Most people will tell you that the fact that marijuana and cannabis are illegal under federal law is a real problem for most California cannabis entrepreneurs. However, I would argue the federal laws are a blessing in disguise for most California cannabis entrepreneurs. There is no question that the fact of federal cannabis illegality makes life difficult for anyone involved in the cannabis business. This illegality makes it difficult for cannabis companies to find a bank (as most banks are registered with the federal government and don’t want to get involved with a federally illegal product), find insurance (as with banks most insurance companies are federally regulated) and many other services that are regulated by the federal government. There is also the fear, no matter how remote, that the DEA or some other federal agency could swoop in any time and shut down your business because it violates federal law.
However, I feel all these negative issues attached to federal illegalization are far outweighed by the fact that federal illegalization seriously cuts down on the competition. Just imagine if Archer Daniels Midland, General Mills or something other food or agribusiness conglomerate entered into the recreational cannabis market in California? With their resources and experience in the market, they could crush any recreational cannabis company in the market today. So why don’t they? Because all these companies are listed on national stock exchanges which are regulated by the federal government.
I could be wrong here, but it is my strong believe that any company that is listed on any national exchange i.e. NASDAQ, the NYSE, the Pacific Stock Exchange etc. may not get into the Cannabis business. That is a huge advantage for any entrepreneur. In almost any other industry one would have to worry about big conglomerates pushing their small or medium start ups out of business. But in the recreational California cannabis business, we only have to worry about unlisted conglomerates pushing us out. I believe that is just one of the reasons why the California recreational cannabis business is such a prime market for small entrepreneurs to enter.