The Wild West: The Legal Marijuana Industry

By Andrew Millman Monday, May 11, 2015

legal marijuana industryIt’s 2015, and we’re entering an entirely new frontier. Legal marijuana is now the fastest growing industry in the United States.

Similar to the dot-com boom in the late 1990s and the real estate explosion in the early 2000s, the burgeoning marijuana industry--especially marijuana dispensaries--has been skyrocketing. The marijuana industry is thriving, and with it comes the opportunity for many people to prosper.

We have noticed an influx of new companies that are popping up in order to get in early on the legalized marijuana industry. With rapidly growing new markets, such as marijuana edibles, marijuana accessories, cannabis research and development and various cultivation methods, the expansion of this new “Wild West” industry, has limitless potential in states where marijuana has been legalized. 

However, as with any new industry, many of these new start-ups will flourish while others won’t last more than a couple of years. One significant but often overlooked element can determine the longevity of any start-up company: investors. 

There are many investors just waiting for the next exciting, profitable business prospect who want to invest early in order to maximize their return. What attracts potential investors? A great product, of course, as well as a sound business plan. 

Another good way to attract potential investors is by filing the company in the state of Delaware. Delaware continues to be recognized around the world as the best state in which to incorporate a business. 

Some potential investors are more likely to invest in a startup when it’s a Delaware corporation. In fact, most venture capital firms will only consider investing in a startup company that is a Delaware corporation. Why not raise your company above the competition, making it as enticing as possible, by setting it up in the state of Delaware?

Four states--Colorado, Washington, Oregon and Alaska--have legalized marijuana for both medicinal and recreational use; several other states have legalized marijuana for medicinal use only but decriminalized it. It is very likely that more states will be following one or both of these trends in the near future. However, as of today, non-medical marijuana is still illegal in Delaware, so the use of the word “marijuana” is not permitted in corporate names.

If you have any questions about forming your new Delaware corporation or LLC through Harvard Business Services, Inc., reach out to one of our friendly customer service representatives today at 800-345-2677. We’re ready to help.

Next: Cannabis Industry Guide

*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such source’s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.

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