How to Get a Cannabis Dispensary License in California

THC Legal Group
Aug 24, 2017 · 3 min read

Although the passage of Proposition 64 and the Medical Cannabis Regulation and Safety Act (MCRSA) legalized marijuana in California, many questions now arise from the unknowns of the new law in regards to opening a business. Below are brief explanations of some of the questions that individuals may have when attempting to start a cannabis business in California.

1.) What are the residency requirements for California cannabis licensees?

In Chapter 5, Section 26054.1(a) of the proposition, there is a statement that, “No licensing authority shall issue or renew a license to any person that cannot demonstrate continuous California residency from or before Janurary 1, 2015.” This appears to provide a residency requirement, but the proposition states that this only applies to “controlling persons” and interestingly, “controlling” is not defined in the initiative.

2.) Who can finance California’s marijuana businesses?

Proposition 64 does not discuss financing for business owners interested in the cannabis industry. In Washington state, residency requirements have led licensees to rely on money borrowed from friends and family. In states, like Nevada, Illinois, and Oregon, which do not hold residency requirements for cannabis business owners, the same problem does not typically exist. Thus, if California follows in the same footsteps as the three states mentioned before, investments in the marijuana industry are likely to increase exponentially.

3.) What about for-profit cannabis entities?

The MCRSA states that a licensee is an “[o]wner or owners of proposed facility, including all persons or entities having ownership interest other than a security interest, lien, or encumbrance on property that will be used by the facility.” Attorneys who have followed this initiative believe that for-profit companies will be allowed under this new law, but the question that still remains is whether current non-profit medical marijuana facilities are allowed to convert to for-profit companies.

4.) What is priority licensing?

In Article 4, Section 19321 of the MCRSA, there is a statement regarding issuing licenses — “the licensing authority shall prioritize any facility or entity that can demonstrate to the authority’s satisfaction that it was in operation and in good standing with the local jurisdiction by Janurary 1, 2016.” In Chapter 5, Section 26054.2(a) of Proposition 64, it states that, “A licensing authority shall give priority in issuing licenses under this division to applicants that can demonstrate to the authority’s satisfaction that the applicant operated in compliance with the Compassionate Use Act and its implementing laws before September 1, 2016, or currently operates in compliance with [the MCRSA].” Interestingly, there is no definition for what this priority status is or what it allows applicants seeking a cannabis license to have or do.

5.) How many licenses can one obtain?

Although the MCRSA asks that the number of licenses given be limited, there is no specific number for that limitation.

6.) What are the licensing fees?

These new laws have not defined or revealed license fee amounts. In states where recreational marijuana is legal, the license application fee is $250 or less. However, in medical marijuana states, license application fees can range from $5,000 (Nevada) to $60,000 (Florida). In Florida, this fee is non-refundable.

7.) What are the requirements for completing a license application?

Neither the MCRSA nor Proposition 64 reveal what information California will require in its licensing applications. Some of the information that is expected are (a) detailed background checks and disclosures for every financer and owner of the business, (b) start-up costs and an annual budget, © proof of security measures, (d) proof of insurance, (e) list of products to be produced and/or sold, etc.


Originally published at www.thclegalgroup.com.

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