With adult-use legalization drawing nearer, now is the time for cannabis business operators to begin the process of applying for licenses so you can hit the ground running. The experienced advisors at ELLO have assembled this guide to help you prepare for the licensing process.

If you have any questions about California licensing, or would like a consultation from ELLO, please reach out to us.

Download the PDF Guide

1: UNDERSTAND THE LICENSE TYPES (AND APPLY FOR BOTH!)

To manage the expected rush of applications for commercial cannabis licenses, California is issuing two license types: temporary and annual. The requirements for issuing temporary licenses are less stringent and time consuming, allowing the industry to begin operating during the review of annual licenses. Below are some key facts to know.

Temporary License

  • Will be issued in two types:
    1. A-license: For adult-use commercial cannabis activity
    2. M-license: For medicinal commercial cannabis activity
  • Conditional license that will allow businesses to conduct commercial cannabis activities for 120 days.
  • Can be extended for an additional 90 days.
  • Will not go into effect until January 1, 2018.
  • Applications expected to be available in December.

Annual License

  • Will be issued in two types:
    1. A-license: For adult-use commercial cannabis activity
    2. M-license: For medicinal commercial cannabis activity
  • More stringent requirements for license issuance.
  • Applications expected to be available in December.

OPERATORS WILL BE ABLE TO SUBMIT APPLICATIONS FOR TEMPORARY AND ANNUAL LICENSES AT THE SAME TIME.

2. GET TO KNOW YOUR AGENCY

Three California state agencies are responsible for regulating and issuing commercial cannabis licenses to each cannabis business type.

Dispensaries, Distributors, Testing Labs, and Microbusinesses will be issued licenses through the Bureau of Cannabis Control (“BCC”), which is housed within the Department of Consumer Affairs.

Cultivators will be issued licenses through CalCannabis, which is housed within the California Department of Agriculture.

Manufacturers will be issued licenses through the Manufactured Cannabis Safety Branch, which is housed within the Department of Public Health.

3. GET THE APPROPRIATE PERMITS

Cannabis retailers, distributors, microbusinesses, cultivators and manufacturers making sales are required to obtain seller’s permits from the California Department of Tax and Fee Administration (CDTFA) (formerly BOE).

Additionally, distributors are required to register with the CDTFA for a cannabis tax permit.

4. ENSURE LOCAL COMPLIANCE

Authorization from your local city or county is a required step for the licensing process and jurisdictions are issuing different protocols and regulations. To align your operations with local rules, contact one or more of the following agencies:

  • Building Department
  • Environmental Health Department
  • Office of the County Agricultural Commissioner
  • Office of the Sheriff or Police Chief
  • Planning Department
  • Public Works Department

5. APPLICATION AND LICENSE FEE REQUIREMENTS

Temporary Business License: No Charge!
All Annual Licenses: $1,000
Physical Modification of Premises: $500

Before organizing and submitting your license application, make sure you are prepared to pay the appropriate fees since no licenses will issued or renewed if the issuing regulatory agency has not received payment. Additional annual license fees will apply to the distinct license types.

6. ARE YOU ELIGIBLE FOR PRIORITY LICENSING?

If your cannabis operation has been active previously, you may be eligible for priority licensing, which will expedite the licensing review process. Eligible businesses will need to demonstrate that they have been in compliance with the Compassionate Use Act of 1996 and its laws before September 1, 2016.

Local jurisdictions will be supplying lists of eligible operations in response to a request by the BCC. If your jurisdiction does not supply a list, or if you do not appear on a list, you can submit a document issued or signed by your local jurisdiction that contains the following:

  • Name of the applicant and address of the premises to be licensed
  • License types that the applicant is applying to the Bureau for
  • Name of the local jurisdiction
  • Name of the local jurisdiction office responsible for enforcing compliance with the Compassionate Use Act of 1996
  • Signature, name and contact information for the person authorized by the local jurisdiction to sign on its behalf
  • Statement to the effect of: “The above named party is currently conducting commercial cannabis activity in this jurisdiction and has been operating in compliance with the Compassionate Use Act of 1996 before September 1, 2016.”

Once you’ve completed these steps, it’s time to begin preparing your license applications. Please return to www.ELLOInsights.com for our guidance regarding applying for licenses.

If you have any questions or concerns about the licensing process, please feel free to reach out to our team at ELLO and we’ll help you through this dynamic process.

ABOUT ELLO

ELLO LLC was founded in 2017 by highly-experienced business advisors to be a force for positive, sustainable change in the emerging cannabis industry. ELLO’s industry-leading services include regulatory compliance, finance effectiveness, performance reviews, operations improvements, strategy consulting, as well as tax planning, outsourced services, and more. Our vision is to help instill transparency, responsibility, and legitimacy in the cannabis industry by developing and implementing sustainable business practices.

About the author(s)

Evan Eneman
Evan has more than 18 years of experience assisting private and public companies in a variety of industries including Cannabis, Financial Services, Healthcare, Technology, Media, and Entertainment. His areas of expertise include: strategy, compliance, enterprise risk management, business process, internal controls, audit, governance, and IPO readiness. Evan also has experience founding and running an early stage venture capital firm and a branding and marketing agency dedicated to the cannabis industry. Prior to his involvement in the cannabis industry, Evan spent 12 years with a Big Four firm, advising Fortune 100 and emerging growth companies on various aspects of governance, risk, compliance, operations and strategy.