Welcome to WEEK THREE of the 10 week Marijuana Business Training Course!

This week’s course will cover: REGISTERING YOUR BUSINESS AND WRITING A BUSINESS PLAN

Hopefully by now you have completed your last week’s tasks and assignment, so you are ready for the next step toward owning your own Marijuana dispensary or delivery business. This will be one of the biggest undertakings of getting your business off the ground, so power through this section with diligence and be thorough so the rest will seem like a breeze.

Non-Profit or LLC

Most dispensaries run on a non-profit business model, and in many states there are specific legal advantages to this route. Again, it is important to learn the specifics of your locale, because, for example, Washington D.C. is the only governing regional area that encourages for-profit dispensaries. Colorado, on the other hand, is the only state to ban collectives and cooperatives, and dispensaries operate on a not for profit basis.

Your first step is to decide if you want to establish your business as a for profit or not-for-profit entity, and it is most common for dispensaries to operate as non-profit 501(c)3 corporation. State law says that caregivers are entitled to “reasonable compensation” for managing the operations of the organization. Therefore the non-profit organization does not make a profit, but they do have other ways of compensating you. Of course this also means that there are other special rules compared to operating as a normal corporation. Many attorneys also recommend establishing as a non-profit because there are additional layers of legal protection.

The laws of a non-profit express that all workers are required to be paid “reasonable” salaries for their skills and professional services. Therefore, paying yourself a multi-million-dollar per year salary is likely to raise suspicion by the IRS, however large dispensaries supporting the required management and labor could easily pay its upper level employees six figure salaries.

Once you have established your desired structure, you will then open a business bank account and get an Employer Identification Number or a 501(c)3 number from your state. Following your initial paperwork filing in Week One (to establish yourself as a patient or caregiver and registration with the state licensing board), you should have already begun a quality organizational schema for your paperwork. You will add to this all of your business/non-profit start-up information. A good idea is to have duplicates of your paperwork in two separate locations so that if there is a fire or some other disaster, you will still have a copy of all your important papers. Some people even go as far as to have paper and digital copies in both locations. It is better to be safe than sorry, and if you have ever experienced the frustrating process of reconstituting lost data you know the importance of backing up work is unquestionable.

Create Your Business Plan

Now that you’ve gotten through the preliminary steps toward making your operation legitimate, you must now create a business plan to flesh out the next steps going forward. The basic items to take account of in your business plan include a definition of what your business is and how it will operate (everything from caregivers and patient agreements to rental agreements and staff payroll). A business plan also provides an arena for you to think through all of your ideas related to marketing – what products will you sell exactly (for example, vaporizers and edibles or strictly cured plant material, aka flowers) and who are you selling to (glaucoma patients, people suffering from chronic pain, cancer patients, all of the above or one in particular). These parameters will set the stage for determining how the product will be produced, and this can be enhanced through doing market surveys of your area to determine what best fits your chosen location. If you decide to have caregivers and processing specialists produce your product (oils, edibles and the like), be sure to have contracts set out for these relationships. If you intend to produce your own wares, then you will have to research all for the equipment and security measures required to operate a greenhouse and/or processing facility (of course, you will also need to do the research on finding a location that will house these industries in addition to the retail frontage). As a final precaution, review all laws and regulations to make sure any of your intended goals don’t require additional taxation or regulation, and if they do be sure you can be in compliance. You can expect that a business plan without consideration for production of wares will be around 60 pages in length, and 80 if you’re including information on growing and manufacturing goods.

The following bulleted list gives you an idea of documents that are required, and provides a good starting point. Quite often, in the preparation of these documents you will come across other documentation requiring preparation, but this is highly variant in regard to state and local legislation.

• Executive Director Letter
• Scope of Project
• Mission Statement of Dispensary
• Organizational Structure of Dispensary
• Day-to-Day Goals
• Objectives
• Capacity to Perform Work
• Site Use Analysis
• Implementation Strategy
• Partnerships
• Team Members & Consultants
• The Need and Opportunity
• Products and Services
• The Market
• Operations
• Building & Construction
• Security Plan
• Fire Plan
• Community Engagement
• Management and Governance
• Green Practices
• Research & Development
• Financials
• Articles of Incorporation
• Corporate Bylaws Sample
• Action of Incorporator Template
• Promissory Note
• Patient Membership Agreement
• Financial Plan

 

Make sure you cover these basic points when drafting your business plan and file your paperwork with the state to formally incorporate:

• Ensure your business name complies with your state’s corporation code
• Appoint directors
• File official “articles of incorporation” and pay associated fees
• Establish bylaws that explain operating rules
• Determine if a board of directors will be necessary and schedule regular meetings
• Design a record keeping system
• Design inventory control procedures
• Generate a system for keeping track of all forms

 

Expect your list of forms to include:

• Patient registration forms
• Track all sales records
• Track all staff timesheets
• Have official letterhead available for documents you are required to print.

 

Many of these documents have free templates available on different websites (www.scribd.com is a good example of a website that has lots of different examples of document types).

While the process of writing your business plan and drafting all of your documentation may seem tedious and strenuous, it will help you to be prepared in the long run. This exercise will also help you to frame the costs involved in starting the business, and having a rough idea of all costs involved will help you if you need to seek assistance in funding. Quite often, initial planning involves lofty goals, and creating a realistic monetary structure to associate with your goals will help you determine what can be accomplished with start-up funds and what will need to be saved for year two or three. To this end, it is wise to create a vision statement that will help you stay focused as you begin to make purchases and flesh out your business plan.

The more effort you put into analyzing demographic and market data to ascertain the value and potential success of your business, the greater the likelihood that investors will feel comfortable going into business with you. You want to show how your business will benefit the community, through direct help of patients in need as well as tax dollars contributing to greater social good. This information will also come in handy down the line as you begin to establish your business in the community and begin to contact locals and officials to educate them on the value of your business to the community.

Once you’ve completed writing your plan and drafting your documents, the final step is to have your documentation and contracts reviewed by an attorney that specializes in medical Marijuana. You can keep this cost low by doing your research and requesting they take the time to review documents as opposed to drafting them for you, but it is nonetheless imperative that you spend the money to make sure everything you’ve created is in working order.

READ THE TWB GUIDE FOR MORE INFO ON – Investors as Out of State Residents ; For Profit, Nonprofit, Not-For-Profit, C-Corporation ; Collectives and Cooperatives ; Sole Proprietor or LLC ; License Approval or Denial ; Business License Department ; Business Bank Account ; Legislation to Ease Banking for Marijuana Business

 

YOUR FOURTH ASSIGNMENT

If you haven’t started already, it is time to write your business plan. It is a big step, and obviously an important one. The next three weeks will be the busiest of the entire start-up process, and this one will be the toughest. So even if it takes you longer than a week to write your business plan, don’t get discouraged and keep with it. You are well on your way to owning your dispensary. The next topic will expand on this business plan to help you through the process of finding funding. If you are already independently wealthy, then you can start researching on the location of your business when you’ve completed your business plan. For those requiring assistance with startup capitol, begin researching on ways you can procure funding and think seriously about anyone you know that might like to collaborate on this venture with you. Yes it is expected that you begin researching financiers while you write your business plan. This may seem cumbersome, but if you set out a certain number of hours each day to complete well defined sections you will be able to keep on track with both tasks. Give yourself 70-80% more time to write your plan than to research financiers, and gradually shift this time allotment toward monetary considerations going forward as your plan takes shape. The point is that you want to be pushing things forward so that you can build up momentum.

 

We are here to help and want to see you succeed! If you have questions you can email The Weed Business directly at info@theweedbusiness.com.

Happy Trails!

The Green Ninja, DANKO and the Weed Business Team

The Green Ninja has business experience from owning two companies, has operated The Weed Business since 2009, and follows news providers to stay as current on issues and business laws of Medicinal and Recreational Marijuana use in the United States. DANKO is from a Medical Marijuana state and has many card carrying friends providing first hand insights from patients and caregivers, in addition to researching and writing in-depth articles about the most current issues of the industry. Combined, we have spent hundreds of hours looking into different states’ medical Marijuana laws and the industry to make sure the information included is the most cutting-edge and up to date information there is. The Weed Business has a number of other contributors and a large support network, so if you have a question we can’t answer there’s a good chance we know someone who can.

Move On to WEEK FOUR