Thinking of pursuing a dispensary license in California in 2020?
This in-depth guide covers our system for how to get a dispensary license in California in seven steps:
To be frank, the path to getting a dispensary license is littered with legislative hurdles, and even the smallest mistake can cause huge delays.
Fortunately, we’ve made a science out of the process.
If you want, we can help you find appropriately-zoned land, build a winning business plan, and manage ongoing paperwork (there’s going to be a lot of it).
Whether you’re starting your first cannabis business or expanding an existing one, this article is for you.
Continue reading to learn our seven-step process for how to get a dispensary license in California in 2020.
We’re also going to help you visualize a profitable long-term business plan, but before we jump into the licensing process, let’s cover the basics:
When most people think about the cannabis industry, cultivation and retail are usually the first niches that come to mind.
However, a lot goes on between growing raw flower and selling the finished product, and each phase offers significant financial opportunities.
The five phases of the cannabis supply chain are:
Each phase involves its own set of licenses, permits, benefits and challenges.
The good news is that you don’t have to pick just one.
As a matter of fact, in many cases it’s best to acquire multiple licenses and occupy several stages of the supply chain, but more on that later…
For now, let’s take a look at how to get a dispensary license in California in 2020:
For simplicity’s sake, we’re going to use the state of California as an example for the remainder of this guide.
In California, cannabis retailers apply directly to the Bureau of Cannabis Control.
Manufacturers, on the other hand, obtain their state license from the Department of Health, while cultivators apply to the Department of Food and Agriculture.
When you look closely, however, the licensing procedures for each niche are all more or less the same.
In order to simplify how to get a dispensary license in California, we’ve broken it down into the following seven-step process:
By the time you’re finished with this guide, you should have a solid idea of the journey ahead.
Here’s how to get a dispensary license in California in 2020:
Before you do anything else, you’ll want to put together a master plan for the entire project.
The good news is that you may already have some of the essentials in place, like land, capital, and existing operations.
However, if you’re starting with nothing but an idea and a dream, that’s not a problem either.
Our 5-step discovery process will help you…
Want to learn more? Check out How to Create a Winning Work Plan
The second step in this guide about how to get a dispensary license in California is to prepare your site and facility plans.
Site and facilities plans can make or break your project.
To begin with, cannabis stores are only allowed in designated “green zones” and local governments typically limit the number of retailers per zone.
Before buying land, you’ll also need to take into account the potential for future growth.
For example, you may want to start in retail and then expand into manufacturing and distribution later on.
At the same time, some of the property’s features can automatically disqualify it.
That’s why our consultants evaluate for prohibitive land-use restrictions that might stall the project or be too expensive to maintain.
After all, nothing sidelines a project faster than having a protected watershed next door.
We use precise GPS and scanning instruments to analyze every nook and cranny of the land and facilities, including topography, property corners, buildings, access roads, and trees.
Finally, we use those measurements to generate detailed drawings and 3D model of your building plans.
If you haven’t even started looking for land, that’s okay too, we can help you survey locations, evaluate the pros and cons, and make an informed decision.
Want to learn more? Check out how to pick a site and develop a facilities plan.
The third step of how to get a dispensary license in California is to create a winning business plan.
When it comes down to it, regulators won’t grant approval unless you can demonstrate that your business will succeed.
Here are some of the basics of a sound cannabis business plan:
Are you looking to attract investors?
We can include exit strategies, target demographics, and market research that instills trust.
Remember, you’re going to be competing for a limited number of retail licenses, so you’ll need to put your best foot forward.
Luckily, we have a long track record of building winning business plans.
Want to learn more? Check out how to create a winning cannabis business plan.
Before seeking approval from local and state governments, you’ll first have to obtain approval from supporting state agencies like the Department of Tax and Fee Administration (DTFA) and the Secretary of State (SOS).
Depending on the level of land development involved, you may also require approval from CalFire, the Department of Fish and Wildlife (CDFW) or the State Water Resources Control Board (SWRCB).
That’s why it’s important to be thorough when selecting a piece of land because mitigation for additional property development permits can be costly.
However, before any of that, you’ll need to form a legal entity through the California Secretary of State.
Our consultants can help you decide which of the following entities will best suit your needs:
Although it’s possible to apply as a sole proprietor, your chances of approval are much greater if you apply as a legal entity.
Forming an entity also makes it easier to obtain environmental approvals.
Now that you have your state agency approvals, business plans and site plans, you’ll finally be ready to seek local approval.
In general, local city governments are governed by a city council, and it’s their job to regulate land use and police power.
Counties, on the other hand, make ordinances regarding local affairs and are governed by a Board of Supervisors.
It’s their job to administer their ordinances through county departments.
Altogether, California has 58 counties and 482 incorporated cities, for a total of 540 different local governments!
Each one presents unique challenges, so it’s easy to see how complicated it can get.
The first step is to apply for a “discretionary” conditional land use permit (CUP) from the Planning Department.
This requires applicants to present their plan at a public hearing.
The planning commission and city council then vote to either accept or deny the proposal.
However, even if it gets the thumbs up, you still may not be in the clear.
You may also need additional certifications and environmental assessments, although these are less likely to be required of retailers.
If you’ve made it this far, the sixth step towards getting a dispensary license is usually more of a formality than anything else.
By now you should already have everything you need to gain final state approval.
All you’ll have to do now is to submit a few documents, including:
It’s the state’s job to enforce laws and regulations that govern business, public safety, and the environment, and they’re required to confirm that you’ve already received approval from the local governments.
All cannabis permits and licenses are issued with an agreement to track inventory, stay up-to-date, and report back to government regulators.
Like clockwork, local and state officials will be swinging by to inspect your operations, and when they do, it’s imperative to have all your ducks in a row.
Ultimately, it falls on you, the licensee, to keep everything current.
Of course, you can always outsource permit and licensing upkeep to Be Green Legal so that you can focus on growing your business.
Be Green Legal can handle the planning, proposals, legislative maintenance, and everything else you need to start a successful marijuana business in green states throughout the country.
We build all our business plans from scratch, meaning we don’t use any pre-made templates.
Throughout the process of obtaining a dispensary license, you’re going to get a few curveballs…it’s inevitable.
That’s why it pays to work with seasoned experts.
Our proven seven-step process provides a framework for success.
We only work with specialized consultants, and although we’re based in California, our extensive network spans across the country.
No matter which cannabis-friendly state you live in, we guarantee to make the licensing process as painless as possible.
Call us today to set up a 30-minute consultation.
Florida, Colorado, Washington, Michigan and California all allow recreational and medical marijuana businesses to operate.
This means that as long as you comply with local and state regulations, you’ll be safe from federal prosecution.
In fact, the stricter the state’s regulations, the safer you should be.
As you decide which state to operate in, you’ll also want to consider the following factors:
Michigan and California, for example, make vertical integration easy for small businesses.
In fact, California offers a grand total of 26 unique cannabis licenses, including microbusinesses.
Florida, on the other hand, issues very few cannabis licenses and is best-suited for big players with deep pockets.
Some niches have massive long-term upsides but are more difficult to get off the ground.
Testing and manufacturing, for example, are significantly more expensive to get licensed.
Plus, you’ll need at least $1 million to cover equipment and facility buildouts.
Other niches, like retail and delivery, are more affordable to get licensed and build-out.
However, these niches also tend to cost more for branding, marketing, and logistics, so you’ll ultimately have more expenses down the road.
If you do decide to go the retail route, you’ll be joining a line of entrepreneurs who are all competing for the same few spots.
In California, retail licenses are either merit-based or are awarded through a lottery system.
Beating the competition often requires leveraging insider information, taking rapid action, and getting lucky along the way.
If for whatever reason your retail license doesn’t go through, you can always consider starting a cannabis delivery service: a sub-niche of retail that’s less competitive and more affordable to break into.
California is the ideal state for entrepreneurs who want to occupy multiple stages of the supply chain, including manufacturing, cultivation, distribution and dispensaries.
By having operations in 3-4 of these categories, you can expand profits and rapidly build your brand.
The testing niche, however, is off-limits to vertical integration because regulators need to ensure that owners remain unbiased.
Aside from that, you can integrate multiple cannabis businesses and reap the rewards.
There are dozens of options for vertical integration, but we recommend focusing on the following three strategies:
Vertical integration can be challenging for a solo company to manage on its own, especially on a large scale.
After all, each phase of the supply chain requires specific insights and knowledge.
Partnerships allow teams to stay specialized, leading to higher quality products, fewer errors and reduced risk.
At the same time, you’ll be in a much better position to capitalize on new opportunities as they evolve.
In many industries, partnerships and joint ventures can be hard to come by, but the cannabis industry is unique.
It’s full of savvy business owners who recognize that the best way to capitalize on the green rush is to form alliances with like-minded entrepreneurs.
Another reason why I’m a fan of California is because of all the opportunities there are for multi-location integration.
In many cases, it’s hard for a cannabis business to reach its full potential if it’s restricted to a single county or region.
For example, big cities like San Diego have plenty of retail opportunities, but fewer spaces for cultivation.
Northern California, on the other hand, is ideal for large-scale outdoor grows.
Rather than confining yourself to a single location, it might be smart to spread out and leverage the special advantages that each region has to offer.
California offers a business category called “Type 12 Microbusiness,” and it allows you to control every phase of the supply chain from cultivation to retail.
The only catch is that your operations are limited to a small-size grow AND the entire business needs to be on a single property.
Plus, you’ll need to occupy at least three of the following four stages of the supply chain (not including testing):
Keep in mind that if cultivation is involved, you won’t be able to exceed a canopy space of 10,000 square feet.
However, if you plan to focus on retail, it usually makes sense to expand into distribution and manufacturing first.
When it’s all said and done, vertical integration can raise the ceiling on your business’s potential.
The four primary benefits of a vertically integrated cannabis business are:
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.
Want to test the cannabis industry without spending a fortune?
Luckily, the state of California offers several service-based licenses that are easier to obtain and require a smaller upfront investment, including:
A full-scale retail business, for example, can cost a lot for logistics, marketing and branding.
However, a retail delivery service, while still required to be in an approved commercial building, can allow you to start building a brand without the additional cost of building out a storefront and is not limited to a single location.
For many first-time cannabis entrepreneurs, it’s best to start small.
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: covers the following:
The discovery process will help determine your needs for the following:
We will lead the charge so you can stay laser-focused on your brand, customer experience and product development. Be Green Legal has helped hundreds of cannabis entrepreneurs build profitable businesses.
Ready to move forward? Let’s get started.
Have some questions first? We’d love to hear from you!
Check out how we helped Green Pro Enterprises navigate some very sticky red tape and come out victorious.
Here is a detailed history of the Cannabis Laws in California.
1. Brief review of California’s marijuana laws, including the following:
a) The Compassionate Use Act (CUA) (Proposition 215)
b) The Medical Marijuana Program Act (MMP) (SB 420)
c) The Medical Cannabis Regulation and Safety Act (MCRSA) (AB 243, AB266, SB643)
d) The Adult Use of Marijuana Act (AUMA) (Proposition 64)
e) The Medical and Adult Use of Cannabis Regulation and Safety Act (MAUCRSA) (SB 94)
f) The Federal Controlled Substances Act (CSA)
g) The Cole Memo and Farr Rohrabacher Amendment
h) Takeaway Message
2. How operating a dispensary has changed under California law
3. Steps showing you how to get a dispensary license in California
4. Anticipated marijuana dispensary start-up costs
Over past 21 years, California has experienced a major shift in policy related to production, distribution, possession, and use of marijuana. While it will be legal in 2018 to produce, distribute, and possess both medical and adult-use marijuana, it is important for any cannabis business to understand the evolution of state law and how it is radically changing the industry.
a. Proposition 215
(http://www.canorml.org/medical-marijuana/patients-guide-to-california-law) and SB 420 (http://www.canorml.org/laws/sb420.html) created a business landscape for the California cannabis industry marked with limited legal structure, no access to institutional banking systems, minimal oversight except from police, and little incentive to pay taxes. The only legal entity structure was the collective and cooperative model, which has no established legal framework for transfer of goods and services between collectives. Consequently, every transaction between parties (grower selling to dispensary for example) is technically an illegal transaction unless they are both members of the same collective. With a small number of individuals, the collective model would work. However, with over 39 million people in the state of California, it is impractical for a collective to be liable for every cultivator from whom they receive products.
b. The state’s new licensing structure under MAUCRSA
(https://www.calgrowersassociation.org/understanding_the_maucrsa) establishes a clear framework for how businesses within the legal cannabis industry should operate and interact with each other. Three state agencies, including the Bureau of Cannabis Control (http://bcc.ca.gov/), Department of Food and Agriculture (http://calcannabis.cdfa.ca.gov/), and Department of Public Health (https://www.cdph.ca.gov/Programs/CEH/DFDCS/Pages/MCSB.aspx), are responsible for administering 26 license types issued to cannabis operators active in every activity involved with creating consumable cannabis products. Dispensaries now operate one segment of the industry devoted to retail sales. Cannabis is first produced by a cultivator who then transfers the harvested crop to a distributor, or manufacturer if slated to be extracted as a concentrate product. The distributor then conducts a quality assurance/control process, including facilitating testing with an independent laboratory, before transporting retail-packaged products to retailers.
c. While it was possible for cultivators to sell cannabis directly to the dispensary in bulk, 2018 cannabis regulations require products to be tested and packaged before they are transported to a retail store or delivery service. Cultivators wishing to retain the same control over packaging and distribution will need to obtain their own distribution license or conduct their own marketing programs and contract with a distributor for testing, packaging, and transport. At the same time, retailers will no longer have the option to package their own cannabis products, store and display bulk cannabis, or give away free products to adult users.
a. Local Approval – While it is now possible to get a cannabis license in California, operators must first obtain approval from their local city or county government to operate at their location. Cities and counties in California are the primary authority regulating the use of land. Cannabis businesses therefore need to obtain approval to operate on a property. A good cannabis consulting will have experience in obtaining land use permits, which require a business plan, floor plan, site plan, security plan, community relations plan, and financial analysis. Here is a great piece on how to convince your local government that you deserve a medical marijuana dispensary license.
EXPLORE WHERE YOU CAN LEGALLY OPERATE YOUR MARIJUANA BUSINESS IN CALIFORNIA:
b. Environmental Permits and Assessments – For cultivators and other cannabis businesses effecting change on the environment through land development, you will need one or more of the following:
c. State License – Once you have received local approval, you can apply for a state cannabis license. Retailers, distributors, microbusinesses, and testing labs will need to apply to the Bureau of Cannabis Control (https://aca5.accela.com/bcc/Welcome.aspx). Cultivators must obtain a license from the Department of Food and Agriculture (http://calcannabis.cdfa.ca.gov/), while manufacturers need to apply to the Department of Public Health (https://www.cdph.ca.gov/Programs/CEH/DFDCS/Pages/MCSB.aspx)
a. There are many steps needed to get a cannabis license in California and each takes significant time and effort. Here are four new cannabis licenses available for your marijuana business.You can complete these steps yourself if you have the skill and experience to do so, or hire a proven cannabis consultant to help you. Whichever way you choose, it is important to ensure that preparation of your permitting and licensing documents is completed accurately and with a strategy in mind of how your business will operate. Errors, omissions, or lack of preparation will lead to processing delays or rejections from regulatory agencies, as well as a poorly run business.
b. Costs for a cannabis dispensary license can be broken down into basic categories you can use to decide whether this is the venture for you:
Project costs for other cannabis businesses vary, but follow a similar list.
For more information on how to get a dispensary license in California setup a half hour consultation with one of our expert cannabis consultants.