Choosing the Right Entity for a Cannabis Business: Corporations

One of the most important decisions a new cannabis business can make is the form of entity it will use. In fact, one of the first questions businesses ask is whether the right entity for a cannabis business is a limited liability company (LLC), corporation, or something else. Like basically every other legal analysis, the answer depends on a lot of business-specific factors. In this series, I will break down some of the key points for consideration of the right entity type for a cannabis business. Today, I want to look specifically at corporations.

A note on limited liability

Before I jump into things, I want to define the concept of limited liability. Limited liability is one of the fundamental features of a corporation, LLC, and some other business types. If a person owns a company with limited liability protections, the person is generally not personally responsible for the debts, liabilities, etc. of the company. Except in a few limited scenarios, if the company is sued and loses, the owner won’t lose anything – except, at most, their investment in the corporation.

Corporations are not the right entity for simplicity

Corporations are the classic business entity type. The problem with

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