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California marijuana laws
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As the first state to legalize medical cannabis, California has a rich history of cannabis activism. With the Compassionate Use Act of 1996 (Proposition 215) and the Medical Cannabis Program Act of 2003 (Senate Bill 420), as well as Attorney General Brown’s 2008 memo, commercial businesses began to
establish themselves under a collective model based around patient access.
The operating environment for commercial businesses remained extremely convoluted. With the passage of comprehensive legislative and regulatory frameworks beginning in 2015 and ongoing (MMRSA, MCRSA, and MAUCRSA), California’s cannabis businesses now have clarity with respect to state requirements. However, this also has substantially increased compliance costs and oversight reporting.
In 2016, voters passed the Adult Use of Marijuana Act (AUMA or Proposition 64). This legalized the use, cultivation, and commercial sales of cannabis for non-medical purposes throughout the state. The state-run California Cannabis Portal provides a single consolidated source of state updates on the local cannabis industry.
In 2017, California passed MAUCRSA (Medicinal and Adult Use Cannabis Regulation and Safety Act), creating a regulatory structure for commercial cannabis businesses. State agencies are accepting compliance-based applications for cannabis licenses on a rolling basis.
MAUCRSA has created a two-tier licensing system in California: in order to successfully submit an application for a state license, cannabis businesses must receive Local Jurisdiction Authorization. Many jurisdictions have banned these businesses or have implemented competitive applications.
MAUCRSA has also given authority and oversight power to various different agencies in the process of reviewing and approving applications for state licenses. The Bureau of Cannabis Control (BCC) oversees all retail businesses, including those with dispensary and distribution licenses. The California Department of Food and Agriculture (CDFA) oversees all cannabis businesses with cultivation licenses, and application materials include pre-approval from the California Department of Fish and Wildlife (CDFW), the California State Water Resources Control Board (SWRCB) and the California Department of Taxes and Fees Administration (CDTFA). The California Department of Public Health (CDPH) oversees cannabis businesses with manufacturing licenses.
"Green Rush Consulting has worked with successful applicants and licensees throughout the state. Our clients have won local approval in competitive jurisdictions like Santa Monica, West Hollywood, San Bernardino and Hayward, and secured compliance-based permits from Humboldt to Sacramento to Richmond."
Industry analysts such as ArcView and BDS Analytics project California cannabis sales of $3.7B for 2018, growing to $7.7B by 2021 – triple the anticipated cannabis market value of any other state.
Prospective cannabis entrepreneurs can apply for cannabis business licenses of almost any type: cannabis cultivation (distinguished by size and indoor/outdoor/mixed light, as well as nursery), cannabis manufacturing (including volatile extraction, non-volatile extraction, or edibles and topical creation), cannabis retail (including brick and mortar or delivery), cannabis transportation and distribution, and cannabis events production. A combination micro-business license is also available. Licenses may be for either adult use, medical cannabis, or both.
California’s licensing authorities currently offer the license types listed below. Licensees must also indicate whether they serve the adult use market (A-designation) or medical patients (M-designation), or both.
Cannabis Cultivation Licenses: there are 18 cannabis cultivation license types available, tiered by size and distinguished by indoor, outdoor, and mixed light. These also include nursery and processor (trimming/curing/packaging – no extraction) licenses.
Cannabis Manufacturing Licenses: there are 4 manufacturing license types available:
Type 7 (volatile extraction)
Type 6 (mechanical or non-volatile extraction)
Type N (edible or topical infusions)
Type P (packaging only)
Cannabis Retail Licenses: there are 3 dispensing license types available:
Type 9 (non-storefront/delivery)
Type 10 (storefront retail)
Type 12 (microbusiness)
There are 3 distributor license types available:
Type 11 (Distributor)
Note: Micro-business licenses are listed under retail above, but also encompass cultivation, manufacturing (extraction), and distribution, depending on the scope requested during license application.
Local Jurisdiction Authorization
All of California’s 58 counties and 482 incorporated cities have the authority to offer local permitting for cannabis businesses. Some have chosen instead to ban all commercial cannabis businesses. Each local jurisdiction has its own timeline with unique deadlines. Securing an annual license from CDFA or BCC is heavily dependent on whether or not you have received your Local Jurisdiction Authorization
Local jurisdictions are not required to follow the state structure for license types. Businesses should seek permits that cover their proposed commercial cannabis activities at both local and state levels and should seek legal advice when appropriate to ensure their plans will comply with requirements at both levels of applicable authority.
Key Dates and Fees
Applications are being accepted on a rolling basis by California’s state agencies. It’s important to note that state applications require first securing local approval. State application fees are included below
Specialty Cottage Outdoor $135
Specialty Outdoor $270
Small Outdoor $535
Medium Outdoor $1,555
Specialty Cottage Indoor $205
Specialty Indoor $2,170
Small Indoor $3,935
Medium Indoor $8,655
Specialty Cottage Mixed-Light Tier 1 $340
Specialty Mixed-Light Tier 1 $655
Small Mixed-Light Tier 1 $1,310
Medium Mixed-Light Tier 1 $2,885
Specialty Cottage Mixed-Light Tier 2 $580
Specialty Mixed-Light Tier 2 $1,125
Small Mixed-Light Tier 2 $2,250
Medium Mixed-Light Tier 2 $4,945
Universal application fee of $1,000 for all license types
Universal application fee of $1,000 for all license types
In addition to the local and state fees, California cannabis businesses may owe additional fees or require additional permits from a diverse array of agencies and jurisdictions, such as the Water Control Board.
Start-up costs are highly variable, depending on your location, condition of property, scale of business, and type of business. California has a dual licensing program, meaning that all commercial cannabis businesses in the state must have a state license and proof of local compliance, such as a local permit explicitly authorizing planned commercial cannabis activity.
Estimated market size
how to start a marijuana business California
If you are just starting your marijuana business, the next best step is to start a Business Plan to help educate your team and be ready to apply for a marijuana business license. If you are ready to apply for a Marijuana Business License in California, please Contact us or call our offices to set an appointment to get started. You can also select another State Opportunity, or fill out our Contact Form to discuss potential strategies such as Investment or Partnership Opportunities.