Caregiver Business Models

[PuReKnOwLeDgE]

Are there any caregivers out there that would like to share or discuss business models?

I am a maxed out caregiver and I am looking to include compensation into my legal income. Actually at the moment it is my only source of income. I would like to show some profit for my skills, services, time and investment. I am a full time grower and running multiple varities, rooms, mediums, and environments. It is not exactly the easiest work.

I am most familiar with LLC's. I like that the taxable income passes right through you and not as seperate entity. I also like the liabilty protection an LLC provides, and the oppurtunity to write off expenses.

I researched non-profits for my state earlier and it seems I need more then on member to be the board. I am not wishing to include anyone else in this venture. Do non-profit dispensaries all have a board? Or am I misunderstanding the law?

DBA? Any thoughts on that? No liabilty protection but I can get some income on paper.

As you can see I am trying to find the best angle to approach this. I want to pay taxes and have an income on paper for a mortgage. I am mostly settled on an LLC, from my point of view it seems the best route.

What about federal taxes? Do you not file?

Anyone in a med state has any experience in this matter I would appreciate your input here.

 

[PuReKnOwLeDgE]

Bump

 

[SELFHEMPLOYED]

bump for a good topic

 

[headiez247]

I just dealt with this at length. Interviewed multiple attorneys before picking one and spend countless hours researching.

LLC = illegal. LLC is a for-profit business. Medical marijuana laws say that caregivers/collectives/etc must NOT be a for profit. It needs to be a mutual benefit not for profit incorporation.

If you go to any legit dispensary, every single one will be Incorporated.

There is much mis-information about this subject. Many people will argue that you don't have to form a Incorporation, and are able to just have rec's on hand. This just isn't the case. Anyone who argues this clearly hasn't read the 2008 report from the California Attorney General. In this report it specifically states that not only should you be Incorporated, but that you need to pay taxes on it as well. In fact it specifically states that even if no money is being transferred, the transaction is taxed. For more information google "ag medical marijuana guidelines". The first link is the PDF that was released by the California Attorney General's office.

Many people will also not want to incorporate because of the costs involved and the work required. A lawyer will charge anywhere from 2500-4500 to properly incorporate you. Once you are incorporated you must keep track of your transactions, and you must pay tax to the state of California for it. In addition (and your lawyer will help you set this up) you need to have a board of directors (which can literally just be yourself if you want) and you must keep certain paperwork in order.

Re: federal taxes. Unless you want the IRS chasing you, you must report federal taxes as well. However for IRS its more vague, you can put "medical provider" for your job title.

Both California and IRS are 90% more likely to come after you for NOT paying taxes then they are for you properly reporting and paying them.

Re: compensation. While it is a mutual benefit not for profit entity, that does NOT mean that you as the grower (and any employees) are not compensated. As the CEO of the Inc you can pay yourself whatever is "appropriate" given your workload. There have been cases that have gone thru the legal system where a caregiver had to justify making $150,000 a year, and it went through fine (and the charges were dropped, mainly because he was properly incorporated). Its any EXCESS profit that is made AFTER all expenses, wages etc, that MUST go back into the collective in some way to benefit the patients/collective. Now this could mean better equipment, a fish tank, a better company vehicle, grower lessons, anything as long as it benefits the collective.

Bottom line. Incorporate. It is the highest level of safety available. If your not going to incorporate you might as well just stay underground because forming a LLC for a medical marijuana grow is highly illegal.

 

[funkfingers]

I just dealt with this at length. Interviewed multiple attorneys before picking one and spend countless hours researching.

LLC = illegal. LLC is a for-profit business. Medical marijuana laws say that caregivers/collectives/etc must NOT be a for profit. It needs to be a mutual benefit not for profit incorporation.

If you go to any legit dispensary, every single one will be Incorporated.

There is much mis-information about this subject. Many people will argue that you don't have to form a Incorporation, and are able to just have rec's on hand. This just isn't the case. Anyone who argues this clearly hasn't read the 2008 report from the California Attorney General. In this report it specifically states that not only should you be Incorporated, but that you need to pay taxes on it as well. In fact it specifically states that even if no money is being transferred, the transaction is taxed. For more information google "ag medical marijuana guidelines". The first link is the PDF that was released by the California Attorney General's office.

Many people will also not want to incorporate because of the costs involved and the work required. A lawyer will charge anywhere from 2500-4500 to properly incorporate you. Once you are incorporated you must keep track of your transactions, and you must pay tax to the state of California for it. In addition (and your lawyer will help you set this up) you need to have a board of directors (which can literally just be yourself if you want) and you must keep certain paperwork in order.

Re: federal taxes. Unless you want the IRS chasing you, you must report federal taxes as well. However for IRS its more vague, you can put "medical provider" for your job title.

Both California and IRS are 90% more likely to come after you for NOT paying taxes then they are for you properly reporting and paying them.

Re: compensation. While it is a mutual benefit not for profit entity, that does NOT mean that you as the grower (and any employees) are not compensated. As the CEO of the Inc you can pay yourself whatever is "appropriate" given your workload. There have been cases that have gone thru the legal system where a caregiver had to justify making $150,000 a year, and it went through fine (and the charges were dropped, mainly because he was properly incorporated). Its any EXCESS profit that is made AFTER all expenses, wages etc, that MUST go back into the collective in some way to benefit the patients/collective. Now this could mean better equipment, a fish tank, a better company vehicle, grower lessons, anything as long as it benefits the collective.

Bottom line. Incorporate. It is the highest level of safety available. If your not going to incorporate you might as well just stay underground because forming a LLC for a medical marijuana grow is highly illegal.

As it stands right now in colorado you're allowed to make money off mmj.. so A-LOT of people out here are LLC. so I think it depends on the way your mmj laws are written. I do agree with you though that becoming INC is the best way to go for a lot of reasons..

 

[headiez247]

ya, I don't know the laws in Colorado, only California. By the sounds of it though I wish our laws were like yours lol.

 

[funkfingers]

well yes and no, real low plant count, their tryng to regulate it pretty hard out here Cali set a nice example of what not to do though..

 

[PuReKnOwLeDgE]

Thank you for the insightful post. That is more of a description of a nonprofit mmj operation then a night of research can yield.

I am in Mich. so our laws here are still fairly new. I did write the number one attorney for mmj in our state about LLCs and he referred me to another lawyer. I never made it any farther then that. Apparently it was possible here or maybe he would have told me otherwise. I am aloud to recieve compensation for my medicine and services, but I get what your saying about LLC for profit and it is better to be a non profit but pay yourself reasonably.

Probelm with underground is this is my job, and I intend to do this as long as I am legally aloud to. I have no recorded form of income and I want to upgrade to a nicer home in the country soon.

Non-profit sounds expensive, but may be worth it for the chance to run a dispensary when our laws change here this fall

Lets keep this rolling! I know there are others who can help educate some of us in the new medical states get setup and avoid mistakes with accounting/banking/taxes/business models and practices. Of course not all information would be relevant across the board but it could help gives us direction. I know you guys in Cali who have been fulltime vending for years have something solid setup Any information is helpful here, the number of med states is growing and the reality of being involved with medical marijuana cultivation professionally is here.

 

[Classic Seeds]

good idea you have i 've been wondering how other states do it ,here in oregon if you grow for someone else they are supposed to supply all their lighting seeds etc. and split the cost of the growing and the 6 plants that are there that you grow for them are totaly theirs.

but a few people permit shop for people who only get a portion of the 6 and do not want to grow or do not know how. that is not how it was intended but that is what is going on .and now we have bud shops and home delivery who buy and sell patient to patient or card holder to card holder.they seem to be doing a booming bussiness for the time being

i would hate to see anybody go to jail but its really stretching our mm program and i can see the D.E.A. starting to take a interest in oregon because of the money changing hands you can call it a donation ,but its just word games and i do not know how you would file unless you filed a return as a specialty farmer and did not say you grew pot i think as long as you pay your taxes your safe i know a lot of my friends and me included did this in cali in the late 70's and early 80's and here in oregon they like the taxes also so it will be interesting to see how it turns out for these interprising souls who have their butts on the line so to speak

 

[Classic Seeds]

i do know if our legalization for everyone pass's here in oregon the state will be the store they will test for safety and buy if it meets their standards and distribute it through the state liquor store system they have inplace

to me the measure sounded like it did away with the indivual permits and the state supplying for free to the poor or medically needy who now have mmp and if their insurance will not cover mm i hope this is not going to come down this way because i want to grow my own not have the state give me a hand out of someone else commercial crop

if the state wants to regulate its sales fine by me but leave us little medical grower alone if we do not want to sell it just smoke it we should be able to grow our own the same way you can make x amount of booze tax free and not have to turn it over to the goverment for a tax stamp or buy permits to brew or distill spirits.but i must admit if it pass's i will probably grow a few extra to sell to the state and get my property taxes back from them he he

 

[PuReKnOwLeDgE]

bump

 

[kava]

I am running a sole properity and my accountant has keeped me straight as to what I am able to include such as office supplies and worm food and opperating costs and milage on vehicles. I am a Organic Fertilizer Production Specialist (worm farmer)lol. You deffinatly need to talk to an accountant and get a list of deductions that are able to be claimed for the business even if it is Inc. or LLC. Even paperclips, paper, phone bills, milage on vehicles (for picking up supplies and deliveries). You need to make sure reciepts are kept and filed there is a lot of things you wouldnt think of that are deductable.
Hope this helps you out too.
signed The Worm Farmer lmao