The RULES ON SETTING UP A Medicinal Marijuana Business
Municipalities are under unique pressure from marijuana proprietors seeking to establish retail dispensaries and places to cultivate, process and package medical marijuana. Through amendments to their existing zoning bylaws, municipalities can stipulate where medical marijuana facilities will be located, and under what conditions.
Entities designed for the cultivation, production, processing assembly, packaging, retail or wholesale sale, trade, distribution or dispensing of marijuana that is designated and restricted for use by, and for the benefit of, Qualifying Patients in the treatment of Debilitating Medical Conditions.
California statutes authorize collectives, cooperatives, or individuals so long as they are not to profit from the sale or distribution of marijuana. Making sure you structure the correct business formation is important to the future success of your business.
Kinds of Non-profit organizations:
A legal marijuana dispensary by law should be a non-profit organization. It could be one of the following types:
A collective is a group of entities or individuals that share or are motivated by at least one common issue of interest or work together on a specific project(s) to achieve a common objective.
(b) Cooperative (Co-op)
A cooperative is a group of individuals, commonly laborers, farmers, or small capitalists, formed to execute a common goal of a productive enterprise, the profits being shared in accordance with the capital or labor contributed by each.
(c) Nonprofit mutual benefit corporation(C-Corp)
A Nonprofit mutual benefit corporation is a corporation that is set up for the sole benefit of its members and should not seek tax exemption under IRS code section 501. If this type of corporation did generate a profit, it would be taxed.
It is very important to keep the legal aspects in mind while setting up a California medical marijuana dispensary or legally growing medical marijuana. It is very important to get sound advice and build a team which knows its responsibilities. Another aspect is to find out details about the local laws and the community support in regards to the setting up of a marijuana dispensary or delivery service.
SAMPLE STEPS FOR SETTING UP A NONPROFIT
Check the most up-to-date local regulations for the city or area you want to open your medical marijuana shop to be sure you are in compliance. Regulations vary from one area to another.
Form and organize a non-profit collective or cooperative organization.
File articles of incorporation for your non-profit collective or cooperative organization with the state of California.
Apply and obtain an Employer Identification Number
Draft the Bylaws
Draft the Conflict of Interest Policy*
* While not formally required, adopting a conflict of interest policy is a strongly recommended best practice.
Hold the first meeting of the board – elect the officers, adopt the bylaws and conflict of interest policy, establish the tax year, and take other appropriate board actions.
Register with the Your State’s Attorney General’s Registry of Charitable Trusts. (only for qualified Non-Profit entities, such as those Non-profits that “help marijuana patients get informed and become empowered to become legally protected”, Informational entities may qualify for exempt status and require registration with the state).
Prepare and file IRS Form 1023 (only for qualified Non-Profit entities, such as those Non-profits that “help marijuana patients get informed and become empowered to become legally protected”, Informational entities may qualify for exempt status and require registration with the IRS).
Prepare and file FTB Form 3500 (only for qualified Non-Profit entities, such as those Non-profits that “help marijuana patients get informed and become empowered to become legally protected”, Informational entities may qualify for exempt status and require registration with the state).
File the Statement of Information with the Secretary of State
Apply for a California seller’s permit by filling out California Department of Equalization Seller’s Permit application form BOE 400.
Apply for a California sales tax number by filling out and submitting BOE form 230.
Apply for a medical marijuana dispensary license in the city or locality where your store will be located in.
Locate a store-front property to operate your legal medical marijuana store that is not located within 600 feet of a school. California state law AB 2650 prohibits any marijuana dispensary from being located within 600 feet of a school as of January 2011.
Hire a lawyer. Because of the unique legal situation medical marijuana dispensaries face, it’s important to seek professional legal advice before purchasing or opening a dispensary. A lawyer will also be able to help you secure the appropriate entity formations, and other relevant documents and systems in place for a seamless business strategy.
- For example, in some states you may be required to classify your dispensary as a “non-profit organization”
A not-for-profit is stated in the Attorney General guidelines. A not-for-profit organization is an organization that does not distribute its surplus funds to owners or shareholders, but instead uses them to help pursue its goals. This means you can still pay yourself and employees a reasonable salary and have your expenses covered for the business.
Our Lawyers are familiar with Medicinal Marijuana Nonprofits and those laws facing the Medicinal Marijuana industry. Many business owners have no idea the amount of power they have, when they are being advised by a legal representative in these cases. A lawyer will look at the complete situation, and then advise you on the different circumstances that are suitable for your situation.
For a free consultation regarding any issue that you might have with the Medicinal Marijuana business, call Legal Solutions 2 U today at 855 – 77 LAW 2 U (855-775-2928)
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Not all entities meet the needs of every individual or group of individuals looking to establish an entity. The above steps are provided solely as a set of example of steps to take when setting up a charitable nonprofit. Discuss your specific needs with a qualified attorney. The information herein is not intended to be legal advice or a complete list of steps necessary to establish a nonprofit entity.