In California, a distribution license is one of the various types of licenses issued by the California Bureau of Cannabis Control (BCC) that allows a business to engage in the legal distribution of cannabis and cannabis products within the state. Distribution licenses are a crucial part of the cannabis supply chain as they facilitate the movement of cannabis products from cultivators and manufacturers to retailers, testing laboratories, and other distributors. Here are some key points to know about obtaining and operating under a distribution license in California:
Are you looking to start a cannabis distribution business in California? Getting the right license is an important step in the process, and this guide will help you understand the requirements and the steps needed to get your distribution license in the State of California.
Our regulatory consultants based in California are experts in the regulations and strategies to improve cannabis distribution businesses.
There are different types of distribution licenses in California:
Type 11 Distributor (Non-Storefront): This license allows businesses to transport cannabis and cannabis products between licensed businesses but does not permit retail sales to consumers.
Type 13 Distributor (Transport Only): This license is specifically for businesses that transport cannabis and cannabis products between licensees but do not store or handle the products.
Type 14 Distributor (Cannabis Events): This license allows distribution at cannabis events only.
Requirements: To obtain a distribution license, applicants must meet certain requirements, which typically include:
- Meeting residency requirements (for certain types of licenses).
- Demonstrating compliance with local regulations and ordinances.
- Providing detailed business plans and security plans.
- Having adequate storage and transportation facilities.
- Passing background checks and providing fingerprints.
- Paying the required licensing fees.
Compliance and Record-Keeping: Distributors are required to adhere to strict compliance standards. This includes tracking and tracing cannabis and cannabis products using the California Cannabis Track-and-Trace (CCTT) system, maintaining comprehensive records, and ensuring that products meet state testing and labeling requirements.
Testing: Distributors are often responsible for ensuring that products have been tested by licensed testing laboratories and meet state-mandated quality and safety standards before distribution.
Tax Collection: Distributors are also responsible for collecting and remitting the appropriate excise and cultivation taxes to the state.
Transportation: Distribution licenses may involve the transportation of cannabis and cannabis products from cultivators and manufacturers to retailers. This transportation must be conducted in compliance with strict security and transportation regulations.
Delivery Services: Some distribution license holders may also offer delivery services to licensed retailers and consumers, allowing for the legal delivery of cannabis products.
Compliance Inspections: Distributors may be subject to compliance inspections by state regulators to ensure they are operating in accordance with state laws and regulations.
Renewal: Distribution licenses must be renewed annually, and license holders must continue to meet all regulatory requirements to maintain their licenses.
Research and understand the conditions of licensing
Before applying for your distribution license, you must research and understand all the conditions of licensing in California. You must obtain a local license from the jurisdiction where your business is located and a state license meeting the specific criteria for your license type. As part of this process, consider the business entity that you plan to operate under as well as other important requirements such as obtaining the necessary liability insurance for cannabis distributors. Make sure to familiarize yourself with all applicable local and state regulations to ensure that your application is successful.
Research local laws and policies
It is essential to research the local laws and policies of the city, county, or jurisdiction in which you plan on operating your business. All municipalities will have their own individual restrictions and regulations regarding cannabis businesses. Jurisdictions may impose additional permits or requirements for your business type including operational, zoning, facility design or construction, or safety and security requirements. Make sure to become familiar with all local requirements before submitting your application for a distribution license.
Complete and submit the necessary documents and payments
Once you’re sure that you meet all the associated requirements, you’ll be able to complete and submit your license application. Depending on your business structure, you will need to provide business documents such as an Operating Agreement or Shareholders Agreement, as applicable to your entity type. Additionally, all cannabis businesses must provide an exemption from, or comply with, the California Environmental Quality Act (CEQA).
With the sunset of the provisional license program in September 2022, applicants must fulfill all the requirements for an annual license with the state agency, the Department of Cannabis Control (DCC). Environmental studies and reviews can take several weeks to months to complete and can be costly. Make sure to research the process and requirements in your local jurisdiction to obtain CEQA compliance to factor into your budget and licensing timeline. Applying for a distribution license can be time-consuming but is an important step for aspiring cannabis entrepreneurs in California seeking commercial success.
How much is a cannabis distribution license in California?
The cost of a cannabis distribution license in California can vary based on several factors, including the type of license, the size of the operation, and the local jurisdiction. Cannabis licensing fees are subject to change, and new regulations or fee structures may have been implemented since then. Additionally, the licensing fees may vary from one city or county to another within California.
To get the most accurate and up-to-date information regarding the cost of a cannabis distribution license in California, I recommend visiting the official website of the California Cannabis Control Bureau (CCB) or contacting the relevant local authorities in the city or county where you intend to operate. They should be able to provide you with specific details about the current licensing fees, requirements, and application processes for cannabis distribution licenses in your area.
Requirements for a California Cannabis Distribution License
- Applicants must be at least 21 years old.
- Applicants cannot have certain felony convictions, and all owners and financial interest holders will be subject to background checks.
- Form a legal business entity, such as a corporation, limited liability company (LLC), or partnership.
- Obtain local approval or authorization from the city or county where you intend to operate. Check with your local jurisdiction to understand their specific requirements for cannabis distribution.
Premises and Facility:
- Secure a physical location that complies with local zoning and land-use regulations.
- Develop plans for storage, handling, and distribution of cannabis and cannabis products.
- Develop operational plans that outline how you will handle, store, and distribute cannabis products safely and securely.
- Establish quality control and inventory management procedures.
- Implement comprehensive security measures to prevent theft, diversion, and unauthorized access to cannabis products.
Record Keeping and Reporting:
- Develop systems for accurate record keeping and reporting of all distribution activities, including transportation and transactions.
- Outline transportation procedures and vehicles to ensure compliance with state regulations.
- Submit an application to the California Bureau of Cannabis Control (BCC) or the appropriate regulatory agency in charge of cannabis licensing.
- Pay the required application and licensing fees.
- After submitting your application, your facility will undergo an inspection by regulatory authorities to ensure it meets all requirements.
Compliance with State Regulations:
- Ensure that your distribution activities adhere to all state regulations, including product testing, labeling, and packaging requirements.
- Demonstrate financial capability to operate a cannabis distribution business, which may include submitting financial statements.
Note: Regulations and requirements can change, so it’s essential to refer to the official California cannabis regulatory agency, such as the Bureau of Cannabis Control (BCC), for the most up-to-date information on obtaining a distribution license in California.
Understanding the California Distributor License:
A distributor license in California allows businesses to engage in the storage, packaging, labeling, and transportation of cannabis products between licensed entities. Essentially, distributors act as the bridge between cultivators, manufacturers, and retailers, ensuring that products meet state regulations and quality standards.
Additional Requirements for a California Distributor License:
Business Structure: Establish a legal business entity and comply with all state regulations regarding business structures.
Location: Secure a suitable location for your distribution operations, adhering to local zoning laws and regulations.
Background Checks: Ensure that all owners and employees undergo thorough background checks as mandated by the state.
Financial Requirements: Maintain adequate financial resources to sustain your business operations. Financial stability is a key consideration for licensing authorities.
Quality Control: Implement a robust quality control system to guarantee that products meet California’s stringent quality standards.
Transportation Compliance: Acquire vehicles that comply with state regulations for the secure transportation of cannabis products.
Compliance Documentation: Keep meticulous records and documentation of all transactions and operations to demonstrate compliance with state laws.
The Cannabis Distribution Licensing Process:
Preparation: Thoroughly research and understand all the requirements for a distributor license. Seek legal counsel if needed to ensure accurate preparation.
Application Submission: Prepare and submit a comprehensive application to the California Department of Cannabis Control (DCC). Ensure that all required documents, including financial records, security plans, and operational procedures, are included.
Background Checks: All key personnel associated with the business will undergo background checks. Clearances are necessary for licensing approval.
Site Inspections: The DCC will conduct site inspections to verify that your operations align with the information provided in your application. Be prepared to demonstrate compliance during these inspections.
Approval and Compliance: Once your application is approved, adhere strictly to the regulations outlined in your license. Regular compliance checks will be conducted to ensure ongoing adherence to state laws.
Launching Your Operations: Upon receiving your distributor license, you can officially start your cannabis distribution operations. Ensure that you maintain compliance in all aspects of your business to avoid any legal issues.
How we can help?
At Cannabis License Experts, we provide you with the guidance to plan your cannabis business, acquire funding, navigate the legal requirements, and acquire the appropriate cannabis license for your operations. As the California cannabis industry develops, more and more licensed producers will be needed to meet the demands of consumers.
Cannabis License Experts offers support from day one of starting your cannabis business, including strategic planning, floor plan preparation, site audits, 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 provincial regulations.