December 1, 2020
With the rise of the pandemic, many people have found themselves out of work and looking for a new career path. From the beginning of the shutdowns in California, the cannabis industry remained open as an essential business. With this information in your pocket, you may be considering a new career as the owner of a cannabis business in California. But, what does that entail?
Almost every business requires a business license. While most businesses may obtain this license through simple means, the cannabis businesses must go through a few hurdles first.
For starters, for a business to engage in commercial cannabis sales, the business must have a state license. States cannot issue a license if the local jurisdiction prohibits commercial cannabis activity. Therefore, all applicants for a business license are required to show proof of approval from their local jurisdiction prior to applying for a state business license.
The Bureau of Cannabis Control regulates commercial cannabis licenses in California. This includes licenses for retailers, distributors, testing labs, micro-businesses, and any cannabis events.
There is more than one type of business license available for retailers, and during the application process, the retailer must decide which is the appropriate license designation for the type of cannabis activity the retailer will be conducting. This includes choosing an A-License for adult use and/or an M-License for strictly medicinal sales. Generally, a commercial cannabis business will apply for both licenses.
Next, the retailer must decide if its business will be delivery only, or make storefront sales. In addition, the retailer must identify its business organization structure.
There are strict rules about the legal locations for cannabis storefronts. For example, the storefront may not be within a 600-foot radius of any school, day care, or youth center. Of course, there are several other requirements to obtain a license. Eskridge Law would be happy to discuss further requirements.
All applications require a $1,000 non-refundable application fee.
Similarly to retailers, distributors must also choose an A-License for adult use and/or an M-License for strictly medicinal sales. A distributor may only transport cannabis between licensed businesses, and may not engage in any other cannabis-related activities.
As a testing lab, the entity must provide a detailed account for its standard operating procedures, security procedures, and data packaging.
Similarly, micro-businesses must also choose an A-License for adult use and/or an M-License for strictly medicinal sales.
A micro-business acts as a retailer, distributor, manufacturer, and cultivator.
Micro-businesses, in addition, must submit supplemental applications for cultivation and/or if they act as a manufacturer.
To throw a temporary, or even a one-time, cannabis event, the cannabis business must obtain a cannabis event organizer license. This requires written approval from the business’s local jurisdiction.
Tracking and Reporting Requirements
Cannabis businesses in California are required to participate in the California Cannabis Track-and-Trace (“CCTT”) system, to record the inventory and distribution of cannabis products. California partnered with Franwell, Inc. in 2018 to join the Marijuana Enforcement Tracking Reporting Compliance (“METRC”). Originally a Colorado software, METRC is now the leading data collection system for the states leading the cannabis revolution.
Prior to using the CCTT METRC system, a cannabis business owner must complete state-provided training. No access to the CCTT METRC system will be granted until the applicant has completed all mandatory training.
All information received by the CCTT METRC system is confidential, pursuant to California’s Medicinal and Adult-Use Cannabis Regulation and Safety Act, section 26067(b).
Other Important Regulations
It is important to note that a storefront which sells cannabis or cannabis products may not sell alcohol or tobacco products.
Cannabis companies may not provide any free cannabis or cannabis products in giveaways. If a cannabis retailer holds a medicinal license, however, the retailer may donate cannabis or cannabis products to medicinal patients under section 5411 of the California Code of Regulations. [16 Cal.Code Regs. § 5411.]
A cannabis storefront may not display any products which are visible from outside the store.
Much like with the sale of alcohol, cannabis retailers are required to verify the age and identity of clients. Selling to minors is a major offense. Medicinal customers must be 18 years old with a valid ID and a certified medical recommendation. Adult-use/recreational customers must be 21 or older with valid ID.
Need more information?
ESKRIDGE LAW may be contacted by phone (310/303-3951), by fax (310/303-3952) or by email (firstname.lastname@example.org). Please visit our website at eskridge.hv-dev.com.
This article is based on the law as of the date posted at the top of the article. This article does not constitute the provision of legal advice, and does not by itself create an attorney-client relationship with Eskridge Law.