Unique Issues Facing Medical Cannabis Businesses
Medical marijuana businesses experience a number of roadblocks that set them apart from other consumer-facing businesses. These issues range from strict regulations and artificially-restricted consumer bases as well as limited access to business services. With the potential to limit successful growth, these challenges must be acknowledged. Here we will look at the common issues medical cannabis businesses struggle with and explore best practices for overcoming them.
A Complex Patchwork of Laws
From its beginning in California in 1996, medical cannabis has existed in a legal no-man’s land between conflicting state and federal cannabis laws. Three dozen states have legalized medical cannabis in some form thus far. The details of these programs and the regulations they’ve enacted vary wildly from state to state, making it difficult for companies to navigate regionally specific rules. This is especially true for businesses that operate across multiple states, creating a need to reconcile variances in cannabis laws.
Until cannabis legalization happens at a federal level, cannabis businesses will have to be vigilant to ensure they remain fully compliant to avoid repercussions such as fines, loss of license, and even legal action.
Restricted Consumer Access
Unlike most industries, the number of potential consumers for the medical cannabis market is artificially restricted. This usually happens because most legal medical cannabis programs limit participation to patients suffering from a limited number of medical conditions. The severity of effects from this differs from state to state. California sits on one extreme, allowing nearly anyone with a doctor’s recommendation to access medical cannabis. Other states like Louisiana have a compact list of severe medical conditions to qualify. This generates a preset level of growth and can prohibit the ability of companies to scale successfully.
Pinch points, like a shortage of doctors licensed to recommend medical cannabis, can similarly restrict the number of available consumers, as patients are forced to wait or travel excessive distances in order to gain access to an approved medical professional.
Consumer access can also be limited by accessibility of the medical cannabis itself. In some legal cannabis states (or within certain cities), the location of cannabis dispensaries is restricted to certain zones or by distance to schools, churches, etc. This can make it difficult for patients who are limited in their ability to travel to obtain their medicine, potentially forcing them to choose in favor of easier treatment options.
Trouble Securing Business Services
The dubious legal status of cannabis looms over the medical cannabis industry when it comes to day-to-day operations as well. Due to its illegal status at the federal level, cannabis companies, especially those that work directly with the cannabis plant, its derivatives, and resulting consumer products, continue to have trouble securing some basic business services, including banking, credit processing, and insurance.
Legislation looking to resolve this issue has been a boon to cannabis companies hoping to operate in the same ways as more standard industries. However, much more is needed. The Secure and Fair Enforcement (SAFE) Banking Act was first introduced in 2019 to protect financial institutions from liability providing services to cannabis companies. It is currently awaiting action by the U.S. Senate. The Clarifying Law Around Insurance of Marijuana (CLAIM) Act was introduced in March of 2021 to offer similar clarity and protections for insurance companies working with the cannabis industry.
Choosing a Qualified Cannabis Insurance Partner
If you don’t currently have an insurance provider, it is important that you find a partner with prior experience working with cannabis companies and the necessary knowledge of cannabis regulations to ensure your business is fully covered against potential risk. Contact CannGen here to see what coverages you need to protect your cannabis business.
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Disclaimer: Information shared is for general purposes only.