New states throughout the USA have legalized recreational cannabis for adults 21 and over in 2021. The issue is that there still are no legal recreational dispensaries in newly legalized states like New York to buy cannabis. Slowly, the process is starting. Licenses are not going out on a first-come-first-served basis or if you can afford it. Depending on the state they are going out via a lottery system. Some states are doing their lottery based on those who apply with seniority going to individuals with criminal histories, minorities, or other people negatively affected by the laws before they changed. This means a few key things for people looking to get into the business of selling marijuana.
Licenses for Those Negatively Affected by Previous Laws
Cannabis Debit Card Processing for Licensed Dispensaries
To undo some of the damage caused by decades of harsh Cannabis laws and a criminal justice system that more harshly targeted non-whites, licenses will first be offered to those communities negatively impacted. This means neighborhoods and communities previously punished for Cannabis will now have an opportunity to utilize the new industry as a means for betterment. Here is what the process looks like in the State of New York:
“The OCM will promote social and economic equity applicants who have been harmed by the prohibition of cannabis for adult-use licenses, establishing a goal of awarding 50% of licenses to social and economic equity applicants.” (source: Cannabis Licensing NY State)
“Social and Economic Equity Applicants” refers to individuals who have faced jail time, fines, and other impacts due to Marijuana convictions. Because the laws have now changed, criminal histories related to Cannabis have been expunged. If an individual spent time in jail for a felony cannabis conviction. They could never get a good job due to that felony conviction, they have a better chance of receiving a Cannabis license in New York State.
Each state is doing it a little differently. Connecticut is using a lottery system without the guidelines of NY. Licenses may not go to “social and economic equity applicants”. This means knowing what the particulars are for your state will make a difference in the licensing application process if you’re looking to get into the business.
Getting a License is Just the Start
Receiving a cannabis cultivation or sales license is a big deal. That isn’t the end of the journey but rather the beginning. There are serious financial obligations that those with licenses will have to meet to start and succeed in the Cannabis business. If you have the license to cultivate here are some questions you’ll have to answer:
- Can we afford the upfront costs to get the business off the ground?
- Do we have funding to rent/lease/purchase land or a facility to start growing Cannabis?
- Can we pay for electricity, fertilizers, plant nutrition, and staff?
- Who can we sell our Cannabis due when it is ready for sale?
- Are we complying with all regulatory requirements?
- and more.
Receiving a license is great, but knowing how to get the business up and running is something else entirely.
Cannabis Sales Licenses have Other Issues
If you receive a license for Cannabis sales, be it recreational or medical, there are other conditions you must meet to be compliant. You too need a storefront that must be prepared for inspections and quality checks from both state and local authorities. Who you sell to is highly regulated and must meet certain standards. Your bookkeeping and taxation are really where you will be scrutinized. Do you have your accounting so that you can confidently face an audit? What about accepting payments?
Cannabis debit card processing for licensed dispensaries is still the main option for accepting card sales. If you plan to take a lot of cash transactions using a dispensary Cash management system will be smart. National banks in the USA still do not offer Cannabis businesses access to traditional business banking services. You need to know which regional banks you can partner with and which ones will give you normal rates like any other business.
Brother Processing has partnered with regional banks that specialize in the Cannabis and CBD industries for over 5 years. We understand the particulars of the marijuana industry and what each company requires depending on their operations. Give us a call today and let’s discuss your processing needs and how we can be a great fit.
