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Types of Medical Marijuana Business Partnerships
When choosing a business structure for a medical marijuana caregiving service, it is important to evaluate which structure works best for you and the resources you have access to. One business structure option that medical marijuana business owners have is a partnership. There are different types of medical marijuana business partnerships in Michigan, all coming with their own benefits and drawbacks. It is important that when making the decision to enter a partnership, you have evaluated the advantages and disadvantages, and are confident in your potential partnership. If you want to know more, speak to a qualified medical marijuana lawyer who can protect your rights.Types of Partnership
There are two main types of partnership that a business owner can consider, including a general partnership and a limited partnership. In some ways, the general partnership is like a sole proprietorship. One major difference is that a general partnership can have more than one owner. There is no paperwork to fill out to set up a general partnership, just like a sole proprietorship. Like the sole proprietorship, an individual can use their own name or set up a partnership under a different name if they apply for a DBA certificate with a county clerk.What are Partnership Agreements?
If a business owner has more than one partner in the partnership, it is a good idea to establish a partnership agreement. This agreement can address any possible issues that might arise, the role of each partner, and any other important information. This can help avoid disagreements in the future. Owners of general partnerships have unlimited liability when it comes to business debts. Each partner is responsible for the debt that the business takes on.Limited Partnership
If an owner is deciding between the different types of medical marijuana business partnerships in Michigan, they should also consider the limited partnership option. This type of partnership can have both general and limited partners. General partners are completely liable for the business' debts. They are also responsible for operating and controlling the business.
Limited partners, on the other hand, are usually investors in the business. They are not responsible for controlling or operating the business. In addition, their personal liability in the business is limited to their contribution to the partnership. Establishing a limited partnership in Michigan requires filing a certificate of limited partnership with LARA. Limited partnerships that do not comply with regulations default to general partnerships.Advantages and Disadvantages
There are many different advantages and disadvantages associated with the different types of medical marijuana business partnerships in Michigan. Some advantages include the ease and lack of expense to set them up, a single tax, and ownership by more than one individual. Some disadvantages could include the unlimited personal liability for general partners, legal responsibility of all partners for the actions of other partners, and the fact that a general partner's interest in the business can only be sold with the consent of all partners.Limited Liability Company (LLC)
Of the different types of medical marijuana business partnerships in Michigan, LLCs combine the best aspects of corporations and partnerships. An LLC provides the owners or partners in the business limited liability when it comes to business debt. In addition, it establishes simpler taxing and operation advantages that a partnership would offer. If someone is interested in applying for an LLC, it is a good idea to file an operating agreement, although one is not required in the state of Michigan. This agreement can outline expectations and responsibilities of members.Articles of Organization
Even if you do not file an operating agreement, you do need to file the Articles of Organization with LARA. You also must pay an annual fee if you want to maintain an LLC. Some advantages of the LLC are limited liability for partners, no double taxation, and easy to create and maintain. Some disadvantages of the LLC are that it is more complex to create than some other options, members can only take money out through profit distribution, and members are not exempt from paying self-employment taxes. If you want to know more about different types of medical marijuana business partnerships in Michigan, speak with a knowledgeable marijuana attorney who can offer you their assistance.