California Cannabis Business Licensing and Registration
Cannabis Compliance Lawyers understand every essential step of the licensing and registration procedures that you must navigate to establish a strong foundation for your business and your investors.
California has rigorous licensing requirements for marijuana entrepreneurs. The licensing process in California is unique, the requirements are demanding and the investment is significant.
To acquire or register for a state license, new prospective cannabis businesses face an exhaustive process filled with varying laws, multiple agencies, and soon to be released state regulations.
At Cannabis Compliance Lawyers, we have established a strong reputation with the local and state regulatory agencies to help make your licensing process as efficient and successful as possible.
We have helped clients in leading cannabis markets in California to obtain their operational licenses, permits, registration filing deadlines and we are continually adapting and honing our licensing services to insure the job done is correctly the first time.
Our California licensing and registration services include:
- Advice regarding compliance with local regulations and the relationship between each of the governing state agencies.
- Business consulting and long term planning.
- Instruction regarding compliance with current and anticipated regulations.
- Developing compliance protocols necessary manuals to meet California.
- Compilation of license and registration applications.
- License application support for cannabis cultivators, retailers, and delivery companies.
- Payment fees or other approval costs, and, as in Sacramento, payment of a percentage of gross revenues to local area groups.
- The state agencies may conduct investigations to verify that you are complying with all of the necessary criteria including any financial and other capitalization requirements.
California will begin issuing licenses for “commercial cannabis activity” in 2018.
Last year the state legislature passed breakthrough legislation consisting of three bills: AB 243, AB 266, and SB 643.
Collectively known by many as “the act” these three bills provide a comprehensive regulatory framework for licensing commercial cannabis in California.
What license types were created?
- Type 1 = Cultivation; Specialty outdoor;
- Type 1A = Cultivation; Specialty indoor;
- Type 1B = Cultivation; Specialty mixed-light;
- Type 2 = Cultivation; Outdoor; Small.
- Type 2A = Cultivation; Indoor; Small.
- Type 2B = Cultivation; Mixed-light; Small.
- Type 3 = Cultivation; Outdoor; Medium.
- Type 3A = Cultivation; Indoor; Medium.
- Type 3B = Cultivation; Mixed-light; Medium.
- Type 4 = Cultivation; Nursery.
- Type 6 = Manufacturer 1.
- Type 7 = Manufacturer 2.
- Type 10A = Dispensary; No more than three retail sites.
Stand Alone License Types
- Type 8 = Testing.
- Type 11 = Distribution.
- Type 10 = Dispensary; General.
- Type 12 = Transporter.
When can I get a license?
State licenses will not be available until 2018. You can begin preparing for licensure now by ensuring you are in compliance with all existing regulations.
What will the fees for the licenses be?
Fees will be determined between now and 2018. All license fees shall be set on a scaled basis by the licensing authority, dependent on the size of the business.
Will there be limits on the number of licenses issued?
The legislation requires the regulatory agencies to limit the number of Type 3 (Medium Cultivation) and Type 7 (Manufacturer 2 – Volatile Solvents).
The legislation does not specify whether there will be limits on the the number of licenses issued for other license types.
What's up with vertical integration?
Regulations limiting or authorizing vertical integration are an important feature of any regulated cannabis marketplace.
In California, the Blue Ribbon Commission “and many of the individuals it consulted had significant reservations about the other end of the continuum, namely a market dominated by large corporations that could exert increasing influence on the commercial and political process.”
The Commission determined that “it is appropriate and probably wise for the state of California to adopt a path that limits the size and power—both economic and political—of any one entity in the marijuana industry.”
Further, the report went on to say that “In addition to limiting the scale of operations, it may be appropriate for the state to set limits on vertical integration.”
So, can I vertically integrate?
Yes. But with limits. The legislature took a decidedly cautious approach on vertical integration.
A licensee may only hold a state license in up to two separate license categories, as follows:
Type 1, 1A, 1B, 2, 2A, or 2B licensees may also hold either a Type 6 or 7 state license.
Type 6 or 7 licensees, or a combination thereof, may also hold either a Type 1, 1A, 1B, 2, 2A, or 2B state license.
Type 6 or 7 licensees, or a combination thereof, may also hold a Type 10A state license.
Type 10A licensees may also hold either a Type 6 or 7 state licenses, or a combination thereof.
Type 1, 1A, 1B, 2, 2A, or 2B licensees, or a combination thereof, May also hold a Type 10A state license.
Type 10A licensees may apply for Type 1, 1A, 1B, 2, 2A, or 2B state license, or a combination thereof.
Type 11 licensees shall apply for a Type 12 state license, but shall not apply for any other type of state licenses
A Type 10A licensee may apply for a Type 6 or 7 state license and hold a 1, 1A, 1B, 2, 2A, 2B, 3, 3A, 3B, 4 or combination thereof if, under the 1, 1A, 1B, 2, 2A, 2B, 3, 3A, 3B, 4 or combination of licenses thereof, no more than four acres of total canopy size of cultivation by the licensee is occurring throughout the state during the period that the respective licenses are valid.
All cultivation pursuant to this section shall comply with local ordinances. This paragraph shall become inoperative on January 1, 2026.
After your review is finished
The governing state agency will either approve or deny your application. In some cases, the agency may require additional criteria or conditions to approve your application.
In the unfortunate case of a denial, they will inform you of the alleged deficiencies or the reasons for your denial.
In those instances where the denial is incorrectly, we are prepared to appeal the denial, and represent your interests in the appeal process.
With the emerging use of marijuana, the various regulations are increasingly becoming very specific to local markets therefore your lawyer will require a localized knowledge of such laws, statutes, and regulations, including a clear understanding in relation to the federal system.
Understanding and Managing Cannabis Legal Compliance: No Excuses
Regulatory Compliance programs are absolutely vital for businesses in the marijuana industry. Because cannabis remains outlawed at the federal level and bound to strict regulatory conditions in those states where it is legal, compliance efforts are especially important for cannabis retailers, distributors, producers, and processors.
Cannabis businesses need to expand their strategy for compliance with regulations and laws that are custom-made to their own needs and that deal with their own risks.
Efficient compliance programs make certain that a cannabis company takes the following actions:
- identify all appropriate regulationsand laws
- prioritize laws that may affect the operation of the company
- create and put into practice procedures that address possible legal obligations
- codify compliance procedures
- communicate procedures throughout the company and to the company’s business partners, specifically through training
- Archive compliance procedures.
It is vital to continuously record and identify regulations pertinent to cannabis businesses’ as well as creates protocols to improve compliance with local and state regulations.
However, cannabis businesses should prioritize those state laws that can result in severe legal punishment and address these risks early in the companies’ operations.
There are many ways in which a cannabis company can benefit from strong compliance programs. Strong compliance programs can help guide cannabis businesses away from any legal trouble as well as protect from the loss of registration or licensing.
Effective compliance programs strengthen a cannabis businesses’ reputation along with increasing the good will of state and local regulators. This benefit can have a tremendous impact on the future success of your business.
With the large amount of new regulation in the cannabis industry regulators must decide on how they interpret these new regulations and how they apply to a company’s operation.
For the most part regulators want to see that these companies are doing the right thing.
With a strong compliance program regulators are more likely to work with you in order to fix any minor violations rather than penalize your company.
Bottom Line: The implementation of strong compliance programs can benefit cannabis companies. These compliance programs should document and prove your commitment to abide by the applicable regulations and should be easily accessible to be reviewed by regulators.
Compliance protocols will help to avoid any legal or regulatory punishment such as license revocation. This endeavor requires constant vigilance and basic legal knowledge because there is no excuse for ignorance.