On November 8, 2016, voters in the state of California passed the Adult Use of Marijuana Act (Proposition 64), leading to the legal use of recreational marijuana throughout the state. On January 1, 2018, the law went into effect and the country’s largest recreational cannabis market opened its doors, allowing California state residents to legally buy marijuana without a doctor’s approval.
California is now among 8 states allowing legal medicinal and recreational use, and 7 more medicinal only states are looking to push recreational use legislation in 2018. Although this a milestone for California, its businesses and its residents, the state has implemented strict licensing laws to avoid the vertical integration by major corporations, in turn preventing anyone from cornering the market. California’s cannabis program, both adult use and medicinal, is entirely outlined in the emergency regulations that were officially released by the California Bureau of Cannabis Control (BCC) on November 29, 2017.
Getting Started
It is estimated that there will be 20,000+ dispensaries in California by the end of 2018, and Green Wave Advisors projects California should reach $5.3 billion in retail sales its first year, doubling that of medical cannabis sales. Needless to say, things are looking up for the California economy and business looking to take advantage of this blossoming industry. But how does this all work?
For starters, the California Bureau of Cannabis Control (BCC) is responsible for regulating commercial cannabis licenses for retailers, distributors, microbusinesses, testing laboratories, and temporary cannabis events. The California Department of Food and Agriculture is in charge of cultivation and the California Department of Public Health is in charge of manufacturing. Prior approval by local city or county governments is required for all state-licensed facilities.
A Cannabis Advisory Committee was initiated under the BCC by the Department of Consumer Affairs to advise the BCC and these other licensing authorities. This committee will assist in the development of regulations that help protect public health and safety and reduce the illegal market for cannabis throughout the state.
Cannabis businesses will only be granted a temporary license that allows a business to engage in commercial cannabis activity for a period of 120 days. In order to obtain a temporary license, a business must have valid license, permit, or other authorization issued by the local jurisdiction in which the business intends to operate. The California See to Sale Traceability Knowledge Center has provides a detailed breakdown of all licensing information, but for source information please visit the BCC.
Understanding California Cannabis License Types
There’s a lot of information about how to get licensed and the fees associated, which this article will get into later, but it’s very important to understand the license types before jumping in head first. Here is a full list and breakdown of all California Cannabis License Types:
- Type 1 – Cultivation: Specialty outdoor (small)
- For outdoor cultivation using no artificial lighting of less than or equal to 5,000 square feet of total canopy size on one premises, or up to 50 mature plants on noncontiguous plots.
- Type 1A – Cultivation: Specialty indoor (small)
- For indoor cultivation using exclusively artificial lighting of between 501 and 5,000 square feet of total canopy size on one premises.
- Type 1B – Cultivation: Specialty mixed-light (small)
- For cultivation using a combination of natural and supplemental artificial lighting at a maximum threshold to be determined by the licensing authority, of between 2,501 and 5,000 square feet of total canopy size on one premises.
- Type 1C – Cultivation: Specialty cottage (small)
- For cultivation using a combination of natural and supplemental artificial lighting at a maximum threshold to 96 Ch. 27 — 42 — be determined by the licensing authority, of 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, on one premises.
- Type 2 – Cultivation: Outdoor (small)
- For outdoor cultivation using no artificial lighting between 5,001 and 10,000 square feet, inclusive, of total canopy size on one premises.
- Type 2A – Cultivation: Indoor (small)
- For indoor cultivation using exclusively artificial lighting between 5,001 and 10,000 square feet, inclusive, of total canopy size on one premises.
- Type 2B – Cultivation: Mixed-light (small)
- For cultivation using a combination of natural and supplemental artificial lighting at a maximum threshold to be determined by the licensing authority, between 5,001 and 10,000 square feet, inclusive, of total canopy size on one premises.
- Type 3 – Cultivation: Outdoor (medium)
- For outdoor cultivation using no artificial lighting from 10,001 square feet to one acre, inclusive, of total canopy size on one premises. The Department of Food and Agriculture shall limit the number of licenses allowed of this type.
- Type 3A – Cultivation: Indoor (medium)
- For indoor cultivation using exclusively artificial lighting between 10,001 and 22,000 square feet, inclusive, of total canopy size on one premises. The Department of Food and Agriculture shall limit the number of licenses allowed of this type.
- Type 3B – Cultivation: Mixed-light (medium)
- For cultivation using a combination of natural and supplemental artificial lighting at a maximum threshold to be determined by the licensing authority, between 10,001 and 22,000 square feet, inclusive, of total canopy size on one premises. The Department of Food and Agriculture shall limit the number of licenses allowed of this type.
- Type 4 – Nursery
- For cultivation of cannabis solely as a nursery.
- Type 5 – Cultivation: Outdoor (large)
- For outdoor cultivation using no artificial lighting greater than one acre, inclusive, of total canopy size on one premises.
- Type 5A – Cultivation: Indoor (large)
- For indoor cultivation using exclusively artificial lighting greater than 22,000 square feet, inclusive, of total canopy size on one premises.
- Type 5B – Cultivation: Mixed-light (large)
- For cultivation using a combination of natural and supplemental artificial lighting at a maximum threshold to be determined by the licensing authority, greater than 22,000 square feet, inclusive, of total canopy size on one premises. (c) No Type 5, Type 5A, or Type 5B cultivation licenses may be issued before January 1, 2023. (d) Commencing on January 1, 2023, a Type 5, Type 5A, or Type 5B licensee may apply for and hold a Type 6 or Type 7 license and apply for and hold a Type 10 license. A Type 5, Type 5A, or Type 5B licensee shall not be eligible to apply for or hold a Type 8, Type 11, or Type 12 license.
- Type 6 – Manufacturing Level 1
- For sites that manufacture cannabis products using nonvolatile solvents, or no solvents. A Manufacturing Level 1 M-Type 6 licensee shall only manufacture cannabis products for sale by a retailer with an M-Type 10 license. (2)
- Type 7 – Manufacturing Level 2
- For sites that manufacture cannabis products using volatile solvents. A Manufacturing Level 2 M-Type 7 licensee shall only manufacture cannabis products for sale by a retailer with an M-Type 10 license.
- Type 8 Testing Laboratory
- (ONLY LICENSE WE DO NOT HELP OBTAIN)
- Type 10 – Retailer
- For the retail sale and delivery of cannabis or cannabis products to customers. A retailer shall have a licensed premises which is a physical location from which commercial cannabis activities are conducted. A retailer’s premises may be closed to the public. A retailer may conduct sales exclusively by delivery.
- Type 11 – Distributor
- For the distribution of cannabis and cannabis products. A distributor licensee shall be bonded and insured at a minimum level established by the licensing authority.
- Type 12 – Microbusiness
- For the cultivation of cannabis on an area less than 10,000 square feet and to act as a licensed distributor, Level 1 manufacturer, and retailer under this division, provided such licensee can demonstrate compliance with all requirements imposed by this division on licensed cultivators, distributors, Level 1 manufacturers, and retailers to the extent the licensee engages in such activities. Microbusiness licenses that authorize cultivation of cannabis shall include the license conditions described in subdivision (b) of Section 26060.1.
Getting Licensed
Now that there’s a better understanding of who dictates cannabis licensing in the state of California and the different types of licenses, how does a business go about getting their license? The best place to start is of course the Bureau of Cannabis Control. For more information about the latest laws and industry news throughout California, here are some helpful links:
California is the world’s sixth largest economy housing over 39 million residents and hosting over 250 million tourists per year. Whether its cultivation, manufacturing, distribution or retail, the state California is primed for businesses looking to open their doors in the cannabis space, so now is the time to take advantage.