What is a cannabis growers business trust organization?
Although growers have greater protections and permissions than in the past, you’re still challenged every day. One tool to help you out is a formal business organization. The standard choices are LLC or Corporation. But they might not be the best setup for a cannabis operator. Here’s why – they’re easily found online.
For example, ‘Cannabis Daily LLC’ or ‘Daily Cannabis Inc’ is easily searched in the Secretary of State database. Personal and other details you provide the state can lead to business identity theft. Look on the SOS website for the warning message.
And you probably have a bank account using the business name. But just like anyone in a competitive business you might prefer to keep your business and banking details confidential.
If you want to keep competitors guessing, get utilities activated, buy real estate, and deal with vendors then stealth can be your best friend. But a Corporation or LLC will let you down because of all the public state compliance reporting and the resident agent for legal summons.
2020 UPDATE: Washington DC – Senate and House have pending legislation requiring photo identification of all corporate stockholders or LLC shareholders.
Okay – so what if you don’t want all these disclosures and visibility?
Use a Business Trust
It’s unlisted with the Secretary of State. There is no registration. Your business details are off the public radar screen. Competitors are blind as to who you are because there is nothing to look you up online.
You do get a business bank account and tax identification number. But large paper currency transactions are an issue for banks. This is because they have state and federal regulators looking over their shoulder on every account. But the account itself is unlisted and unless someone knows the name of your business trust, it remains invisible to outsiders.
Your business is obligated for income taxes. If you use the business trust, get taxed as a corporation which has many deductible expenses and benefits.
Maybe you’re looking to buy additional land and you don’t want the sellers to know it’s Mr. X because the price will go higher. Negotiate with anonymity. Or quietly buy supplies from a vendor.
Play it safe. Use a business organization because of the liability and tax benefits. But if you also want stealth then get a Business Trust.