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Are You Doing Business In Legal Gray Areas?

As technology exceeds legislation, more and more businesses are stumbling upon legal gray areas.

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Tobacco is just one example of this trend. Medical and recreational marijuana growers in states like Colorado and Washington are complaining that over-regulation is hurting business, but millionaires are being made in the industry.

“The government wants our tax revenue, but regulates the industry as if we’re common criminals,” said a grower in Colorado Springs to The Motley Fool. Although financial institutions cannot loan money to finance marijuana industries, and it is illegal for banks to loan money to businesses that violate federal law, there is plenty of money being made; and Washington State has paid attention to how the taxation and laws in Colorado affected the industry.

 

Pushing the Envelope

Other industries are birthing startups in this gray zone. Everything from Uber and other crowd-sourced businesses to the legal harvesting of body parts in the Ukraine. As long as there is a service or product that people want and can make a profit, there will be businesses that push the envelope of legal behavior to sell it.

Although products and services can be regulated, ethical behavior cannot. Exploiting the lack of regulation to sell a product can be seen as a good thing.

The sharing economy has launched companies like Uber and Airbnb that are changing the way consumers look at taxis and hotels, respectively, but businesses that inhabit that area run the risk of crossing the line; many times without realizing it. Uber, “Once a spunky little disruptor, Uber has become a juggernaut with a $17 billion valuation—and, accordingly, it is now a hot topic for politicians across the U.S., and beyond, who are trying to figure out how to tame it.” (Bloomberg Business)

Businesses are built with a fundamental goal to turn a profit. However, greed and competition can push normally ethical people into situations where instead of pushing the limits they cross the line.

Unfortunately, because of legal gray areas the limits are non-existent and entrepreneurs must rely on their own code of business ethics.

“To determine ethical limits we no longer rely on our own moral values. Instead, we check the existing laws and rules to see what is not legally acceptable. The advantage of this approach is that if the law does not mention that it is not acceptable then by definition it should be acceptable,” wrote David De Cremer and Henri-Claude de Bettignies for the Business Strategy Review.

 

This article has been edited and condensed.

Simon Crompton is an entrepreneur running several online businesses. Currently focusing on his marketing firm, Threecolors.blue, he is also a trained journalist sharing his knowledge via several internet blogs. In his spare time he’s an avid programmer and videographer. Connect with @PermanentStle on Twitter.

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