CBD Entity Formation: 7 Words to Avoid when Naming your LLC

Problems you may encounter if you use Cannabis Words in your LLC

No doubt if you’ve started a CBD company already, you know how challenging this industry can be.  Most likely you’ve already been shut down by a merchant account, bank account, payroll company, or advertising platform just because you sell CBD products.  There are so many pitfalls in the cannabis industry, a lack of knowledge can cause a world of hurt.  One way to minimize these issues, aside from reading all of our Cannabis Business Blogs, is to start your corporate identity off right by naming your LLC something general that excludes any cannabis words.  Doing this can help you avoid several problems starting your CBD business.

Trouble Opening a Bank Account

Most banks won’t let you open an account if they know you are a cannabis company.  If you walk into Wells Fargo and try to open a business bank account for Big Budz LLC, they will most likely send you packing.   Instead, name your entity BB LLC, and you won’t have a problem. 

Trouble Signing up for Payroll Services.

This has the same problems as banking above.  Most payroll companies, or anything having to do with money have a problem with cannabis companies.  It’s important that you anonymize that part of your business in a general entity name.

Negative stigma associated with Cannabis.

It’s sad, but some people still think CBD, hemp, and marijuana are the devil, the gateway to all that is evil.  Your LLC or Corporation, in most states, is public record.  So, think about how that can affect you now, or in the future, with other people who can easily find that information.

May limit your company to Cannabis.

Naming your company entity or brand using a cannabis associated word can box you in to one industry.  For example, let’s say your company name is “Blue Water CBD” and you decide you also want to sell protein powder.  It would be better if you initially named your company just “Blue Water”.  Then you can break down different divisions with DBAs.

May Red-Flag State Regulators.

If you’re not properly licensed or set up to pay state taxes correctly, you’ve just made it extremely easy for them to find you.

Will put your information on marketing lists

You will instantly go onto email marking lists because you’ve told the marketing companies exactly what industry you are in.

My Jeopardize future business opportunities

A future business opportunity outside of the cannabis space may be compromised if someone sees you’ve owned a cannabis company.  Maybe it’s a government contract or an opportunity with a Church or non-profit that does not want to be associated with anyone who markets or sells CBD or other cannabis products.