Cannabis Business California Licensing

Last year the state legislature passed breakthrough legislation consisting of three bills: AB 243, AB 266, and SB 643. Collectively known by many as “the act” these three bills provide a comprehensive regulatory framework for licensing commercial cannabis in California.

The State of California will begin issuing close to 20 different licenses for commercial cannabis activity on January 1, 2018. The regulations that licensees must comply with are being promulgated by three different agencies. This rule-making process will take up significant time in 2017.

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, processing and nurseries will be regulated by the Department of Food and Agriculture
  • Packaging, extraction and infusion will be regulated by the Department of Public Health
  • Testing, Distribution, Transportation, and Retail will be regulated by the Department of Consumer Affairs: Bureau of Medical Cannabis Regulation

Applications may be available as early as October. Licenses will not be available before January 1, 2018.

Medical Cannabis Cultivation Licenses

The California Department of Food and Agriculture (CDFA) is authorized to issue the following 11 Types of Medical Cannabis Cultivation Licenses:

Type 1 – Specialty Outdoor

For outdoor cultivation that uses no artificial lighting for a 5,000-square-foot or smaller total canopy size on one premises, or for up to 50 mature plants on noncontiguous plots.

Type 1A – Specialty Indoor

For indoor cultivation that exclusively uses artificial lighting for 501 to 5,000 square feet of total canopy size on one premises.

Type 1B – Specialty Mixed-Light

For cultivation that uses a combination of natural and supplemental artificial lighting at a maximum threshold (which will be determined by the licensing authority) for 2,501 to 5,000 square feet of total canopy size on one premises.

Type 1C – Specialty Cottage

For cultivation that uses a combination of natural and supplemental artificial light at a maximum threshold (which will be determined by the licensing authority) on one premises for:

  • 2,500 square feet or less of total canopy size for mixed-light cultivation
  • up to 25 mature plants for outdoor cultivation, or
  • 500 square feet or less of total canopy size for indoor cultivation

Type 2 – Small Outdoor

For outdoor cultivation that uses no artificial lighting for 5,001 to 10,000 square feet of total canopy size on one premises.

Type 2A – Small Indoor

For indoor cultivation that exclusively uses artificial lighting for 5,001 to 10,000 square feet of total canopy size on one premises.

Type 2B – Small Mixed-Light

For cultivation that uses a combination of natural and supplemental artificial lighting at a maximum threshold (which will be determined by the licensing authority) for 5,001 to 10,000 square feet of total canopy size on one premises.

Type 3 – Outdoor

For outdoor cultivation that uses no artificial lighting for 10,001 square feet to up to 1 acre of total canopy size on one premises.

Note: CDFA will limit the total number of Type 3 licenses allowed

Type 3A – Indoor

For indoor cultivation that exclusively uses artificial lighting for 10,001 to 22,000 square feet of total canopy size on one premises.

Type 3B – Mixed-Light

For cultivation that uses a combination of natural and supplemental artificial lighting at a maximum threshold (which will be determined by the licensing authority) for 10,001 to 22,000 square feet of total canopy size on one premises.

Type 4 – Nursery

For cultivation of medical cannabis solely as a nursery (examples of typical nursery activities include cloning and seed propagation)

Note: Type 4 licensees may transport live plants if they also hold a Type 12 transporter license.

Adult-Use Cannabis Cultivation Licenses

The California Department of Food and Agriculture (CDFA) is authorized to issue the following 13 Types of Adult-Use Cannabis Cultivation Licenses:

Type 1 – Small Specialty Outdoor

Type 1A – Small Specialty Indoor

Type 1B – Small Specialty Mixed-Light

Type 2 – Small Outdoor

Type 2A – Small Indoor

Type 2B – Small Mixed-Light

Type 3 – Medium Outdoor

Type 3A – Medium Indoor

Type 3B – Medium Mixed-Light

Type 4 – Nursery

Type 5 – Large Outdoor

For outdoor cultivation that uses no artificial lighting for more than 1 acre of total canopy size on one premises.

Note: CDFA will not issue any Type 5 licenses prior to January 1, 2023

Type 5A – Large Indoor

For indoor cultivation that exclusively uses artificial lighting for more than 22,000 square feet of total canopy size on one premises.

Note: CDFA will not issue any Type 5 licenses prior to January 1, 2023

Type 5B – Large Mixed-Light

For cultivation using a combination of natural and supplemental artificial lighting at a maximum threshold (which will be determined by the licensing authority) for more than 22,000 square feet of total canopy size on one premises.

Note: CDFA will not issue any Type 5 licenses prior to January 1, 2023

Manufacturing licenses

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.

Testing Licenses

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.

Dispensary licenses:

Type 10 – Dispensary – general

Type 10A – Dispensary – no more than three retail sites

Distribution licenses

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.

Transportation licenses

Type 12 – Transportation (not required under Prop 64)

Transportation licenses are designated Type 12. Only Type 12 license holders can transport cannabis or cannabis products between licensees, such as cultivators and retail outlets.

Type 13 – Micro-business


We create medical and recreational cannabis business plans for different types of cannabis business:

Please do not hesitate to contact us to make an order for a cannabis business plan or a cannabis industry research. We will create complete and professional business plans, including pro forma financials and projections to help you 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.

We also offer “70% ready to go” Cannabis Financial Models and Cannabis Business Plan Templates for a growing, processing, dispensary, testing and vertical integrated cannabis business. Please make a note that you need Californian version and you will get the template tailored cannabis business in California.

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