If you want a California Cannabis License, it is essential to understand the regulatory process governing the cannabis industry in California. California has a dual licensing system. You must first obtain a local license from the city or county your business is in and then obtain a state license from the Department of Cannabis Control (DCC).
The process can be complex, but with the proper guidance from experienced cannabis experts who understand the California licensing system, it will become more accessible. Here we break down a step-by-step guide to getting you on the right path for a cannabis license in California!
Step 1: Research the Local Market and Regulations
There are 58 counties and 482 cities in California. Each with its own rules and regulations governing cannabis businesses within its jurisdiction. The first step to starting your cannabis business is understanding the rules and regulations of the local municipality, such as whether cannabis is regulated by the city or county. Are cannabis businesses allowed in that jurisdiction?
What type of businesses are allowed and how many licenses are available? Are they accepting applications and what is the process (CUP, merit-based, lottery, etc.)? What is the tax structure? How saturated is the market for your business type?
Step 2: Find the Right Location
Once you’ve narrowed down the municipality you want to open your business and have researched the application requirements you will need to find a location for your business. Finding a compliant property for your business is one of the most challenging hurdles cannabis entrepreneurs face. Most local jurisdictions in California require a secured business location prior to applying for a local license. You will need to find a location that is compliant with the local municipality’s zoning and location restrictions for your business type.
Many jurisdictions require cannabis businesses to be a set distance from specific sensitive use sites or other cannabis businesses. Distance requirements and what is defined as a sensitive use vary by jurisdiction so you will need to check the municipal code. Once you’ve secured a compliant location, there are still some things leftover from this process: getting your local and state licenses.
Step 3: Create Your Cannabis Business Structure
You’ll need to choose the best business structure that is right for your cannabis business. The two most common business structures are corporations and limited liability companies.
A corporation is the most common business structure in California. There are two types of corporations for cannabis business owners in California: a C-Corporation and an S-Corporation. Both C-Corporations and S-Corporations provide protection for shareholders from being personally liable for corporate debts or legal obligations. Although C-Corporations offer maximum benefits for corporate tax deductions, they are also subject to double taxation, whereas, S-Corporations are only taxed once.
Limited Liability Company (LLC)
A Limited Liability Company allows more flexibility than a corporation as the governing rules are less strict and provide limited personal protection liability for owners. Members of an LLC can also elect how the company is taxed allowing for more flexibility to minimize tax burdens.
Step 4: Apply for a California Cannabis License
You will first need to apply for a local license with your local municipality before applying for a state license. Each local municipality establishes its own licensing process so you will need to first become familiar with the requirements and timeline of your jurisdiction. There are some basic requirements generally shared among local and state license applications including:
- Legal name and contact information of the applicant
- Business structure of the applicant and formation documents
- Business location
- Disclosure of business owners and criminal history background checks
- Business premises diagram
- Federal Employer Identification Tax Number (FEIN)
- Compliance with or exemption from California Environmental Quality Act (CEQA)
- Business operating procedures
Hire a Great Cannabis Expert to Walk You Through Licensing Process
Navigating the cannabis licensing system in California is complex. Finding an experienced and savvy cannabis consultant is crucial to your success as a cannabis business owner. An experienced cannabis business licensing and compliance consultant will help you with every step of this process, from finding the right location for your business to creating a business plan, applying for licenses, and keeping your business compliant for longevity and success.
As the California cannabis industry develops, more and more licensed producers, cultivators and dispensaries will be needed to meet the demands of consumers.
What kind of support do we provide?
Cannabis License Experts offer support from day one of starting your cannabis business. This may include strategic planning, floor plan preparation, site audits, Standard Operating Procedures (SOPs), Preventive Control Plans (PCPs), and more.
Our Edibles Compliance division can provide you with a solid plan for your edibles business, to help get your products on store shelves.
Contact us today to discover how we can license and legalize your cannabis business to meet federal or state regulations.