How does cannabis licensing work in California?
In California, much like other states, cannabis businesses must obtain a state license in order to operate legally. The process for obtaining this license involves several steps, including:
Determine which type of license you need
California has different types of licenses for various activities related to cannabis, such as cultivation, manufacturing, retail sales, and distribution. These various licenses come with different application processes and associated fees, so the first step is knowing which kind of license your business will need.
Meet local requirements
In addition to state requirements, you will also need to obtain a permit or other authorization from the local government where you plan to operate. If your physical location is within a city, you’ll need permission from the city and the county. If your business resides in an unincorporated area, you’ll just need permission from the county.
If you’re unsure, Google “your address” and then “city.” Unincorporated areas may be referred to as a “Census Designated Place” or “CDP.”
Complete the application process
You will need to complete and submit a license application to the California Bureau of Cannabis Control (BCC). The application process includes submitting business and financial information electronically.
With regards to fees, you’ll need to pay a non-refundable submission fee (anywhere from hundreds to several thousand dollars depending on the type of license you’re applying for) alongside your application as well as a license fee once your application is approved.
Obtain any necessary approvals
After submitting your application, the BCC may request additional information or require you to obtain approvals from other state or local agencies.
Meet licensing requirements
If your application is approved, you will need to meet additional requirements before your license is issued. These may include demonstrating that you have a secure location for your business and passing a background check.
Once you have obtained a license, you will need to renew it annually in order to continue operating legally.
What additional documentation might you need?
In addition to the standard license application, you may need to provide additional documentation as part of the application process. This can include:
- Proof of ownership or leasing of the location where the business will be conducted
- A detailed business plan
- Financial information, such as a profit and loss statement or balance sheet
- A list of all owners, officers, directors, and key personnel
- Documentation of any prior criminal convictions
- Documentation of any prior experience in the cannabis industry
- You may also need to provide additional documentation to meet local requirements or to obtain approvals from other state or local agencies. The specific requirements will depend on the type of license you are applying for and the location of your business.
So you’ve got your license… Now what?
Once you have obtained a license to operate a cannabis business in California, you will need to comply with a range of rules and regulations in order to maintain your license and operate legally. Some of the key considerations include:
Maintaining accurate records
As the owner of a cannabis business in California, you will need to use METRC (Marijuana Enforcement Tracking Reporting Compliance) to track your inventory and record all cannabis-related transactions, including the cultivation, processing, distribution, and sale of cannabis products. . You will also need to ensure that your employees are trained to use the system and that all required information is entered accurately and promptly.
Complying with testing requirements
Cannabis products must be tested by an accredited laboratory to ensure that they meet quality and safety standards. You will need to ensure that your products are tested and properly labeled with the results.
Complying with labeling and packaging requirements
Cannabis products must be labeled and packaged in a specific way to protect consumers and prevent accidental ingestion. You will need to ensure that your products meet these requirements.
Cannabis businesses are subject to state and local taxes. You will need to register with the California Department of Tax and Fee Administration and pay all applicable taxes.
Obtaining necessary insurance
It is important for cannabis businesses to have the appropriate insurance coverage to protect against potential risks. You may need to obtain coverage for things like product liability, theft, and employee injuries.
Compliance with other laws
Beyond the rules and regulations specific to the cannabis industry, you also need to comply with a range of other laws that apply to all businesses in California
Business formation and organization
Depending on the type of business you are operating, you may need to choose a business structure and register with the state. Options include sole proprietorship, partnership, corporation, or limited liability company (LLC).
As an employer, you will need to follow all relevant employment laws, including those related to hiring, firing, wages, benefits, and working conditions.
In addition to the taxes specific to the cannabis industry, you may also need to pay other taxes, such as income tax and sales tax. You will also need to follow rules related to tax reporting and payment.
Health and safety laws
You will need to ensure that your business complies with all relevant health and safety laws, including those related to the handling and storage of cannabis products.
Depending on the nature of your business, you may need to follow laws related to environmental protection, such as those related to air and water quality.
By familiarizing yourself with the laws that apply to your business and taking steps to comply with them, you can ensure that your business operates legally and responsibly.
Clearly, there are many hills to climb when it comes to getting your cannabis business off the ground in the state of California. Always be sure to check your current local legislation for the most accurate information.
If you have any questions, you can always reach out to your local city or county government, the California Bureau of Cannabis Control (BCC), or cannabis industry associations such as the California Cannabis Industry Association (CCIA) and the National Cannabis Industry Association (NCIA).