The Role of Government Relations in Cannabis Industry Success

NEW YORK — In highly regulated industries, success depends not only on how well a business operates, but also on how well it fits within the rules set by government. This is especially true in the cannabis sector, where the legal landscape is still developing, shaped by political shifts, and varies significantly between jurisdictions.

Government Relations (GR) is often seen as optional or secondary. In reality, it’s essential. In cannabis, GR helps companies navigate the complex regulatory environment, reduce risk, and move forward—by helping them enter, operate, and grow in markets where public policy can matter as much as consumer demand.

Licensing Is Only the Entry Point

For many cannabis businesses, the first government interaction comes with applying for a license. But this process goes far beyond paperwork. Successful applications often start well before filing—through outreach to local officials, early conversations with planning boards, and relationship-building with the community.

Each jurisdiction has its own political structure. Some allow cannabis operations, others do not. Local priorities—budget needs, public opinion, land use concerns—also play a role. Without a thoughtful GR strategy, companies risk investing in projects that are technically allowed but politically unworkable.

A well-planned approach to government relations helps identify friction points early. It positions the business as a reliable contributor to local development, rather than an unwelcome outsider.

Land Use and Zoning

Even with a state-issued license, local zoning rules can still make or break a cannabis project. Most businesses need additional approvals like conditional use permits (CUPs), must follow buffer zone requirements (such as distance from schools or parks), and often face public hearings.

Local zoning boards work on their own timelines and with their own priorities. Their decisions may be based on how well a project fits into the neighborhood, how residents feel about it, or whether it sets a precedent for future developments. Even fully compliant projects can be delayed—or blocked—by local procedures.

GR professionals help businesses understand these local codes, prepare documents that align with local planning goals, and engage early—before resistance forms. This makes the approval process smoother and more predictable.

Fiscal Policy: Alignment with Local Revenue Models

Many municipalities view cannabis businesses as a potential source of local revenue. In addition to state taxes and licensing fees, local governments often add their own taxes or require additional agreements, such as community benefit contributions.

For cannabis businesses, aligning with these expectations is essential. GR professionals help demonstrate the economic value a business can bring to the area—jobs, tax revenue, investment—and advocate for balanced tax structures that don’t undermine the legal market’s sustainability.

In some cases, GR teams also take part in public discussions about how cannabis tax revenues will be allocated. This creates opportunities to align business goals with public priorities—such as funding for health, education, or equity programs—and build stronger relationships with community stakeholders.

Enforcement: Preventative Rather Than Reactive

The most effective government relations strategies don’t wait for problems to arise—they work to prevent them. This means keeping communication open with regulators, being transparent with compliance teams, and addressing small issues before they grow into larger ones.

In situations where enforcement actions do occur—such as inspections, audits, or rule violations—companies with strong GR infrastructure are better equipped to handle them. They already have established relationships with relevant agencies, understand regulatory expectations, and can respond constructively.

Without this foundation, enforcement issues can lead to delays, reputational damage, and even loss of license. GR acts as a stabilizing system that reduces these risks through proactive alignment and ongoing engagement.

Influence During Rulemaking and Reform

Cannabis rules are not fixed. States and municipalities regularly review and update rules related to licensing, packaging, safety, equity, and more. These changes are shaped during comment periods, advisory sessions, and public hearings—where early participation can make a real difference.

Government relations teams ensure that operators take part in these opportunities. By offering practical feedback based on business experience, they help design policies that are more workable and enforceable. At the same time, they give regulators the insight they need to craft better rules.

For businesses operating in multiple states, GR also plays a role in keeping messages consistent and adapting strategies to different regulatory environments. This coordinated approach helps reduce the risk of conflicting rules and policy surprises across jurisdictions.

Community Legitimacy Is Policy Insurance

Even as cannabis becomes legal in more places, public attitudes are not always supportive—especially at the local level. Businesses must navigate not only laws and regulations but also community perceptions, concerns, and resistance.

Government relations helps bridge this gap. The focus goes beyond public image—toward building real, long-term relationships with the community. That can include working with local hiring programs, supporting neighborhood initiatives, or partnering with civic groups.

These efforts help build credibility and trust, which matter when challenges arise—whether it’s a proposed zoning change, a license renewal, or local political turnover. Being seen as a constructive, responsive part of the community is often the difference between expansion and rejection.

Federal Uncertainty, Local Certainty

While national cannabis policy continues to shift, the most immediate and decisive actions still happen at the local level. Municipal governments determine where cannabis businesses can operate, how they are licensed, and what rules they must follow.

This means that a company’s ability to operate legally and sustainably depends more on its understanding of local government than on any future change in federal law.

At the same time, the lack of cohesive federal reform is not simply a legal gap—it reflects a broader political impasse. Congressional polarization, election cycles, and competing legislative priorities have stalled meaningful national progress. As a result, cannabis businesses cannot rely on top-down change and must instead navigate a policy environment shaped from the bottom up—where city councils, planning boards, and local political coalitions define the boundaries of viability.

Effective government relations connects business leaders, legal teams, and compliance departments with the local decision-makers who actually control access and operations. It helps businesses understand how local governments work, who holds influence, and what steps are needed to gain and maintain permission to operate.

By focusing on local institutions, GR helps cannabis operators navigate real-time challenges, anticipate rule changes, and stay aligned with regulatory expectations—even as federal laws remain uncertain or inconsistent.

Bottom Line

In the cannabis industry, regulatory navigation defines the operational model. Markets are shaped by local decisions long before they are driven by consumer demand. Land use, license conditions, tax structures, and political sentiment are all determined by public institutions at every level.

Government relations is the mechanism that aligns institutional goals with regulatory structure. It integrates legal foresight, policy engagement, and community presence into a unified strategy that supports stability, access, and long-term positioning.

Rather than treating compliance as a checklist and regulation as a barrier, GR reframes both as systems to be understood, engaged, and anticipated. It links operational decisions to political timing, regulatory change, and public priorities—transforming unpredictability into a manageable, strategic factor.

For cannabis operators with long-term objectives, government relations is not a back-office support function. It is a core capacity that builds the conditions under which sustainable growth can actually occur.

Author Jeff Guillot

Copyright Highly Capitalized Network and MAD Global Strategy © 2025. All rights reserved.

Thank you to MAD Global Strategy and Jeff Guillot for collaborating on this article.

Jeff Guillot is a seasoned strategist in government relations, policy, and regulatory affairs, with a sharp focus on the cannabis industry. As Managing Partner at MAD Global Strategy, he collaborates with federal, state, and local governments to craft regulatory environments that support both business growth and community impact.

His expertise covers emerging technologies, sustainability initiatives, land use policy, cannabis regulation, and the inner workings of state and local governance. Jeff’s public sector experience includes roles with U.S. Congressman Gary Ackerman, the New York City Council, and as Legislative Director for Assemblyman Richard Brodsky in the New York State Assembly.

To learn more about how government relations can support your cannabis business, contact Jeff Guillot via email [email protected].