Medical marijuana start-ups face challenges in New Jersey

The old saying in real estate is, of course, "location, location, location." A new business will need to plan carefully as to where it wants to establish itself, considering the neighborhood culture among other things. But what happens when the would-be neighbors say "no thanks" to the new business?

Such was the hurdle to be cleared by Greenleaf Compassion Center, New Jersey's first 100 percent legal dispensary of medical marijuana. The state's Department of Health last year gave the green light to a total of six nonprofits to grow and sell the drug. However, five of the six have yet to find towns that will allow them to set up shop; proposed sites in industrial zones have all been shot down by staunch public opposition.

Greenleaf, however, has been able to move ahead by proposing to grow the marijuana in another unnamed town and sell at its storefront in Montclair. With a median household income of $140,000, racial diversity and a reputation for tolerance, the "lefty" town seemed like a fit for the fledgling business. Greenleaf now has a prominent location in Montclair, notably just a 30-minute train ride from Manhattan, where state law continues to prohibit marijuana.

New Jersey is one of 17 states that have taken legislative action to allow medical marijuana despite unwavering federal prohibition. Different states have different distribution models, although New Jerseys are recognized by both opponents and advocates of marijuana as among the strictest in the country. Besides regulating the potency and types of marijuana that can be grown, the state maintains tight control over the conditions for which patients may be prescribed the drug. And under current law, only state residents may fill prescriptions at Greenleaf.

Start-ups always face challenges, from entity selection and affiliate formation to preparing organizational documents and succession planning. But especially when a new business really is among first of its kind in the state, and when the product or service is highly regulated by state and federal agencies, the uncharted legal waters can be perilous. Entrepreneurs would do well to seek legal advice regarding their business formation and planning in order to help ensure stability and profitability.

Source: Huffington Post, " Montclair Pot Dispensary: New Jersey's First Marijuana Storefront Lands Pot License," Geoff Mulvihill, Oct. 24, 2012

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