Cannabis Business Organization Options

Cannabis Business  Formation and  Corporate Governance in California

Cannabis Compliance Lawyers provide local, regional and national business clients with a comprehensive understanding of the strategic, advantages and disadvantages of various business organization options.

We are committed to provide legal advice and representation that is calculated to provide for our clients’ long-term success.

We assists entrepreneurs and business owners while navigating the complexities of new business formation efficiently.

The legal structure a business selects often has a profound implication on business operations, tax matters, reporting, and personal liability for the company’s debts.

Regulated industries like the cannabis industry require extremely careful planning and preparation when drafting corporate governance documents.

Boilerplate agreements simply do not address the many important and specific issues that can and will arise for a business. This is particularly true for a cannabis business.

Our lawyers work closely with our clients to help them select the proper organizational structure.

We also closely examine our clients’ business plans to help them select the business structure that is consistent with their goals and objectives.

  • Limited Liability Companies
  • Limited Liability Partnerships
  • Closely Held Companies
  • S Corporations
  • C Corporations
  • Sole Proprietorships
  • Partnerships
  • Joint Ventures


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Business Governance

Once your entity is formed, we work with our clients to develop and update business plans, corporate governance issues and, when necessary, dispute resolution.

We also assist clients with shareholder agreements, employee and independent contractor agreements, real estate issues, and permitting and licensing matters.

Cannabis Compliance Lawyers has a keen understanding of how to address possible governance issues before internal disputes or business challenges arise.  We provide preemptive solutions to keep the business running while mitigating the risk of disruption or litigation.

We having successfully resolved a diverse range of corporate governance disputes for decades, and are committed to helping our clients restore their stability quickly and professionally.

Whether you have a operating agreement for an LLC or a shareholders’ agreement with bylaws for your corporation, it is important to make sure that your cannabis business governance documents specifically address issues unique to cannabis businesses.

Cannabis Licensing

We have assisted numerous clients in navigating the complex and ever changing laws relating to legal cannabis operations.

Our clients operate some of the most respected dispensaries, cultivation operations and delivery services in the State.

We regularly meet with local legislators, bureau members and municipal leaders to maintain a dialogue about current and future regulations for both medical cannabis and the evolving recreational cannabis markets.

The governing bodies have made very clear that those who comply with the licensing laws will be treated as lawful businesses, and caution that those who fail to comply with be faced with costly enforcement actions.

Regulatory Marijuana Violations

We can assist clients with regulatory appeals to overturn an alleged violation or resolve pending charges so that no property or licenses are lost.

Resolving criminal or civil cannabis violations requires a keen knowledge of the local regulations and governing bodies. We have established relations and maintain our excellent reputation to assist in such matters.

Credibility is key!  We have credibility in spades from complex regulatory matters in Sacramento. 

Seizure of Medicine and Return of Property

We have assisted numerous clients in obtaining the return property improperly seized by the police, and are keenly aware of California laws mandating that improperly seized medical marijuana must be returned to qualified patients. Qualified patients and caregivers are entitled to due process protections, as are licensed business owner.

Other Applicable Laws:  School Zones

Patients should avoid possession of marijuana in school zones.  There are typically additional penalties for the possession, use, and cultivation of marijuana near schools, whether it is for medical or recreational use.

California patients and caregivers have been the targets of extreme charges and harsh penalties for medical marijuana in these “Drug Free School Zones.”

These Drug Free School Zone laws can double the maximum sentences in federal court. Although most local agencies declare that cultivation and dispensaries cannot be located within 600 feet of schools or parks, SB 420 explicitly states that it does not authorize the smoking of marijuana “in or within 1,000 feet of the grounds of a school, recreation center, or youth center, unless the medical use occurs within a residence.” This caveat is an important nuance in the laws.

Civil Asset Forfeiture

Federal law provides for the forfeiture of property and profits obtained through or used in the commission of felony drug offenses.

Prosecutors are encouraged to include forfeiture offenses in all drug indictments.

This can apply to landlords who rent to people considered in violation of federal law, and can be used against the landlords of business or patients who cultivate, manufacture or use cannabis on the premises.

We advise landlords and property owners how to protect themselves from risks of forfeiture.

Landlord/Tenant Law

Signing a lease means you have read and understand the requirements of the legal contract. Most leases contain specific clauses limiting a landlord’s access to the rental property.

However, with proper notice, landlords can inspect the property for maintenance needs and to assure you are complying with the lease. Closely inspect this clause of your lease and be ready to comply.

Landlords may only enter your premises without permission in the case of an emergency, unless you run a business that is open to the public.

Any attempt by your landlord or maintenance personnel to enter your business without complying with the terms stated in the lease should be firmly but politely refused.

Attempts to exclude any person listed on the lease should be immediately reported to your attorney, as your landlord has no right to exclude you from the premises without going through proper eviction proceedings.

Some leases may include prohibitions on use, cultivation and distribution of controlled substances, which likely includes medical marijuana.  Specific lease terms must be included to address the intended use of the premises to protect the cannabis enterprise.

Cannabis is a unique business, and requires a great deal of diligence.  Many problems can be avoided by these simple rules:  

  1. Be a good tenant/landowner.
  2. Be a good neighbor.
  3. Work with law enforcement and the regulators.
  4. Keep in close contact with your attorney.
  5. When in doubt, politely decline an inspection request and call your attorney.
  6. Remember, silence is golden.

Attorney General Guidelines

On August 25, 2008, the Attorney General of California issued comprehensive guidelines concerning medical marijuana.

Among its other provisions, the Guidelines make clear that storefront dispensaries may operate legally under California law, so long as they do not operate for profit and follow other applicable regulations.

We have many contacts within the Office of the Attorney General because we have practiced law in Sacramento for many years. This provides an opportunity for dialogue on important policy issues.