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Running a retail cannabis business can be taxing if you don’t know what you’re doing. Any small business requires a level of professionalism, but a cannabis business is unique in that the laws of each state, county, and even city differ across the U.S.
Without a consensus, even a seasoned pro in one state will still have to study up on other states, and even once you get the hang of a state’s laws, they can quickly change at any given election. Here’s everything you need to know about operating a compliant cannabis business in California, and the state’s cannabis laws.
Yes. California regulators are actively cracking down on unlicensed cannabis businesses.
The Bureau of Cannabis Control (BCC) was created to manage all retail medical and recreational cannabis licenses, with a few exceptions. The California Department of Public Health (CDPH) regulates cannabis-infused edibles, and the California Department of Food and Agriculture (CDFA) manages cultivation licenses.
Some local municipalities have cannabis regulators too. In Los Angeles, the Department of Cannabis Regulation controls licenses. In San Francisco, it’s the Office of Cannabis. Licenses from both the state and city are necessary to operate in these cases. Always check with your local government.
Each of the three departments listed above has an online application process to obtain a Manufacturer, Cultivator, Retailer, Distributor, Microbusiness, Testing Laboratory, or Cannabis Event Organizer license.
Each city and county has further licensing regulations, and you’ll need a local license before you can apply for a state license.
Los Angeles issued 150 retail licenses, but distributors, manufacturers, and the rest of the supply chain is still waiting. You’ll also need clearance from the LA Fire Department’s Cannabis Unit and the Office of Finance.
Fees vary wildly by location, so check with your local government for city and county licensing fees. Calaveras County, for example, charged cannabis businesses $16.3 million in taxes and fees before banning the program.
The California State license application fee is $1000 For all licenses. Retailers pay additional fees ranging from $4,000-$72,000 based on sales. Testing and Distribution licenses pay an additional $1200-$125,000, depending on product volumes processed. Manufacturers are charged an additional $2,000-$75,000, depending on operation size.
Growers will need a CDFA license, which has a $135-$8,655 application fee and $1205-$77,905 licensing fee, depending on volumes. And these are just the state licensing fees. Local municipalities have additional licensing and application fees. San Francisco charges $2000 for a permit, and $3000 in inspection fees for a total of $5000.
Overall, expect to pay upwards of $200,000 for the entire process.
All fees listed above are annual fees.
A retail license is required to service recreational customers. A dispensary or caregiver license is needed to serve medical patients. Stores can sell both medical and/or recreational but need a license for each. Medical products have higher THC dosing and lower prices, and they can only be sold to medical patients with a qualifying state medical card.
Yes. If you have an existing medical business, you can get a retail license as well.
Every city and county is different. See above for information on Los Angeles and San Francisco rules. Many cities and counties ban cannabis businesses altogether. You will need to seek city and county approval before applying for a California state license.
Yes – the BCC has both temporary and annual cannabis event organizer licenses, which costs $1000. Instructions can be found here.
The location of your cannabis events determines which license you’ll need to pursue. If you’re attending an event like a High Times Cannabis Cup, you’re actually a vendor at that event.
Holding your own offsite events puts you in a High Times position where you need to file the proper city and county licenses. Work with the venue to ensure this is completed in a timely manner (something High Times actually failed at for the 2018 SoCal Cannabis Cup).
Yes, you can hold more than one license of any type. You can hold events on your premises, host offsite events, or attend offsite events proudly representing your business.
Reading, understanding, and consistently applying California state cannabis regulations is essential. During the application process, your entire organization will be tested on compliance competency.
Also track everything. Record every interaction. Have every dollar, plant, and product tracked from seed to sale. A solid POS that can automatically interface with the state’s tracking system is only the start of what you’ll need to stay compliant.
Required cannabis business security measures will cost at least $100,000. Video surveillance, security lighting, transportation and waste disposal processes, platforms, and procedures need to be in place from day one.
Cloud video data storage will be a significant cost for startup businesses. Plan ahead for this.
It’s a funny question, because you’ll be labeling all product that enters and exits your retail store. There are no specific regulations about packaging on premises, but cannabis must be already sealed before transport.
Yes and no. Generally you can’t sell alcohol or tobacco at cannabis dispensaries or cannabis at smoke shops, liquor shops, etc. Terpenes (basically cannabis essential oils) and hemp products have different rules. It’s possible to create cannabis-flavored products that don’t include THC. Also, tinctures contain alcohol, so even though THC vodka or beer (or even vodka or beer without cannabis) would be not be allowed in California dispensaries, alcohol-based tinctures are allowed.
You can. So long as you meet the requirements, you can house everything in one building. Each license can be obtained and stacked on each other.
You can’t give away products as part of a promotion or any other commercial activity.
Your store can be open anytime, and many in the state are open 24/7.
You can (unless your city or county ordinances forbid it).
18 for medical and 21 for recreational.
California’s system of record for the cannabis industry is Franwell’s Metrc POS platform. Your POS should ultimately report directly to Metrc directly to seamlessly remain compliant.
You’ll need to pay Franwell $40 per month per Metrc license and $0.25 to $0.45 for package and plant tags.