Depending on the rehab estimate from contractors, we would determine if it makes sense to fix it up first or just sell as is.

@Phyllis EffahI would look to forming the LLC in Alabama as that is the state that you will be considered doing business in.While CA does have a $800 minimum tax; you may be able to potentially avoid having to pay it.This will depend on the level of activity of your partner/member who lives in CA.If he is a non-managing member and doesn't make any decisions regarding the LLC; it can potentially be avoided (money partner).

Good buys north  of Huntsville too if you are ever interested, depending on your comfort level.

But it could be a stretch depending on how you use them.

Our insurance company stated that fires related to cultivation of marijuana won’t be covered so .... that’s a real pickle as far as liabilities. 

It depends on what type of property you're trying to acquire

Can explore a trust too, but depending on number of properties you have and size of this one, might not be the most cost-efficient solution. 

Rates are heavily dependent on FICO, LTV, Term, loan size, and other variables. 

The long answer to your question depends on a lot of factors, such as:What does the original purchase contract (which I assume is from the seller to you) state?

In terms of your question - sell or refinance - it depends on your LT RE goals, plans and priorities.