Cannabis Business California Licensing
On November 16, 2017, California published the long awaited rules and regulations to implement voter approved Proposition 64, the Adult Use of Cannabis Act of 2016, which legalized adult use of cannabis in the State of California. The California Legislature passed and the Governor signed into law the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), which creates the general framework for the regulation of both commercial medicinal and adult-use (recreational) cannabis.
Where to apply?
There are three different state agencies that are tasked with issuing licenses to cannabis businesses and several more agencies that will assist in the process.
- Cultivation will be regulated by the Department of Food and Agriculture
- Manufacturing will be regulated by the Department of Public Health
- Testing, Distribution, Retail and Micro-business will be regulated by the Bureau of Cannabis Control
License Categories: M (Medicinal) or A (Adult -Use)
Cannabis Cultivation Licenses
The California Department of Food and Agriculture (CDFA) is authorized to issue the following Types of Cannabis Cultivation Licenses:
(a) Type 1C Specialty Cottage:
(1) “Specialty Cottage Outdoor” is an outdoor cultivation site with up to 25 mature plants.
(2) “Specialty Cottage Indoor” is an indoor cultivation site with 500 square feet or less of total canopy.
(3) “Specialty Cottage Mixed-Light Tier 1 and 2” is a mixed-light cultivation site with 2,500 square feet or less of total canopy.
Type 1 “Specialty Outdoor” is an outdoor cultivation site with less than or equal to 5,000 square feet of total canopy, or up to 50 mature plants on noncontiguous plots.
Type 1A “Specialty Indoor” is an indoor cultivation site between 501 and 5,000 square feet of total canopy.
Type 1B “Specialty Mixed-Light Tier 1 and 2” is a mixed-light cultivation site between 2,501 and 5,000 square feet of total canopy.
Type 2 “Small Outdoor” is an outdoor cultivation site between 5,001 and 10,000 square feet of total canopy.
Type 2A “Small Indoor” is an indoor cultivation site between 5,001 and 10,000 square feet of total canopy.
Type 2B “Small Mixed-Light Tier 1 and 2” is a mixed-light cultivation site between 5,001 and 10,000 square feet of total canopy.
Type 3 “Medium Outdoor” is an outdoor cultivation site between 10,001 square feet and one acre of total canopy.
Type 3A “Medium Indoor” is an indoor cultivation site between 10,001 and 22,000 square feet of total canopy.
Type 3B “Medium Mixed-Light Tier 1 and 2” is a mixed-light cultivation site between 10,001 and 22,000 square feet of total canopy.
Type 4 “Nursery” is a cultivation site that conducts the cultivation of cannabis solely as a nursery.
“Processor” is a cultivation site that conducts only trimming, drying, curing, grading, packaging, or labeling of cannabis and non-manufactured cannabis products.
Manufacturing licenses are separated into two categories based upon the type of solvent used. Like Type 3 licenses, the Department of Public Health (DPH) will limit the number of licenses for manufacturers who use volatile solvents (Type 7).
Type 6 – Manufacturer 1
Manufacturing using non-volatile solvents.
Type 7 – Manufacturer 2
Manufacturing using volatile solvents.
Type 8 – Testing
Testing licenses are designated Type 8. The DPH is responsible for ensuring that all cannabis is tested prior to delivery to dispensaries or other businesses, and will specify how such testing will be conducted. Type 8 license holders must test for THC, cannabinoids, contaminants, microbiological impurities, among other compounds listed in Business & Professions Code § 19344.
Retailer (Type 10)
Non-Storefront Retailer (Type 9)
Type 11 – Distribution
Distribution licenses are designated Type 11. All cultivation (Types 1-4) and manufacturing licensees (Types 6-7) are required to send their products to a Type 11 licensee where their cannabis products will be inspected for quality assurance before the products pass to the next stage of manufacturing or retail. Type 11 licensees must also send the cannabis products to a Type 8 laboratory for batch testing and certification.
Distributor transport only (Type 13): Allows a licensee to transport cannabis goods between licensed cultivators, manufacturers, and distributors. A licensee may not transport cannabis goods to a licensed retailer and may not engage in any other distributor activities.
Type 12 – Micro-business
Allows a licensee to engage in cultivation (on an area less than 10,000 square feet), manufacturing (Level 1 manufacturing, Type 6), distribution, and retail sale, or any combination of the four activities. Licensees will be required to comply with all rules and regulations, which will include, where applicable, regulations adopted by the California Department of Food and Agriculture and the California Department of Public Health, governing the activities they are engaged in.
Cannabis Event Organizer (Type 14)
Recreational cannabis sales officially began in California and the agency had issued 404 temporary business licenses for cannabis companies as of Jan. 1:
- 140 medical and 94 adult-use retail licenses
- 21 medical and 18 adult-use microbusiness licenses
- 49 medical and 40 adult-use distributor licenses, along with another four medical and five adult-use that are transport-only
- 12 medical and nine adult-use retail non-storefront retail licenses (for delivery companies)
- 12 testing labs
We offer “70% ready to go” Cannabis Financial Models and Cannabis Business Plan Templates for a growing, processing, manufacturing, distribution, retail, testing, vertical integrated and micro- cannabis business. Please make a note that you need a Californian version and you will get the template that is tailored to cannabis business in California. Professional business plan template includes a pro forma financials and helps you to know how much money it’ll cost to start your business and how much money you can make by starting and operating your 100% legally compliant medical and recreational marijuana business.