Franchising a Marijuana Business: It’s Not Quite Mission Impossible

A discussion of the laws that are most important to entrepreneurs planning to franchise a cannabis business, particularly those that touch the plant.

 

Medical marijuana has been legal in California for 20 years, and today almost half of the states have followed California’s lead by making cannabis legal for at least some medical patients. Recreational cannabis use is also legal for adults – 21 and over – in Alaska, Colorado, Oregon and Washington. In those markets alone, cannabis sales are estimated in the billions annually.

At least some of the licensing deals that are being struck by these businesses today are probably franchises: they combine trademark rights, monetary payments and a business or marketing system that meets the Federal Trade Commission or local state’s statutory definition of a franchise. However, no high profile franchise systems have emerged yet,  … and for good reason. This article discusses a number of the significant stumbling blocks to creating a successful – and legally compliant – franchise system for businesses that touch the plant.

For cannabis businesses considering expansion through franchising or licensing, these issues, and the ease with which some regulatory agencies including the California Department of Business Oversight will interpret a so-called license as a non-compliant franchise, are important to explore as part of initial risk assessment and long-term planning.

Read the full article, “Franchising a Marijuana Business: It’s Not Quite Mission Impossible.”

 


 

The article entitled “Franchising a Marijuana Business: It’s Not Quite Mission Impossible,” authored by Dawn Newton and Shannon L. McCarthy was published in the Winter 2016 (vol. 35, no. 3) issue of the American Bar Association’s Franchise Law Journal. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.