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To Incorporate or not to Incorporate?

Many people believe that, in order to comply with State Medical marijuana laws, they must incorporate in order to "open a store front or be a delivery service". Many lawyers, either through ignorance or a desire to "sell " incorporation documents to their clients, advise their clients that they must incorporate as a "nonprofit mutual benefit corporation". Not true.

THERE IS NO REQUIREMENT UNDER STATE LAW that in order to be a collective that operates a store front or delivery service, the organization must first incorporate in any particular form. In order to comply with Health and Safety Code Section 11352.775, which allows for collective or cooperative association for the purpose of cultivating medical marijuana, persons engaged in such activity may associate in any form of entity that allows for compliance with the rule that the entity, whatever form it takes, must operate as " not for profit" as courts have so specified. As of this writing, only the City of San Diego requires that a collective incorporate as a "Statutory Cooperative" in order to comply with its local ordinance to operate a "store front".

Whether this mandate will stand legal scrutiny vis a vis the MMPA if challenged remains to be seen. In any event, the requirement of San Diego has only local impact and does not apply statewide.

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