Step 1First, you should learn the law. The major laws that allow you to do this are Proposition 215 (Prop 215), Senate Bill 420 (SB 420) and the Attorney Generals Guidelines For The Security And Non-Diversion Of Medical Marijuana.

Prop 215, passed in 1996 gives you or someone you designate as your primary caregiver the right to use and grow marijuana for medical purposes if a doctor recommends it either verbally or in writing. It also protects doctors from criminal liability for recommending marijuana. Notice that they recommend it and don’t prescribe it.

The second law, SB 420, mandates that the state develop law to ensure the safe distribution of marijuana for medical use. It basically mandated a state wide voluntary ID card system that patients or their primary caregivers could join, established the rights of patients and primary caregivers to “associate cooperatively or collectively to cultivate marijuana for medicinal purposes”, further guaranteed the rights of patients and primary caregivers to use, grow and transport, developed “no-smoking” zones with in 1000 feet of schools, libraries and churches and ok’d reasonable compensation for the services of making medical marijuana available.

The last law, the attorney generals guidelines, reconfirms the legality of Prop 215 and SB 420, confirms the taxability of medical marijuana transactions, and calls for cooperatives and collectives to formally incorporate – as a nonprofit.

Step 2Get legal. If you’re going to get in to this business, you really should have a doctor’s recommendation in writing. This means visiting a Pot Doc that specializes in this. It costs about $100.

Step 3Next, Incorporate. You need to formally do this in order to be protected. You’ll need to form a specific type of nonprofit for state purposes but form another type of corporation for federal purposes. You also need to incorporate before you can find a place to operate from because you’ll want to get in to all transactions through this vehicle.

Step 4Find a location. You’ll need to find a place to operate out of. You can actually get insurance for your inventory or bud with this type of business along with regular insurance that any normal business would have. This is a great selling point to a landlord.

Step 5Get your licenses and permits. You’ll need to have a location before you can get a sellers permit, this is why that step was before this one; the permit is tied to the location. You’ll also need to get a local county tax permit and a tobacco retailers license for selling papers and pipes.

Step 6Design your membership agreement. Do your research here because you must have certain things in it in order for it to be legally defensible.

Step 7Open for business. But, before you do, get a really good security system along with video cameras; it’s required by law. You’ll also need to be careful about how much inventory you keep on hand when you first open, the ratio’s of what’s allowed are tied to the number of patients.

Don’t flash a lot of money – cops and robbers look for thisPut your patients first – this isn’t supposed to really be a businessDon’t become the McDonald’s or Donald Trump of dispensaries – you’ll get targeted and bustedKnow the law and follow it – when you break state law here, you break federal law as well.