How to open a Dispensary in California

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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.

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"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."

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Licenses Available

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

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Annual Licenses

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.

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Cultivation

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.

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• 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 

• Nursery $520 

• Processor $1,040

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Manufacturing

Universal application fee of $1,000 for all license types, there are 4 manufacturing license types available:

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• Type 7 (volatile extraction)

• Type 6 (mechanical or non-volatile extraction)

• Type N (edible or topical infusions)

• Type P (packaging only)

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Retail

Universal application fee of $1,000 for all license types, there are 3 dispensing license types available:

• Type 9 (non-storefront/delivery)

• Type 10 (storefront retail)

• Type 12 (microbusiness)

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There are 3 distributor license types available:

• Type 11 (Distributor)

• Transport-only distributor

• Transport-only self-distribution  

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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.

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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.

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Market Analysis

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.

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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.

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