build a cultivation business in the world’s largest cannabis market
Savvy investors, operators, and land owners who prioritize a healthy return on investment will be impressed when evaluating the economics around a cultivation business. A successful cultivation business has the potential of being one of the most profitable, sustainable operations within the entire seed to sale supply chain. Furthermore, California is the largest cannabis market in the world, with exponential growth in demand year over year.
$5.6B
California Market in 2020
81%
Revenue Increase 2019 vs. 2020
40,000
Cannabis Jobs in California
Formula For Building A Cultivation Business
Business
Strategy
Alignment of goals, resources, and stakeholders to develop a strategy and execution plan for moving forward successfully.
Property Acquisition
Identify and acquire suitable and permittable properties for your cannabis business.
Compliance & Renewals
Maintain compliance with state and local agencies and navigate annual renewals.
How To Get A Cultivation License In 6 Steps
(Updated January 27, 2021)
The process for getting a cultivation business licensed and operational requires significant planning, time, financial resources, a firm understanding of the latest laws and regulations, and political finesse. But it also requires something more fundamentally important.
At BeGreenLegal, we have developed a proven framework for getting a cannabis cultivation business licensed, operational, and profitable in California and many other major cannabis markets.
Read on to learn more about our framework for guiding clients through the cultivation licensing process.
Develop a business strategy & vision plan
It’s important to begin with the end in mind.
The first thing we do with new clients is sit down, talk through your strategy, and discover your “why.”
We approach every client like a blank slate to determine your level of commitment and capabilities, and determine your best fit based on goals, experience, and resources.
Some people just want a lifestyle grow op and aren’t too concerned about marketing and scaling. It’s hard to compete at this level and most of the time they get washed out.
At this point there is quite a bit of competition in California for cultivation licenses, so more aggressive entities looking to own significant market share are more likely to rise above smaller competitors.
Our team will help you decide if your vision is a realistic match for the market and create a master checklist for how to build a profitable business. This game plan includes:
Some people just want a lifestyle grow op and aren’t too concerned about marketing and scaling. It’s hard to compete at this level and most of the time they get washed out.
If you’re a big gun who’s looking to own the grow space, then your commitment is going to help you rise above the competition.
Our team will help you decide if your vision is a realistic match for the market and create a master checklist for how to build a profitable business.
Your path can end up being hundreds of miles longer if you don’t have a clear vision. We make sure that the market is aligned with what you’re trying to accomplish, then develop your plan in an organized, realistic fashion with measurable goals.
We see three main types of clients:
- 01.
Small Independants - 02.
Mid-level - 03.
Aggressive enterprise builders
Our Game Plan Includes:
- Forming an entity
- Developing a business framework
- Determining a scheduling plan
- Demonstrating financial stability
- Standardizing procedures
- Preparing a work plan
Property acquisition & the importance of location
Like all cannabis business activities, a cultivation license is tied to a specific location. Because of this, there are restrictions, regulations, and permits governing where and how a business may operate. These factors are not generally straightforward or easily identifiable as an outside party, so it can be quite difficult to find and acquire a permissible property.
Moving forward on a property that does not fit your cultivation needs or fails to meet the permit criteria can be disastrous. And unfortunately, it’s very unlikely that a property already owned can be used. That’s how narrow the requirements are for approval.
Once your property has been acquired, Conditional Use Permit/Land Entitlement must be attained.
This is where local politicking comes into play and criteria for getting permitted enters a “grey area.”
“Believe it or not, being in a “green zone” doesn’t necessarily give you the green light to start growing”
-Chris Cox | Cannabis Licensing Veteran
The local community can always try to block your approval. Local ordinances protect residents from nuisances like offensive odors and loud noises, potentially making your property incompatible with the neighborhood.
Fortunately, our team at BeGreenLegal has gone through this song and dance hundreds of times before and we know how to navigate it.
The property search process starts with a city and county evaluation. Once we know that your city or county allows cultivation, we start a rigorous property search for green-zoned parcels that meet all the requirements for a successful grow op.
It’s important to think about the logistics surrounding each piece of property, like proximity to resources, employee commute time, and easy access to utilities like water and electricity.
Some buildings are poorly suited for cultivation, and an inefficient facility can take a serious bite out of your bottom line.
We analyze every aspect of the property for compatibility, including:
- Topography
- Access roads
- Bodies of water
- Property corners
- Walkways
- Trees
Finally, we use these data points to evaluate zoning restrictions that may inhibit workflow or otherwise disqualify the property.
Prepare the application package to pursue approvals & licenses
Once you have viable property and a site and facilities plan, it’ll be time to prepare an application package.
Local and state officials don’t hand out cultivation licenses to just anybody, so you better have your business plan locked down tight.
On a basic level, your business plan should include essentials like:
Compliance inspections and audits
Tracking and trace complaince
Knowledge of required permits and licenses
Safety and security
Community relations
Odor control
Operations
If you plan to use your business plan to attract investors, our team will also help you outline customer demographics, market research, cash flow analysis and exit strategies.
These documents can be dozens of pages long, and they need to be put together just right in order to get the stamps of approval from state and local officials
Get Started today!
Navigate the hurdles of state approval
Many refer to this step as the State’s gauntlet.
Getting your state approvals is a lot like Ninja Warrior, with a tad more paperwork and a ton more technical execution.
You’ll need to submit your application package to up to six different state agencies, including the Secretary of State and the Department of Fish and Wildlife.
Once again it all circles back to having a bulletproof business strategy, and we help you assemble your application so that it’s easy for the state’s employees to process.
State regulators are always changing their procedures and rotating staff members. You have to be fully plugged in to be aware of these constant changes. This is more of an art than a science, and you have to be patient, tolerant and optimistic.
Throughout this entire process, BeGreenLegal deals with all the correspondence coming from the state. All you have to do is sit tight and stay tuned for updates.
Obtain local approvals
After surviving the state’s gauntlet of paperwork you’ll be ready for the local level, and here’s where the politics start to get heavy…
Local government officials take things a lot more personally. They’re often from the area and are looking out for their home. Do these local regulators want your business in their backyard?
If they don’t like you or your project for any reason, they can stop it dead in its tracks.
The local level is double the effort of the state level. You still have all the same technical hurdles, but with the added layer of political challenges. It’s up to you and your partners at BeGreenLegal to sell yourself and your business to the local government.
Because cannabis businesses require a “discretionary” conditional use permit (CUP), we’ll have to present your plan at a public hearing. The proposal is then either approved or denied based on a vote from the planning commission or city council, but this is just the first step…
You’ll most likely need certifications, permits, and licenses from other local departments, including another round of environmental assessments. This process can be long and costly if regulators decide that there are significant environmental impacts. Knowing this ahead of time, you can usually find ways to reduce potential impacts before you apply.
Maintain permits and licenses
Once you’ve obtained your cultivation licenses, permits and approvals, you’ll have to stay in compliance with ongoing regulations year after year.
All licenses are issued with an agreement to participate in continued monitoring and reporting, including meticulously tracking inventory.
Local and state regulators will regularly inspect your business, and many approvals require annual renewal.
As a licensee, it falls on you to make sure that everything is up-to-date and in compliance.
We’ll work with you every step of the way to ensure that you comply with flying colors.
How begreenlegal can help you get a cultivation license in 2021
BeGreenLegal can take the helm on all fronts, including planning, proposals, and legislative maintenance.
Most importantly, though, we don’t take shortcuts or use cookie-cutter templates.
Each client gets a fully customized business plan because each cannabis business faces unique obstacles.
At the same time, our proven 7-step process provides a battle-tested framework for success.
Our consultants have been assisting businesses with every phase of the permit and licensing process for decades, and together can help you set up a cultivation business that will maximize opportunities and minimize costs.
What state should I start my marijuana business in?
The federal government no longer prosecutes cannabis businesses that are in compliance with state regulations, so the more robust the state’s laws, the safer you’ll be from prosecution.
California, Florida, Michigan, Colorado, and Washington have all passed some form of legislation that allows cannabis businesses to operate.
Florida, however, issues very few cannabis licenses, and when they do, it’s usually to well-financed, vertically integrated companies.
California and Michigan, on the other hand, allow small businesses to occupy many links in the supply chain. In other words, you don’t need big financial backing or powerful political connections to enter the industry.
7 Step Process For Go To Market Success
- Prepare a Work Plan.
- Prepare a Site and Facilities Plan
- Prepare Business Plan
- Obtain Supporting Agency Approvals
- Obtain Local Approvals
- Obtain State Cannabis Licenses
- Maintain Permits and Licenses
Benefits of building a vertically integrated business
California offers an ideal opportunity for entrepreneurs of all sizes to occupy multiple stages of the cannabis supply chain, including:
• Cultivation:
Flower and cannabis biomass
• Manufacturing:
Extraction, infusion and packaging
• Distribution:
Supply chain management
• Dispensary:
Retail stores
The only stage that’s off limits to vertical integration is testing services, and that’s because regulators need to ensure that they’re unbiased in their analysis and reports.
Understanding how these different pieces fit together will help you decide which licenses to acquire in order to maximize long-term potential.
Microbusinesses
California regulators have created what’s called a Type 12 Microbusiness.
If you fit the output requirements of a medium-sized grow, then you can create a complete farm-to-table experience for your customers.
The only catch is that you’ll have to operate at least three different licensed cannabis activities in order to qualify (cultivation, manufacturing, distribution, or retail).
One of the main benefits of a microbusiness is that, other than having a 10,000 sq ft cap on canopy space, you’re allowed to scale without limitations.
An example of an easy-to-scale microbusiness for startups would involve retail, distribution, and some level of manufacturing.
Multi-location integration
You may not be able to accomplish all of your vertical integration goals in a single city or region.
For example, the Emerald Triangle in northern California is ideal for cultivation but has few retail opportunities.
In this situation, it would make sense to establish stores in places like Los Angeles and San Diego where there are bigger retail markets, and base your cultivation operations in northern California.
Partnerships, Joint-ventures and Alliances
Although you may be able to obtain all the necessary licenses for vertical integration, it can be challenging to manage the entire supply chain yourself.
In fact, covering all the steps without partners may be risky and impractical from a regulatory perspective.
That’s why if you really want to scale, it helps to have joint ventures and specialists at each level.
Fortunately, the emerging cannabis industry is full of eager entrepreneurs who are willing to join forces.
If you want to learn more about the value of starting a vertically integrated cannabis business, our Vertical Integration eBook breaks down all the opportunities in greater detail.
It also explains how to get your foot in the door with unique, highly specialized licenses.
Get your foot in the door with specialized licenses
California legislators have created a variety of specialized, service-based licenses that cost less and are easier to get approved, including:
Packaging and Infusion
(subset of manufacturing)
Nursery & Processing
(part of cultivation)
Transport
(limited distribution)
Large-scale projects aren’t the only route to take if you’re brand new to the cannabis industry.
These options allow you to test the waters without having to overcommit on time, money, or manpower.
For example, manufacturing and testing tend to be costly to get approved and require up to $1 million worth of equipment.
Retail, delivery and distribution, on the other hand, are less costly and easier to build out but cost more for branding, marketing, and logistics.
At the same time, getting a cultivation license can come with a ton of environmental hurdles and building permits.
Ultimately, the best decision for many first-time cannabis entrepreneurs is to start small and grow gradually.
Your next steps
Are you ready to take a step forward and explore opportunities within the cannabis industry?
After investing in our official discovery process, our experts will help to identify your best fit in the market based on your goals, skillset and location. We will help you determine the steps required to evolve your ideas into a fully-licensed, operational and profitable business.
Our discovery packages are designed to help you get started whether you just want solid insights to make more informed decisions or a more complete analysis to share with your partners
Each discovery package covers the following:
- Business strategy session
- Opportunity analysis
- Property search and acquisition strategy
- Property suitability assessment fit, search and acquisition strategy
The discovery process will help determine your needs for:
Build-out
Operations
State licenses
Property selection
Business plan
State Marketing & go-to market strategy
Local permit applications
Real estate purchase/lease
Compliance