How to Apply for a California Cannabis License

California began issuing licenses to the cannabis industry on Monday, January 1, 2018.  Specific state-issued licenses now govern virtually every aspect of the cannabis market, from seed to consumption, including cultivation, manufacture of concentrates, transportation, distribution, operation of testing labs, and retail sales.

If you're interested in getting involved with California's legal cannabis industry, the first step is to decide on a specific product or service you plan to offer.  As mentioned above, each stage of production and distribution will require its own specific license.  There are restrictions on how many different types of licenses any person or entity can control, and how many different licensees may operate on a single lot or parcel of land.  If you want to grow cannabis indoors on a lot smaller than 500 square feet, there is a specific license for that.  If you want to grow outdoors on a lot larger than 10,000 square feet but smaller than an acre, there is a specific license for that, too.

Once you settle on a specific product or service that you plan to offer, you'll need to form a business plan, including your ownership structure and financing.  Unlike our old medical marijuana rules, California now allows marijuana businesses to operate on a for-profit basis, rather than limiting them to non-profit mutual benefit corporations.  For the first time, you may choose to operate a canna-business as a sole proprietorship, an LLC, a partnership or a corporation.  The ownership / financing structure that you choose may have significant implications for your license application.  For example, you may be required to disclose personal details of your financial interest holders, and individuals with serious criminal convictions may be disqualified from holding more than a 20% interest in some marijuana businesses.

The next major hurdle in the application process will be finding a local jurisdiction (a city or an unincorporated part of a county) that actually authorizes your commercial cannabis activity.  The state will not process any applications without a copy of a valid local license, permit or other authorization from the jurisdiction where the business plans to operate.  As of today, very few municipalities in Southern California permit new cannabis-related businesses to open their doors.  Some towns have lax enforcement, some allow a handful of grandfathered locations, and some lack the resources to shut down the illegal dispensaries and grow houses that operate in violation of local ordinances.  If you want to apply for a state license, though, you'll need explicit local approval from your jurisdiction.  Before than can happen, more cities in Southern California will have to update their zoning laws to permit these types of businesses.

Once you have approval from your local city, then we can complete the application process according to the regulations that will govern your specific niche of the industry.  This may include obtaining permits from the California State Water Resources Control Board, applying for a seller's permit, registering as an employer with the Employment Development Department, posting surety bonds, negotiating a labor agreement, etc.

As I see it, the biggest impediment to starting a new canna-business in Southern California is the lack of local jurisdictions that expressly authorize them to operate.  You can't start running your business until you have a valid state license, and you can't get a state license until you have approval from your city, and no almost no city in Southern California will approve you (as of today).  There have been a lot of rumors about which jurisdiction might be the next to revamp their land use regulations, but very little action from city councils and planning commissions.

If you're serious about forming a marijuana-related business in Southern California, I would encourage you to speak with your local representatives on the city council and your local planning commission.  Attend public hearings and comment sessions.  Write letters, circulate petitions, support candidates who will promote commonsense reforms and oppose the dinosaurs who still believe in "reefer madness" ("But won't somebody think of the children?", "Not in my backyard!").

If you have questions about getting involved with California's legal cannabis industry, call us for a free attorney consultation.  (714) 449-3335.  Ask for John.

Thanks for reading.

Orange County Cannabis Lawyer