

Venture Capital Firms

Venture capital firms are becoming increasingly common in cannabis. This sort of funding is a good option for small business owners operating in the marijuana industry who would prefer to avoid taking on debt.

Equally important to understand is that a marijuana industry business owner that accepts funding from a venture capital firm is diluting his or her ownership percentage of the business. Thus, if your business is already earning money, it could be best to look for revenue-based business loans instead.

Most small business owners in the marijuana industry look at many grow facilities lenders and alternative lenders before choosing from the VC firms that are willing to work with a cannabis company. However, for those looking into these funding options, Casa Verde, Tuatara Capital, L.P., and Privateer Holdings are the VC firms that invest in the most cannabis and hemp businesses

Cannabis Business Loan Types

Small Business Loans

Small business loans are offered by banks and other traditional lenders to small businesses that need capital but operate outside of the cannabis industry. While funding options for this space are limited at many of the financial institutions regulated by the federal government, a cannabis business owner might still be able to find a small business loan.

Business owners seeking financing through banks or credit unions might obtain a loan based on their company’s revenue, cannabis equipment, assets, or personal guarantee.

The good news is that there’s increasing interest in offering cannabis loan options to small businesses. Meanwhile, some banks are starting to look at these companies as potential clients and offer cannabis business loans.

Business Cash Advance Loans

Some financial service providers may offer a merchant cash advance. However, this is usually one of the most expensive forms of alternative financing, and small business owners are usually better off steering clear of these cash advance options.

Cash advances are only recommended in extreme situations when no other options are available. It’s quite easy for a marijuana business to get behind when they choose to take a cash advance, and it’s important to remember that a business cash advance should be considered as a last resort.

Real Estate Loans

Commercial real estate leasing isn’t always an option for cannabis. Federal government restrictions on these operations make it less appealing to rent the property out.

This is where real estate loans can offer a cannabis business owner the option to buy real estate.

A real estate loan involves a formal loan agreement that helps a business owner purchase property and pay back the loan over time with interest. The loan proceeds to get paid off, and most business owners have a plan in place to ensure they have the capital to make the payments through their day-to-day operations.

Cannabis Working Capital Loans

Another type of cannabis loan is the working capital loan. These types of loans offer financing options for daily operations and are often an attractive option because they don’t require collateral, although the lending institution will review your cash flow and personal credit score to determine whether or not you qualify for a loan.

If your cannabusiness requires more funding than is offered by other commercial real estate financing options, it may be time to look into a working capital loan.

Cannabis Acquisition Loans

Cannabis acquisition loans are available in the cannabis industry, and some of these financing options can help a business owner purchase real estate or other assets.

These loans offer less debt than what’s found with typical acquisition loans, making them more attractive to those who are interested in large-scale operations. Cannabis acquisition loans are secured against property owned by business operators; therefore, this type of financing is only available when a business operator owns real estate.

Bridge Loans

Bridge loans can help a business owner acquire more funding when they need it most.

These loans provide the financial support that’s needed to purchase more inventory or property without having to pay for anything upfront.

Once a loan has been approved, business operators can keep their day-to-day costs low until capital raises have been made and other financing options have been considered.

Bank Loan

A bank loan is another type of financing that’s available to marijuana businesses. But these loans have the fewest options as compared to other types of cannabis loan products.

A bank loan is also one of the most difficult forms of financing for a cannabusiness owner to obtain because banks are usually resistant to offering these products unless they’ve already received approval from their federal government regulator. Regardless of business credit or your credit score, most businesses in this space will have difficulty getting a bank loan because of federal regulations.

Private Loans

Private loans are a popular funding option for cannabusiness owners.

These loans are usually offered by family members or friends who wish to offer financial support without any strings attached. The simple nature of these loans can help business operators secure the funding they need within days and keep their day-to-day costs low until revenue has been raised.

Term Loans

Term loans are often used in the cannabis industry because they offer a fixed, predictable source of financing.

These loans are secured by an underlying asset, and interest rates can be adjusted over time. This offers business operators another way to secure funding for a positive cash flow situation with little risk involved.

SBA Loans

SBA loans are one of the most popular financing options for new businesses in the cannabis industry.

The Small Business Administration (SBA) offers funding to cannabusiness owners who are interested in starting a business from scratch or purchasing real estate that would otherwise not be available to them with traditional lenders. The SBA has numerous guidelines and restrictions surrounding their loans, but if approved, these loans can help business operators secure enough capital to open doors and get started.

cannabis and money

Cannabis Business Financing Solutions

Financing exists in this elevated space. Here are a few we recommend exploring if you aren’t already:

Invoice Financing

Invoice financing is a form of financing that helps cannabusinesses generate enough capital to pay their employees, taxes, and other business expenses.

Invoice financing is also beneficial for those who need help generating revenue because it allows them to purchase inventory upfront using an invoice rather than waiting for customers to pay.

While some companies might base their invoice financing options on a cannabusiness owner’s credit score, business credit usually works for the purpose of invoice financing.

Equity Financing

Equity financing for cannabis businesses is also a popular option. The majority of businesses in this space aren’t eligible for traditional financing products because the legal regulations surrounding cannabis are so new.

Equity financing allows business operators to access funds from investors without paying any fees upfront. This form of financing is often provided to cannabusiness owners who already have a positive cash flow and need capital to help them scale their operations and bypass traditional lending guidelines.

Personal Credit

If you have a high credit score, besides being eligible for cash advances, you likely have good personal credit. This form of credit can also be used as business credit.

Your business credit the same as your credit score and can be used for financing purposes such as investing in a cannabis company or borrowing money to purchase cannabis equipment.

Cannabis Lenders

The SAFE Banking Act has lessened the restrictions for cannabis lenders at the federal level. While many lenders still refuse to see those working with cannabis value as a potential customer, the fact that restrictions have eased at the federal level is enough for some lenders to allow cannacompanies to open a bank account and use these services.

Lenders may offer solutions to allow cannabusiness operators to purchase new or used equipment, property, and other expenses. But it’s important to remember that not all lenders are willing to provide loans to cannacompanies.

Alternative Lenders/Investors

Alternate lenders and investors are equally important to consider. Here are some of the options available for cannabis:

  • Family Offices
  • Cannabis specific funds and a few hedge funds
  • Angel investors
  • High net worth individuals
  • Musicians, athletes, and other celebrities
  • Business incubators and accelerators
  • Industry-specific holding companies

Crowdfunding

Recently, people have been using crowdfunding to start new businesses. There are many crowdfunding platforms available.

For example, some of the platforms cannabusinesses can use are Indiegogo and Kickstarter. Indiegogo has approved some cannabis companies for raising money through their platform.

Other known platforms include StartEngine, which has also approved funding requests for cannabis startups. Lastly, SeedInvest is a platform that welcomes cannabis companies to participate.

cannabis and money cannabis financing

Concluding on Cannabis Financing

Whether you need to purchase property, don’t have working capital, are looking for a way to get the equipment you need, or something else, financing options are available. Hopefully, you’ve found the financing solution your cannabusiness needs in this article.

While the credit unions are beginning to support cannabusinesses, raising capital can be challenging for these operations. The space is still young, and as it matures, we expect to see more financial institutions offering support to elevated businesses.

Northstar: Guiding Cannabis Industry Success

Looking for expert financial guidance in the cannabis space? Northstar is here to guide you!

Contact us now for the financial services your operation needs to scale its success!

Is Marijuana Legal in New Jersey?

Is Marijuana Legal in New Jersey?

Whether you’re a consumer interested in recreational or medical marijuana or an entrepreneur looking to get involved, you’re likely wondering if marijuana is legal in New Jersey.

Yes! New Jersey recently legalized recreational marijuana, and medical marijuana has been legal for quite some time.

For those looking for a simple answer – yes, marijuana is legal in New Jersey. But this hasn’t been the quick and easy win consumers and ganjapreneurs wanted.

What Happened?

There was a failed bid to legalize marijuana for recreational purposes in the state legislature. After this failure, a statewide ballot question received overwhelming approval from voters. But then, we observed disputes regarding how to implement a new system.

Governor Phil Murphy signed three new laws for marijuana legalization in the Garden State. Not long after, New Jersey’s CREAMMA was issued to outline the state’s regulations. But New Jersey’s marijuana laws are still in their infancy.

New Jersey residents and business owners alike are waiting for these marijuana laws. Once this new system is implemented, consumers will be able to legally purchase marijuana from legal cannabis businesses operating within the state.

But for now, we need to understand all sides of the legal marketplace, policing, and expungement as the state has passed reform bills that focus on social, racial, and economic justice.

Thinking about starting or scaling a cannabis business in New Jersey? Northstar is here to lead the way!

Our experts are here to support your goals and thrive in New Jersey’s medical and adult use cannabis space. Contact us now to learn how we’ll guide your operation’s success!

medical marijuana program new jersey

New Jersey’s Medical Marijuana Program

Legal marijuana is nothing new for New Jersey. Despite recent recreational marijuana legalization, New Jersey’s Medical Marijuana Program has been operating for nearly a decade now. But this didn’t happen without some complications.

The New Jersey Compassionate Use Medical Marijuana Act (CUMMA) was passed in January 2010. Governor Jon Corzine signed it into law on January 18, 2010. However, the law was put on pause after Governor Chris Christie came into office the following day.

It wasn’t until August 9, 2012, that New Jersey’s medical marijuana patient registry reopened. This allowed registered physicians to finally begin offering patient certifications with the state’s Medical Marijuana Program.

Governor Christie then signed S 2842 into law on September 10, 2013. This allows cannabis in edible forms for registered patients younger than 18 to consume.

More Medical Marijuana Progress in NJ

Years went by, and on June 2, 2019, Governor Phil Murphy signed A 20. This law, also known as Jake’s Law – named after Jake Honig, a pediatric patient who had been using medical cannabis as part of his cannabis treatment. Through this bill, New Jersey medical marijuana laws now include provisions for home delivery, increased cannabis amount allowances, and expanded access with more cultivators, manufacturers, and retailers.

legalized cannabis plants in new jersey

Newly Legalized Cannabis in The Garden State

While medical marijuana dispensaries have had their time to shine in New Jersey, recreational marijuana possession is now legal. The state legalized recreational marijuana, which allows consumers to purchase, possess, and consume marijuana – all without worrying about having a good criminal defense attorney on hand!

The Marijuana Legalization Amendment

The Marijuana Legalization Amendment was approved on November 3, 2020. The amendment allows residents 21 years and older to legally possess and consume the plant for recreational purposes.

Besides marijuana possession and consumption, these indefensible marijuana laws impose a New Jersey state sales tax rate of 6.625% on all purchases of adult use cannabis. It also allows local municipalities to impose an additional 2% tax on legal weed (recreational cannabis).

New Jersey patients will still be able to buy legal weed without worry about contributing to the state’s sales tax revenue. This ensures all patients, including but not limited to terminally ill patients, can consume medical marijuana in New Jersey without inflated costs.

After a few months of determining the details, politicians working on the details of marijuana in New Jersey came to some decisions. On February 22, 2021, Governor Phil Murphy signed into law the New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act.

Up to Six Ounces

Through these laws, up to 6 ounces of cannabis flower became legal to possess. Those who consume cannabis hash are allowed to possess up to 17 grams at a time, as well.

The bills signed will also implement a framework New Jersey voters will appreciate. These regulations will encourage the success of cannabis in New Jersey by creating an inclusive marijuana marketplace.

Furthermore, Governor Murphy signed A1897. This bill reduces penalties for possession of up to 6 ounces of cannabis and 170 grams of hash. Minors on their first offense will now receive a written warning instead of facing criminal charges over marijuana products.

Now that marijuana is legal in New Jersey, these written warnings will ensure that Jersey’s broken system no longer ruins the lives of young people. Rather than being charged with a fourth degree crime over a minor offense, minors will receive warnings to discourage underage marijuana use without damaging youths’ futures.

New Jersey’s Social Justice Aspect

Cannabis legalization in New Jersey is a monumental win for marijuana decriminalization activists. Law enforcement and its police officers had been disproportionately targeting members of black and brown communities.

Eventually, the criminal penalties will be expunged. But because of the damage done by prohibited cannabis in New Jersey, the social justice aspect of recreational sales is a major component of the new law.

The bill signed into law also includes helping communities most impacted by the War on Drugs. This ensures that business licenses will go to those in minority-owned and women-owned businesses first.

The black and brown individuals trying to rebuild their lives after being convicted of marijuana possession or distribution charges under prohibition have now been given an opportunity to succeed in the new recreational cannabis marketplace.

The Jersey Cannabis Industry

As for businesses, the industry’s anticipated millions of dollars in medical marijuana sales will quickly become millions of dollars in recreational weed sales. With these estimates (and tax revenue), we can only hope that the New Jersey legislature and governors continue to build a functional and cohesive marijuana market that will keep cannabis alive.

Medical cannabis will still thrive in New Jersey. But with the constitutional amendment enabling legislation that focuses on improving the state’s recreational sector, we expect positive change to continue in the Garden State.

marijuana dispensary nj

How Legal Cannabis Will Impact Residents

Cannabis consumers can still buy medical marijuana from Alternative Treatment Centers throughout the state. However, they will still need to get a physician’s recommendation.

For medical marijuana patients, there’s a 4 percent sales tax on marijuana products. But this tax is set to be removed by July 2022.

Patients and caregivers are still allowed to buy up to 3 ounces of medical cannabis each month. For terminally ill patients and patients under hospice care, there is no monthly limit.

We’re still waiting to hear what the Cannabis Regulatory Commission says about adult-use cannabis products. But for now, the Cannabis Regulatory Commission oversees the state’s medical-marijuana program and allows the following products for patients:

  • Cannabis flower
  • Cannabis Extract
  • Infused oral lozenges
  • Cannabis topicals

new jersey legalized cannabis opportunities

Legalized Cannabis Opportunities in NJ

For business operators in New Jersey, the market share is growing exponentially. As more adults and medical marijuana patients decide to delve into the legal market, the opportunities for business owners continue to expand.

While New Jersey consumers can consume cannabis on private property (in their homes), dispensaries are allowed to have consumption areas for patients. Medical marijuana smoking is actually regulated the same way as tobacco smoking.

How do you open a medical marijuana dispensary in New Jersey?

You can’t, at least not at this point. The program started in 2010 and offered vertically integrated Alternative Treatment Center licenses. These licenses permitted cultivation, processing, and dispensing of medical cannabis to qualified patients. So far, the state has given six licenses in 2011 and six more in 2018.

In May of 2019, the state permitted ATC licenses for specialty endorsements. These include cultivation, processing, and dispensing. The vertically integrated permits had 1 cultivation endorsement, 1 for manufacturing, and one for dispensing. The state issued up to 15 dispensary endorsements, 4 vertically integrated permits, and 5 cultivation endorsements.

The NJDOH isn’t accepting applications for new Alternative Treatment Centers at this point. But other opportunities exist!

Cultivation Endorsements in NJ

With this endorsement, an ATC licensee can possess, cultivate, and package cannabis. They can also distribute or sell cannabis to other ATC endorsement holders. However, they cannot sell product directly to registered patients.

Cultivation endorsements are tiered by canopy size. These tiers allow small, medium, and large cultivators to operate.

  • 20,001 square feet to 30,000 square feet can have up to 2 cultivation endorsements
  • 5,000 square feet to 20,000 square feet can have up to 2 cultivation endorsements
  • Operations up to 5,000 square feet can have up to 1 cultivation endorsement

Manufacturing Endorsements in New Jersey

ATC license holders that obtain a manufacturing endorsement can possess and process cannabis. They can also buy, manufacture, and conduct research on cannabis from other ATC license holders. However, they cannot sell directly to consumers.

Dispensary Endorsements in NJ

Dispensary endorsements let ATC license holders buy marijuana from other ATC license holders. These operations can also supply and sell cannabis to registered patients.

Vertically Integrated Permit Holder in NJ

The vertically integrated permit holder can get a cultivation endorsement, manufacturing endorsement, and dispensary endorsement. Thus, those who hold this permit can operate as a vertically integrated cannabis operation in the Garden State.

New Jersey Recreational Marijuana Business Licensing

At this point, we still do not know how many recreational marijuana business licenses will be available in New Jersey. Despite the fact that the amendment does mention marijuana businesses, the state has not released the specifics just yet.

The Cannabis Regulatory Committee will have to establish and oversee the rules and regulations for the state’s recreational program. This regulatory agency will decide on what limitations and details will be involved in recreational marijuana business licensing.

Cannabis Cultivator Licensing

Any person or business that’s licensed to cultivate cannabis in New Jersey is allowed to sell or transport this cannabis to other cultivators, cannabis manufacturers, cannabis retailers, or cannabis wholesalers. However, cultivators are not allowed to sell or transport cannabis to consumers.

This individual or entity must hold a Class 1 Cannabis Cultivator License, and the state limits its license distribution to 37 cultivation licenses for the first 24 months.

Cannabis Delivery Service Licensing

Cannabis delivery service licensing gives a person or entity the ability to provide delivery services for consumer cannabis purchases and related supplies. This involves fulfilling orders for a cannabis retailer, allowing these operations to deliver cannabis items directly to consumers.

The person or entity operating as a cannabis delivery service in New Jersey must hold a Class 6 Cannabis Delivery License.

Cannabis Distributor Licensing

Cannabis distributor licensing in New Jersey is for any person or business that’s responsible for transporting cannabis in bulk from one licensed cannabis cultivator to another. Or, this can involve bulk cannabis transports from any one licensed cannabusiness to another licensed cannabusiness.

A license holder is also allowed to temporarily store cannabis or cannabis items if it has to do with transportation activities. The person or entity must hold a Class 4 Cannabis Distributor License.

Cannabis Manufacturer Licensing

Licensed cannabis manufacturers can process cannabis items by buying or otherwise getting usable cannabis, manufacturing, preparing, and packaging cannabis items. These manufacturers can also package, sell, and transport these cannabis-related items to cannabis retailers, wholesalers, and other manufacturers. They cannot operate with consumers directly.

Cannabis manufacturers in New Jersey must hold a Class 2 Cannabis Manufacturer License.

Cannabis Processing Licensing

Cannabis processors work directly with cannabis items in New Jersey. This involves buying or otherwise receiving cannabis, preparing, manufacturing, and packaging cannabis items, as well as selling and potentially transporting the products. However, this cannot involve direct contact with consumers.

Cannabis processors in NJ must hold a Class 2 Cannabis Processor license. This entity can also be thought of as a cannabis product manufacturing facility.

Cannabis Retailer Licensing

The cannabis comes from cultivators, and the cannabis products come from manufacturers or cannabis wholesalers. This business sells or distributes these products to consumers from a retail operation.

Retailers can use cannabis delivery services or a certified off-site deliverer to get products and supplies to consumers. Cannabis retail operations must hold a Class 5 Cannabis Retailer license.

Cannabis Wholesaler Licensing

Cannabis wholesalers buy, store, sell, transfer, and potentially transport cannabis products for the purpose of reselling them. These entities do not sell directly to consumers, and they must have a Class 3 Cannabis Wholesaler license.

cannabis leaf saying new jersey

New Jersey Cannabis is Legal

Medical and recreational marijuana are both legal in New Jersey. So, if you’re looking for a budding marketplace to conduct business, this is the state to start!

Looking to start or scale a cannabusiness in New Jersey? Northstar is ready to guide your success!

Contact us now to speak with one of our experts about how our financial services will enhance your operation in this budding space!

It seems like you’re interested in state laws covering cannabis. Make sure to check out this other post, too!

New Jersey Marijuana Laws: Big Changes Coming

Starting a Nursery for Cannabis

Starting a Nursery for Cannabis

You’ve heard about the countless successful nurseries popping up all throughout the U.S. But having your own plant nursery changes when you choose to focus on cannabis instead of fruit trees, and tree seedlings.

You likely won’t find cannabis clones at garden centers any time soon – and for several reasons. Over the past few years, some growers have made the switch from growing trees and crafting potting soil to cultivating smaller plants; namely, cannabis.

Each successful plant nursery is selling plants to retail garden centers and acts as a wholesaler. But these sales come from potted trees, like Japanese Maples and other big plants that many nurseries grow.

While some small growers still want to propagate trees and create potting mixes from cow manure, many are making the switch to cannabis. But starting from the cannabis seed, everything is different.

In this article, we cover what goes into starting a nursery for cannabis, the regulations these businesses must adhere to, and how growing cannabis can be more profitable than selling a thousand trees annually.

Wholesale nurseries make more money with the right financial services! Step by step, Northstar will transform your plant nursery into a successful nursery.

Contact us now to learn how our experts will help you scale your part-time operation into a full-time business.

cannabis nursery

Cannabis Nurseries Are Different

The small business operations you buy your seed, the way you distribute, and the methods used to save money are all unique to this industry. Even the growing season is different – unless you grow indoors, of course.

Other nurseries can go to garden shows to obtain industry insight. But for a business responsible for growing plants that are still prohibited under federal law, they’re dealing with high value plants that must be grown in accordance with state regulations.

A simple Google search for softwood cuttings will reveal hundreds of nurseries that specialize in these cuttings. However, searching for cannabis seed, clones, soil, and other industry-specific products will solely reveal businesses that have focused their marketing on search engine optimization.

Since cannabis is still federally illegal, “free advertising” is essential. Pay-per-click options aren’t available just yet. However, despite the lack of paid advertising available, SEO can be quite costly.

Regardless of such, it’s important to know that this isn’t the only way cannabis nurseries can advertise. Despite these being tough times for cannabis nurseries to go into business, some websites and publications will allow marketing for nurseries. But these are niche-specific publications as opposed to the more mainstream advertising options.

As you can see, these operations aren’t all about their cuttings and plants; there’s more to this unique industry than meets the eye. But let’s cover more of the considerations you’ll face choosing to grow cannabis instead of trees and other more common plants from seeds.

cannabis nursery

The Start of a Cannabis Plant Nursery Business

Before starting a business specializing in cannabis seed and clone production, you’ll need a nursery business plan. This is especially the case if you plan to bring in investors.

cannabis nursery business plan

Planning Your Cannabis Plant Nursery

Your plan and pitch deck should showcase your plant nursery goals, and at the same time, it should offer your strategies. Give an analysis of the market, organizational structure, financial information, and operating plan on your own schedule.

Introduction

Your plan should offer an introduction for your plant nursery. This is where you’ll include an Executive summary and an overview of the market.

Your market overview should provide insight into the market, your target market, how you plan to price your products, and SWOT analysis.

Marketing Strategy

Your marketing strategy should offer insight into the sales forecast. This will include online advertising obstacle outlines, a marketing plan, competition analyses, target customer outline, and sales forecast.

Operational Overview

The operating plan should offer insight into the operations of your plant nursery. You’ll include what you plan to offer, how you plan to offer it, where you plan to grow, product assumptions, a physical security plan, transportation outline, and tracking solution. This is minimal information, and more information is always better.

Considering the products you plan to provide is essential in your plan. Whether you plan to offer clones, seeds, mature or young plants, flower, or something else, you’ll need to list out everything you plan to do as you’re selling all your plants.

Organizational Structure

Think about how your plant nursery should be structured. You’re not running a simple backyard nursery here; you’re starting a nursery for selling plants that are prohibited by the federal government.

You’ll need to determine how you’ll abide by regulations within your organization. This will include security and traceability, as well as training employees to adhere to compliance standards.

You’ll also need to consider cannabis waste removal. How will you remove waste products from the premises in accordance with local regulations?

How many plants can you grow? And how will you transport for retail, package, and process your products?

Consider every aspect of your plant nursery and describe the operations planning and production process. This should include soil, equipment, fertilizers, and other products used in the operation, as well.

Financial Plan

Your financial plan should outline a funding analysis. Where will you get the money for starting a nursery and maintaining its operations?

Your goal here is to provide a breakdown of your expected direct and operating expenses, as well as a forecast for your profits and losses. If you have cash flow, you should also include this statement, along with the main ratios and a balance sheet.

cannabis nursery

Cannabis Nursery Business Financials

Before you begin propagating plants and creating your secret own potting mixes, you likely want to know more about the financials. What should you expect as you cultivate healthy plants?

cannabis nursery profits

The Potential Profits

The profits can be pretty impressive.

Similar to retail nurseries, your business might want to produce clones. One plant is capable of generating many clones. This is why it’s crucial to choose plants wisely.

Your healthy mother cannabis plants should be able to produce between 15 and 30 healthy cannabis clones monthly. However, equally important to note is that this can vary depending on the plants’ health and capabilities.

An operation that’s around 1,000 square feet could hold between 20 and 40 mother plants. If your mother plants produce 15 to 30 healthy cannabis clones monthly, you’re looking at between 300 and 1,200 clones produced each month. You might even be able to get more clones out of a nursery this size.

Small growers commonly sell clones for between $3 and $15 apiece. Thus, on the conservative side of this small business, you’re looking at around $900 to $18,000 worth of clones produced monthly.

The price will vary with several factors, including whether your buyer is purchasing clones in large quantities, the frequency at which you’re selling to the buyer, the demand for your genetics, and more. But if you’re operating as a reputable cannabis grower in California or elsewhere, you should find it easy to sell your clones.

If you’re creating your own genetics, some small growers might even be interested in purchasing a seed (or several hundred) for a personal garden or commercial grow operation.

cannabis nursery expenses burning

The Potential Expenses

Profits cannot come without expenses. And if you grow your plants from a seed and sell off the cuttings, it’s important to consider all expenses involved.

Your costs will vary, of course. Some areas are more expensive to own or lease property than others. Then you need to consider your cannabis grow licenses, utilities, marketing, labor, soil and other plant costs, pots, and more.

Cannabis taxes also vary from state to state. For example, if you’re a small grower in California, you’re likely to spend more than a home based nursery in Colorado.

cannabis unique taxes

Cannabis-Unique Taxes

Taxes on cannabis plants are important to think about. Cannabis nurseries must tread lightly and abide by all cannabis cultivation, excise, and sales taxes in place. Immature seeds, mature plants, and clones all have unique tax liabilities to consider.

For instance, in California, the following is how you’ll handle taxation:

  • Cultivation tax: Cultivation taxes don’t apply to nurseries that sell immature plants, clones, and seeds.
  • Excise tax: Immature plants, seeds, and clone sales can be sold to other cannabis licensees. But distributors have to transport cannabis from your business to the other licensees. If you’re selling immature plants, clones, and seeds to a retailer, the distributor will need to collect a 15% cannabis excise tax from the retailer.
  • Sales tax: As a cannabusiness operator, you don’t need to worry about sales tax unless you’re selling cannabis items in the retail market. If you’re simply selling cuttings (clones), seeds, and immature plants to cultivators and small growers, sales and use tax won’t apply to your operation. So long as the products grown from your immature plants, seeds, and clones will be resold as part of the cultivator’s regular business operations, you won’t have to worry about sales and use tax.

Choosing the Right Nursery Grow Site

outdoor cannabis nursery greenhouse

Outdoor Nursery

The right grow site makes a world of difference when operating a cannabis producing garden. A production facility might be better than a retail storefront, especially from a financial standpoint.

As a garden operator, you’ll benefit from having a remote location for your operation. These tend to be more secure, offer logistical benefits, and encourage future expansions.

Depending on your state, you might face restrictions if you plan to produce and open a grow facility. This could mean you’ll need to steer clear of public schools, transit centers, libraries, parks, and places that cater to minors.

Some states require outdoor production facilities to have an established location that’s enclosed by a wall. For example, Washington State needs nurseries to have a physical barrier that’s at least eight feet tall. Other states, namely Colorado, require cannabis growers to grow in a secure, enclosed grow that includes semi-permeable roofing and tall fences.

The Pacific Northwest allows outdoor cannabis production, which is great for plants that are 10 feet tall or more. These areas allow large-scale outdoor cultivation operations, and these businesses will want to get to know your plant nursery from the bare root all the way to the leaves!

indoor cannabis nursery

Indoor Nursery Facilities

A different type of grower will want to check your indoor plants from the bare root to their leaves; these growers go for quality as opposed to quantity, allowing nurseries to serve exclusively to a premium market as the cannabis industry expands.

The plant material that comes from indoor grows is what makes these high value plants so expensive. And while the costs might rise with an indoor grow, you’ll save because, besides the additional costs for lighting and other materials, you can bypass the commercial outdoor machinery and use a few hand tools instead.

Finding an indoor nursery facility can be a challenge. But if you purchase the land or location, you can bypass landlords that prefer to rent to nurseries that grow trees and shrubs rather than this federally prohibited plant.

Considering the benefits of having an indoor nursery. For starters, you’ll have complete control over everything. This means the humidity, light, and pests are all under control at all times. However, you’ll still need to maintain proper light levels and keep your nursery as energy-efficient as possible.

cannabis plants in pots at nursery

What You’ll Need for an Indoor Nursery

Each plant will require extensive care. But if cared for properly, you’ll earn a nice living working for your nursery.

If you’re new to the cannabis space, you’ll need to start with the basics. This means gaining some insight by performing some research in accordance with the seeds you plan to grow.

Depending on the strain, you’ll need to adjust the grow to its needs. Some seeds might do well with more humidity, while others will need dryer air to guarantee top-quality cuttings.

A greenhouse-specific HVAC system could also be a good investment for your indoor plant grow. These are perfect for closed nurseries and ensure your facility maintains the necessary grow conditions for healthy plant production.

Pots are also crucial for your garden. While pots might not seem so important if you have an outdoor grow, your choice for pots in an indoor grow makes a world of difference.

You’ll need 5-gallon pots to hold your plants. Since the roots expand rapidly, you’ll need plenty of room. Having larger pots for your plants ensures they have enough space to grow their root systems. But in some cases, grow bags will work for your plants.

Some high-end cultivators use permeable concrete pots with soil. This allows natural water recycling. However, if you’re interested in collecting some of the water from runoff, wooden pallets can work.

You’ll also need to consider the lights. Climate and light control are essential for the cannabis plant, regardless of the strain. This is especially true for those growing indoor as opposed to outdoors.

Energy-efficient lighting will ensure you get your dollars worth for energy consumption. The lights do all the heavy lifting to provide each plant with the energy they need to thrive.

cannabis plant lighting in nursery

More on Lighting & Electrical

Electricity costs can get out of hand for cannabis growers. This is why it’s essential to think about the lighting and electrical costs for your business. The two main options are HPS and LED grow lights. Here’s a bit more insight into each of these options:

hps grow light in cannabis nursery

HPS Grow Lights

HPS grow lights are the more affordable option. These generate a lot of heat, and the ballasts are usually installed in a separate room. While it’s true you’ll increase your energy costs with an HPS system, you can also save money by avoiding installation costs for ducting systems.

Another vital component when looking at indoor cannabis grow lights: is light penetration. High-quality light penetrates deep into the plants, helping to form potent buds with fewer leaves; this ultimately means higher yields and better nursery business practices for your indoor operation.

LED Grow Lights in cannabis nursery

LED Grow Lights

The LED choices for growers have actually been around for quite some time. But they’ve only recently become a popular choice because of their efficiency compared to other bulbs on the market today. For anyone interested in saving energy, these are a great option.

LED grow lights are also small in size and can be used for specific plants that require more humid conditions than others. Also, the LED growers allow you to control your specific yield time when growing cannabis indoors as well.

Ventilation Systems

A good ventilation system is one last consideration before setting up an indoor nursery for cannabis.

Cannabis requires high-quality air circulation. And filtering systems ensure that only clean air reaches your plant’s desired environment.

Poor ventilation will leave cuttings exposed to pests, mildew, mold, or even other environmental contaminants, which may destroy potential yields by devastating the plant growth cycle if left unchecked.

A bit of research regarding airflow and filtration will help you to set up the best possible environment for your indoor cannabis grow.

growing cannabis plants in a nursery

Growing Plants for Your Nursery Business

If you’re planning to grow cannabis plants and sell them as a nursery for extra pocket money, you might not be in the right business. While this could work for a small town operation interested in selling trees, flowers, and plants in small pots, cannabis is a different breed.

Growing cannabis as a nursery is expensive. You’ll likely need to test your plants’ genetics during a full bloom to have insight for the people interested in your seeds and cuttings. Your whole process will need documentation, including photos and videos. This is where you’ll get the information you need to show interested growers.

Depending on the grower, each is looking for something that appeals to them. For instance, some would prefer to grow short and wide plants. But for those with limited space, tall and thin plants might be the preference. With this in mind, you’ll need to grow a seed from each strain to maturity to offer growers an example of the final product. Offer growers a certificate analysis to showcase the quality of your end product, too.

It’s also important to keep your nursery clean and safe. You want interested growers to be able to trust that you’ve treated your cuttings with care.

Your cannabis plants should always look healthy, so it’s crucial to properly plan out your nursery and make sure all of the growing conditions are ideal for the cuttings and seeds.

Concluding on Starting a Nursery for Cannabis

Whether you’re just now breaking into the cannabis space or have been operating for a while, you’ll need to gear up for the competition.

Because there’s easy access to information online, it’s become easier than ever before to start your own business specializing in plants, seeds, and clones. But keep in mind that cannabis is still federally illegal. You might need legal advice about how to approach this market without running afoul of federal law surrounding marijuana.

Each plant you grow is an investment. If you’re not sure that your grow is the best quality, you’ll need to ensure your customers are happy with their purchases. Maybe consider offering them a small discount on any future purchase if they return for seeds or clones in the future.

If you’re thinking about getting into the cannabis growing business, there’s plenty of information out there to help you on your way. You’ll need a nursery license, as well as a few other permits, but with the right resources, you can have a successful business.

Looking for additional insight to scale your operation? Northstar is here to guide your success!

Contact us now to speak with one of our experts about taking your operation to the next level!

New York Weed Laws in 2021

New York Weed Laws in 2021

New York has been making some tremendous progress with cannabis legalization in the last year. With this being the case, we expect New York weed laws to give consumers and business operators opportunities that weren’t available in the past.

Sure, medical marijuana has been legal for quite some time. But besides the state’s medical marijuana program, we can expect New York marijuana legalization to encourage adult-use businesses.

With these new laws, we need to expect cannabis regulatory oversight to develop in the state. While New York marijuana is now legal, the state hopes to increase its tax revenue by taxing cannabis products New Yorkers consume.

But what does this mean?

For starters, the state will have marijuana products for recreational use available. The law will require updates to ensure a state is a secure place for production, distribution, and consumption.

Social equity and health will remain at the forefront of cannabis consumption in NY. But for business operators, the new law means those operating in and out of New York City will need financial services to scale their operations.

This article covers the regulatory authority in NY, as well as how recreational marijuana and medical marijuana laws will work in 2021.

Interested in scaling your cannabusiness in New York? Let Northstar lead the way!

Contact us now to learn how our experts can grow your business with the right financial services.governor andrew cuomo

Marijuana Regulation and Taxation Act (MRTA)

Governor Andrew Cuomo signed the MRTA on March 31, 2021. This legislation legalized adult-use cannabis in the state. Furthermore, the legislation created the Office of Cannabis Management, which is governed by a Cannabis Control Board that’s responsible for overseeing and implementing the state’s cannabis laws.

Click here for more information on cannabis legislation and taxes in NY.

NY Office of Cannabis Management

Even though federal law still prohibits cannabis, NY legalized medical cannabis – and recently, the state-approved recreational. But with this industry’s development in the state comes the need for cannabis management.

This is where the New York Office of Cannabis Management will play its role.

The state recently became the 15th state to legalize cannabis with a focus on social equity. Its Marijuana Regulation and Taxation Act (MRTA) is the first legislation in the nation to offer a comprehensive regulatory structure for oversight of licensure, cultivation, production, distribution, sale, and taxation for medical, adult-use, and cannabinoid hemp.

This taxation act is a comprehensive regulatory framework that highlights the importance of social justice, public health and safety, and economic development surrounding the cannabis space. Thus, this stands to set standards for every cannabusiness in the state, including but not limited to each cannabis dispensary in NY.

Here’s some more insight about each prong of the Office of Cannabis Management:

Social Justice

Now that cannabis is legal in New York, this framework is dedicated to establishing a strong social and economic equity program. This will actively encourage people from communities that have been disproportionally impacted by the state’s prohibition policies to get involved in the cannabis space.

Public Health & Safety

Both public health and safety are important to those regulating the NY marijuana space. By focusing on these characteristics, the state plans to create a regulatory structure that includes standards for production and manufacturing, labeling, strict product testing, packaging, and advertising. This is how the state plans to guarantee products are safe for consumers and companies aren’t targeting children with their marketing efforts.

Economic Development

No one in NY wants distressed farmers. Through the state’s economic development plan, it will encourage small businesses and farmers to play their roles in the cannabis sector by creating microbusiness, cooperative, and delivery license types.

cannabis shop sign in new york

Medical Marijuana Laws According to the MRTA

New York’s MRTA also has provisions that expand upon the state’s Medical Marijuana Program. The current regulations and program operations will stay the same for New Yorkers interested in cannabis use for certain circumstances like Alzheimer’s Disease.

However, the state needs a regulatory framework in place to facilitate new law implementation. This will take time to develop, which will include a host of new regulations that will be issued and adopted to initiate the necessary changes.

Recreational Marijuana Laws According to the MRTA

New York adult-use cannabis legalization will impact public policy tremendously as it affects various facets of society. The MRTA’s regulatory framework will need time to evolve and must receive input from stakeholders and communities throughout the state.

The OCM needs to draft and issue regulations regarding law implementation before adult-use sales can start. But at this point, even though consumers cannot find stores to buy adult-use cannabis products, it’s now legal for adults 21 years of age or older to possess and use cannabis.

Hemp Laws According to the MRTA

Through the MRTA, the OCM is now authorized to regulate cannabinoid hemp products (those that contain cannabidiol or “CBD) manufacturing and sales. This, of course, includes concentrated cannabis that’s derived from the hemp plant.

The OCM plans to implement basic consumer protections to guarantee that all cannabinoid hemp products are made, tested, and labeled with best practices for safety in mind.

The MRTA also has provisions that expand the Cannabinoid Hemp Program. Currently, the program operations remain the same. But we expect future regulation packages to reflect the changes.

New York Cannabis Laws FAQ

Is recreational marijuana legal in NY?

At this point, it’s legal to smoke marijuana – or otherwise consume it. But while you can smoke cannabis in NY, it will be a while before regulations are in place to allow the first adult-use dispensary to sell cannabis.

What does legalization do for New Yorkers?

Now that cannabis use is legal in NY, residents can possess up to three ounces of cannabis flower for recreational use. They can also hold up to 24 grams of concentrated cannabis.

In the past, possession and consumption were limited to those suffering from chronic pain or other medical conditions. Cannabis use is now an option for all adult New Yorkers for personal use.

Cannabis possession is no longer restricted to patients – like disabled veterans and people suffering from debilitating conditions – and their designated caregivers.

People who are 21 years old or older can now use, smoke, eat, or consume a cannabis product without the need to worry about incarceration or fines. However, they won’t be able to purchase weed at a legitimate business until an adult-use dispensary opens.

Now that NY will legalize marijuana, people can store up to five pounds of dry cannabis at home. However, adult use and medical cannabis must be stored in a secure place.

Marijuana convictions can still happen. But for now, these are limited to the amount of marijuana one has and selling it without the right cannabis license in NY.

Where can marijuana consumption happen?

The bill’s sponsor in the Senate, Liz Krueger, said that people can legally smoke tobacco where others are smoking tobacco. While cannabis plant matter is vastly different, the rules for consumption are similar.

Just like cigarette smoking is not allowed in schools, workplaces, or in cars, neither is cannabis smoking. However, new rules could eventually offer stricter regulations for marijuana consumption in public.

At this point, if someone smokes cannabis publicly where it’s not allowed, they could receive a civil penalty of $25 and have to complete as much as 20 hours of community service.

However, the smell of cannabis isn’t enough for a police officer to stop and search pedestrians.

Consumers are allowed to partake in cannabis in private residences, too. This, of course, depends on the landlord as they can still ban consumption. Some hotels and motels allow it, as well.

Within several months, marijuana consumption sites will be open. These will not allow alcohol, but they will allow cannabis smoking on-site once regulations are developed.

Is impaired driving going to be an issue?

Driving under the influence of marijuana is still a crime. Comparable to driving under the influence of alcohol, cannabis consumption before getting behind the wheel – or while – is still against the law. While past marijuana convictions are likely to get expunged, criminal records that include driving under this plant’s influence will not.

Where can I legally get cannabis in NY?

At this point, the law is working on creating retail licenses. However, most consumable cannabis is not coming from a health care provider or medical marijuana dispensaries.

Until brick-and-mortar dispensaries become established, home cultivation is an option for some. While home cultivation takes some effort, the yield from a small grow-op’s mature plants makes it an appealing endeavor for some.

At the same time, for those looking for cannabis that offers quality, the health department might even approve of it, that’s going to take a while. But the cannabis plants grown at home – up to six plants per household – can be quite potent.

But remember, at this point, federal law does not allow cannabis. This, of course, includes the home cultivation of cannabis plants.

Anyone in NY who decides to grow cannabis at home must understand the rules surrounding these small grows. You must be 21 years or old, can grow up to six plants for personal use (3 mature plants and 3 immature plants). But if the household has two or more adults living in it, they can grow a maximum of twelve plants per household (6 mature plants, 6 immature plants).

New York Cannabis Laws & Business

Cannabis legalization in New York is new and exciting. But with the progress we’ve seen recently, it’s safe to say that business opportunities will continue to flourish in the state’s elevated space.

Now is the time to get involved in the cannabis industry; it’s a new frontier. And those who get in with the right mix of business acumen, hard work, and ethics will be rewarded handsomely.

It’s important to understand the progress we’re seeing unfold in NYS. As rules get more defined – both state-wide and at a local level – the opportunities will continue to grow. Take New York’s off-duty conduct law, for example.

But if you’re ready to start or grow your cannabusiness in this state, there’s no better time than right now.

Interested in growing your cannabusiness in NY? Northstar is ready to lead the way!

Contact us now to learn how our experts can scale your business with the right financial services.

We know you’re interested in New York’s cannabis laws. Make sure to check out our other articles, too!

New York Marijuana Legalization: One of the Most Progressive Laws in America

New York’s Off-Duty Conduct Law: A Win for the Cannabis Industry