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Special considerations for marijuana franchisees

On Behalf of | Jan 24, 2023 | Franchise Agreements

In the words of the famous Ray Krock, “As long as you’re green, you’re growing,” and that’s probably never more true than right now as the nation’s marijuana industry seems poised to expand.

Changing social mores and changing laws have made the cannabis industry a hot property, and the first franchise dispensary chain, which started as a merger between Unity Rd. and ONE Cannabis Group, began offering franchise opportunities back in December 2020.

But marijuana franchises do come with some unique considerations.

How is a cannabis franchise different from other franchises?

Opening a marijuana dispensary as part of a franchise can make the entire process of entering the lucrative cannabis industry much easier. Just like any other franchise, you can see that the business model works, and you get to enjoy the benefits of the franchisor’s name recognition, customer base and established practices.

As a franchisee, however, you need to keep in mind a few things:

  • You do have more legal risk, and this cannot be overlooked. While all franchisees have to comply with regulations, there are a lot of murky rules regarding cannabis because of the conflicts between state laws and federal laws. Until marijuana is legal on a federal level, that won’t change.
  • You have a cash-heavy operation. Initially, many cannabis dispensaries had to operate entirely on cash, although that has changed. Companies like IndicaOnline now provide point-of-sale systems that have alleviated some of the problems – but not all. Banking can be an issue for many cannabis businesses.
  • You may have a harder time finding funding. Again, this has a lot to do with the constantly changing laws (and expectations surrounding those laws) regarding marijuana. Until there is a change on the federal level, potential investors may still worry that all their hard-earned money will end up swept away if the federal authorities suddenly start cracking down.
  • You may have more tax issues than with another business. Because of the way that the IRS views controlled substances, you cannot deduct certain business expenses that would otherwise be deductible, which can lead to significant taxation. 

Ultimately, there’s no right or wrong answer when you’re trying to decide if a marijuana franchise is right for you – but you do want to go into the process as informed and prepared as you can be.

NOTICE: This blog is intended solely for informational purposes and should not be construed as providing legal advice. Please feel free to contact us with any questions you may have regarding this blog post.