Cannabis Business in Alabama

Medical cannabis business in Alabama is still in the process of being established. In 2024, the Alabama Medical Cannabis Commission (AMCC) awarded multiple licenses to:

• Integrated facility applicants,
• Cultivators,
• Processors,
• Secure transportation providers,
• State Testing laboratories, and
• Medical cannabis dispensaries.

Cannabis-Touching vs Cannabis-Adjacent Business in Alabama

Cannabis business industry can be broken down into two major types:

• Cannabis-Touching - any business that directly deals with the cannabis plant
• Cannabis-Adjacent - a business that is a part of the cannabis industry, but does not directly interact with the product.

It’s important to understand which business you are dealing with because each type comes with its own rules, laws, and challenges.

What is a Cannabis-Touching Business?

If the business is involved in growing, touching, securing, or transporting the cannabis, this is a cannabis-touching business. As such, the following types of cannabis businesses are strictly regulated by the state of Alabama and other federal laws:

• BREEDERS and CULTIVATORS
• MANUFACTURER
• EXTRACTORS
• PROCESSORS
• TESTING LABS
• PACKAGING
• DISPENSARIES AND RETAIL STORES
• DISTRIBUTORS AND SUPPLY CHAIN

What Are Cannabis-Adjacent Touching Cannabis Businesses?

If the business offers support services or products related to the cannabis industry without handling the plant itself, such businesses are considered “ancillary” or “non-plant touching”. Here are the most typical examples:

• Banking and Payment Processing Solutions: In Alabama, where cannabis is still federally illegal, it can be challenging for cannabis businesses to access traditional financial services. Specialized financial service providers offer essential support, including banking, loans, and payment processing, helping these businesses operate effectively despite legal uncertainties. This support is crucial because many conventional banks may not work with cannabis companies due to potential legal risks.
• Legal Services and Regulatory Compliance: Lawyers and specialized legal firms adept in cannabis legislation assist businesses in maneuvering through the intricate and frequently evolving regulatory landscape at both state and federal levels.
• Tax and Accounting Services: Cannabis businesses deal with unique financial rules and strict record-keeping requirements. Specialized tax and accounting services are vital for helping them manage everything from daily finances to yearly taxes. These professionals make sure businesses comply with tax laws, even those that limit deductions to just the cost of goods sold. It’s important for cannabis business owners to work with knowledgeable accountants who can guide them through these complex regulations and help manage their finances effectively.
• Consulting and Management Services: Firms specializing in consulting and management assist Alabama cannabis businesses with compliance, licensing, business operations, and market strategy, helping them navigate the complex regulatory landscape.
• Insurance Services: All businesses require insurance coverage, and a cannabis business doubly-so. Cannabis plants themselves are insured differently depending on the stage of production, plus the business operations, staff, and liability must be also covered. It is important to work with an insurance agent who understands your business model and can quote coverage from multiple insurers.

Other notable types of Non-Plant-Touching cannabis business are:

• Technology, Software, and Equipment
• Advocacy Organizations
• Marketing
• Point of Sale (Payment solutions)
• Data Analytics
• Packaging and Labeling, etc.