Legal Requirements for Marijuana Businesses

marijuana business legal requirements

What Legal Requirements Must Be Considered for a Marijuana Business?

Almost every business is subject to multiple licensing, registration, and permit requirements. These are important for tax payment, public safety, or other essential reasons.

Since the cannabis industry is heavily regulated, applying for a license for a cannabis business is quite tricky – especially when you think of performing every process independently.

For such reasons, you must work with a marijuana business attorney who is well-informed about the legal ramifications of the cannabis industry. With their knowledge and experience, you will meet all the legal formalities without any complications while ensuring your business’s success in the long run.

Additionally, concerning a marijuana business, rules and regulations not only differ from state to state, but they can also vary depending on the nature or category of your business, for example, retail or cultivation.

The most common legal requirements you must consider fulfilling when planning to own a marijuana business are mentioned below. Let’s begin…

Basic Legal Requirements

Every business must fulfill some basic requirements before it comes into effect. Here is the list of some fundamental requirements a marijuana business needs:

Tax Identification Number:

It will act as your federal tax identification number, also known as an employer identification number (EIN). The IRS requires this number for your business’s identification when finding anything related to taxes.

Business formation:

Integrating your business or creating an LLC with the state is essential because it covers your assets from any potential debt or liability that may arise from your company.

General Business License:

The general business license, revived annually, enables you to operate in your city or country legally. However, keep in mind that the general permit does not authorize you to perform a cannabis business.

DBA Filing:

The DBA (Doing Business As) enables you to conduct business utilizing a name other than the name mentioned in your incorporation papers

Sales Tax Permit:

This permit is needed if you want to become a retailer that deals in physical or digital products, online and offline. Additionally, you’ll need this permit if you have to collect local and state taxes.


Different businesses need different permits. For instance, you’ll require one with the health department if your business includes food preparation. Additionally, a company may also need zoning, signage, and land usage permits.

Note: An online or home-based business usually demands the same level of compliance as a traditional business.

License Requirements for a Cannabis Business

As mentioned above, when it comes to general licensing requirements, a cannabis business requires a license that varies from state to state and among municipalities. For instance, while some states have an open application period and hand out many permits, other States are more restrictive and usually limit the number of licenses to single digits.

Additionally, you could also have to face restrictions related to residency and background (those with any previous or current legal convictions may not find themselves eligible), which applies to contractors, owners, and employees.


Getting a license for a marijuana business can be a difficult task to accomplish. Moreover, the whole process requires razor-sharp precision when it comes to satisfying all the legal formalities of the process.

But with the help of a business attorney who specializes and has knowledge of the cannabis industry, this process can be less challenging for you.

Make sure you fulfill all the demands of the law so you can enjoy the benefit of running a successful business in the long run.

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