Getting a Cannabis License for Your Business
Cannabis License for Your Business
Obtaining a cannabis license is an important step for any business looking to operate legally within the cannabis industry. With cannabis still illegal at the federal level, navigating the licensing process can be complex. Here’s a step-by-step guide on how to get a cannabis license for your business.
Holon Law Partners has 100+ years of experience combined guiding clients through complex cases Holon Law Partners has 100+ years of experience combined guiding clients through complex cases and legal intricacies. Our approach is empathetic, customized, and client-centered with a focus on you and your unique business needs. To schedule a consultation with us, call our team at (866) 372-0726 or email us at: info@holonlaw.com.
Determine the Type of License Needed
The first step is determining what type of cannabis license your business requires.
Cultivation License
A cannabis cultivation license allows you to grow cannabis plants. Licenses may permit different size grows like small indoor grows or large commercial operations.
Manufacturing License
A cannabis manufacturing license is required for processing cannabis into products like edibles, concentrates and topicals.
Distribution License
A cannabis distribution license allows the business to transport cannabis goods between licensed facilities.
Testing License
A cannabis distribution license allows the business to transport cannabis goods between licensed facilities.
Retail License
A cannabis retail license permits a business to sell cannabis products directly to consumers. Retail licenses may be for medical-only sales or recreational sales where legal.
Research State and Local Laws
Since cannabis regulation occurs at the state level, laws differ widely across the country. Thoroughly research the laws and regulations in your state to understand what is required.
Some key questions to answer:
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Is medical and/or recreational cannabis legal in your state?
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What agency or agencies oversee cannabis licensing?
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What types of licenses are available in your jurisdiction?
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What are the fees, cannabis state application requirements, and regulations for each license type?
Also research local municipal and county level regulations, as you may need local approvals as well. Cannabis business lawyers can help navigate complex regulations.
Choose a Business Structure
Decide on the right business structure for your cannabis venture. Common options include:
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Sole proprietorship
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Partnership
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Corporation
LLCs and corporations limit personal liability and are preferred for cannabis businesses. Cannabis business attorneys can advise on optimal business structures.
Secure Funding
Obtain adequate funding since applying for a cannabis license can be an expensive process. Typical costs include permit fees, cannabis business lawyers, accountants, consultants, real estate and more.
Banks are reluctant to provide loans and credit due to cannabis’ federal illegal status. Look to private funding sources like venture capital firms focused on the cannabis industry.
Obtain Property or Location
In most states, you must first obtain property or have a physical location before applying for a cannabis business license. Work with your local marijuana business lawyer to navigate zoning laws and regulations around cannabis businesses.
Industrial zones are common locations for cannabis cultivators and manufacturers. Dispensaries can be limited to certain commercial zones.
Apply for State License
With your business entity formed, funding secured and property obtained, you can now apply for your state cannabis license. Below are some key steps in the application process:
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Submit required application documents, forms and disclosures.
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Pass background checks on all owners/investors.
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Provide detailed operations plan outlining inventory, security, transportation etc.
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Have proper security systems and surveillance cameras installed.
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Ensure facility meets all state regulatory requirements.
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Pay licensing and application fees.
Hiring consultants or working with a cannabis business attorney can help expedite state approval. The process may take 3-9 months.
Obtain Local Permitting
Most localities have additional licensing requirements for cannabis businesses separate from the state. Local governments want to control the number, location and operations of cannabis establishments in their jurisdiction.
Steps to getting local permitting may include:
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Providing notification of your intention to apply for a license. This may trigger a public comment period.
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Appearing at local council or board hearings regarding your application.
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Submitting permit applications to applicable departments like the planning office, fire department, health department, etc.
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Paying permitting fees which are often high.
Maintain Compliance
After receiving state and local licensing, your work is still not done. There are ongoing compliance requirements like: Renewing licenses annually and paying renewal fees.
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Submitting cannabis sales reports and taxes.
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Following packaging and labeling rules.
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Passing inspections of facilities, security and inventory.
Failure to maintain compliance can result in major penalties or loss of license.
Considerations for the Federal Level
While your business may be legal on a state level, federal law still considers cannabis illegal. A cannabis business lawyer can offer guidance on tax laws, banking and other federal considerations.
Frequently Asked Questions
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How much does it cost to get a cannabis license?
The costs vary greatly by state but plan on at least $10,000-$30,000 for permit fees, lawyers, consultants, etc. Operational costs like real estate and facilities can drive costs much higher.
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Can I get a cannabis license with a criminal record?
Yes, those with certain criminal convictions like drug offenses are not automatically barred in most states. However, expect greater scrutiny and background checks.
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How long does it take to get a cannabis license?
In most states you can expect 3-12 months to get both state and local licensing secured, though the process may take longer.
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Can I get a cannabis license without being a resident?
Residency is not required in most states, but applicants must form a business entity registered in the state where they are applying. Some states do give preference to residents.
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How hard is it to get approved for a cannabis license?
Approval rates vary greatly by state based on factors like the number of licenses available, competition, regulations, and more. Working with consultants and lawyers can help increase your chances.
Choosing a Top Cannabis Business Lawyer
As you can see, obtaining a cannabis license requires extensive planning, compliance and costs. But the work to secure proper licensing is critical, as it allows you to operate legally within the complex cannabis industry.
Partnering with seasoned cannabis business lawyers and advisors like Holon Law Partners can streamline the process and set your business up for success. As advocates and champions for your business, we make client-focused decisions that support your business health. Call our team today at (866) 372-0726 or email us at: info@holonlaw.com for your free consultation.
