CALIFORNIA DISPENSARY LAWS

California Dispensary Laws and Regulations for Retailers

PUBLISHED December 18, 2017 - LAST UPDATED August 20, 2019

If you're planning to open a cannabis dispensary in the Golden State, or if you're a current medical dispensary owner transitioning to a new framework, it's important to understand that successfully applying for a cannabis retail license is only half the battle.

To set yourself up for long-term success, you'll need to know exactly what's required in order to stay compliant with state law. Being found out of compliance - even for a seemingly small infraction - can result in losing the license you worked so hard to get.

Below are answers to frequently asked questions regarding the requirements and procedures both for obtaining a license to operate and remaining compliant with California's cannabis dispensary laws.

 

Related resources:

 Oklahoma Dispensary Laws / Washington Dispensary Laws / Colorado Dispensary Laws Missouri Dispensary Laws / Michigan Dispensary Laws / Illinois Dispensary Laws / Nevada Dispensary Laws / Alaska Dispensary Laws / Montana Dispensary Laws

ANNUAL LICENSING

Keeping your doors open should be at the top of your to-do list. Find how to apply, get approved and more here.

How do I apply for an annual cannabis retailer license?

To apply for an annual license, you must complete and submit the California cannabis retailer license application or apply through the Bureau’s online application system.

How Much Does an Annual Dispensary License Cost in California?

The cost of a cannabis dispensary license in California includes an application fee of $1,000, plus a licensing fee that’s based on the projected value of your operation.

Up to $750,000, the licensing fee is $4,000; between $750,000- $2.5 million, the fee is $20,000; between $2.5 million and $7.5 million, the fee is $64,000; and for more than $7.5 million, the fee is $120,000.

What are the requirements for an annual license?

 Cannabis retailer application requirements include:

  • Business information including formation documents, financials, and plans for operating procedures
  • Detailed information regarding the physical retail location
  • A $5,000 bond payable to the State of California

 

What license type do I need to serve adult-use customers and medical patients?

Depending on the type of operation you plan to run, you’ll apply for an adult-use (“A-license”) or medicinal (“M-license”) cannabis retail license. If you want to sell both medicinal and adult-use cannabis from the same location, you’ll have to successfully—and separately—apply for both license types.

I already run a dispensary in California; will I be able to get a retail license under the new rules?

Established medicinal dispensaries must go through the same application process as other applicants; however, priority licensing will be available to those who can demonstrate that they were operating in compliance with the Compassionate Use Act of 1996 prior to September 1, 2016.



Do I need permission from my local jurisdiction to operate?

Yes. You must include a license, permit, or other form of approval from your local jurisdiction in order to be eligible for a temporary or annual license.



CANNABIS EVENT LICENSING

Fact: the Golden State will be the leader in cannabis events. Here's what you need to throw a 420-friendly event at your operation legally.

Do I need a license to throw events involving cannabis?

Yes. In order to apply for a temporary (one-time) cannabis event license, you must apply for and obtain a cannabis event organizer license.

Do I need a separate license for the premises for a cannabis event?

The temporary cannabis event license requires written approval from the local jurisdiction authorizing onsite cannabis sales and consumption, and only licensed retailers may conduct cannabis sales at the event.

Can I get a cannabis event license if I hold a retailer license?

Yes, as long as you also successfully apply for a cannabis event organizer license.

OPERATIONS

A lot goes into owning a cannabis dispensary. Let’s review the basics.

What security measures am I required to take?

Required security measures for retailers include:

  • ID badges for all employees
  • Limited-access areas within the facility
  • Security personnel
  • 24-hour video surveillance of all areas containing cannabis products and all point of sale areas
  • Alarm systems
  • Commercial-grade locks
  • Secure storage of all cannabis products



How can I ensure that I remain compliant?

By investing in a cannabis-specific POS system, you can automate many of the most important compliance aspects, including state track and trace reporting requirements. Learn more in the Point of Sales section below.



Can I package and label cannabis on the retail premises?

 No. All cannabis products must be packaged and labeled prior to arriving to the retail facility.



Can I sell alcohol or tobacco at my cannabis retail store?

No. Alcohol and tobacco sales are unauthorized at cannabis retail stores.

Is there flexibility for vertically integrated businesses?

Yes. A California cannabis microbusiness may engage in three or more commercial cannabis activities.

Are product giveaways and gifting allowed?

Cannabis retailers are NOT permitted to provide free cannabis products.

However, there is one exception for retailers who hold a medicinal retail license and want to donate cannabis products to qualified medicinal patients who have difficulty accessing cannabis. The criteria for this exception is spelled out in §5411 of the California cannabis regulations.

What are the operating hours for a retail shop?

Retail establishments may conduct business between 6 a.m. and 10:00 p.m. Pacific Time.

Can I have public-facing displays on my storefront?

No. Cannabis goods may only be displayed in the retail area and may not be visible from outside the store.



How long can I continue to operate under the collective model?

The California collective model will continue until January 9, 2019. However, if your collective conducts any cannabis sales for profit, you can be held liable by state and local authorities.

How old do you have to be to work at a dispensary in California?

The minimum age you need to be to work in a cannabis dispensary in California is 21 years of age.

CALIFORNIA CANNABIS LAWS & REGULATIONS

Stay on the right side of the law and make compliance your first order of business.

What are the purchasing limits in California?

Daily purchase limits in California are as follows:

  • Adult use:
      • No more than 28.5 grams (one ounce) of non-concentrated cannabis per day
      • No more than 8 grams of concentrated cannabis per day
      • No more than 6 immature cannabis plants per day
    • Medicinal use:
      • No more than 8 ounces of medicinal cannabis per day



What are my responsibilities with regard to customer verification?

 

Retailers are responsible for verifying the age and identity of every customer. Selling to minors is a major offense, and law enforcement agencies are authorized to use decoys to catch offending retailers.

Adult-use customers must be 21 or older with valid identification; medicinal customers must be 18 or older with valid ID and a certified physician’s recommendation.



What is track and trace reporting and what is required of me as a retailer?

One of the most significant aspects of the regulated cannabis market is track and trace reporting. Also referred to as “seed to sale,” track and trace reporting is the means by which the state can monitor and trace every single cannabis plant along its entire life cycle—from seed to final consumer sale.

California has chosen Metrc as its official track and trace system. Retailers are required to submit daily reports with specified data from every commercial cannabis activity—including every sale, receipt, return, and disposal of cannabis products—by 11:59 p.m. of the day on which it occurred.

Am I able to manufacture edible cannabis products on the premises for consumption on said premises, e.g. a cannabis-infused food restaurant?

The laws surrounding cannabis consumption are still murky. Currently, you may not consume cannabis in public places or within 1,000 feet of any school, daycare center, or youth center while children are present. Under the law, you may consume cannabis on private property.
 
Under Chapter 4, § 5500 of California’s cannabis statute, a licensed microbusiness may perform all cultivation, manufacturing, distribution, and retail activities on the same licensed premises. However, the law does not specifically state that on-premise consumption is allowed.
 
The statute does directly address on-site consumption in Chapter 5, Cannabis Events. Under § 5603, Temporary Cannabis Event Consumption, cannabis consumption is allowed at an authorized temporary cannabis event; however, a temporary cannabis event license can only be issued to a person who holds a temporary cannabis event organizer license, which you must apply for through the Bureau of Cannabis Control. A temporary cannabis event license will not be issued for more than four days.
 
Ultimately, your local government (city or county) has to approve any cannabis venture you wish to undertake, so it’s best to start at the local level and see what your jurisdiction’s ordinances allow.  

METRC

Reporting to your governing body is essential to running a legal (and successful) cannabis retail dispensary. Get the facts here.

What is Metrc?

Metrc is a cannabis track and trace reporting system that allows state governments to monitor commercial cannabis activity. Metrc, which stands for Marijuana Enforcement Tracking Reporting Compliance, was originally developed by software manufacturer Franwell for the state of Colorado; it is now used by the majority of states with adult-use cannabis markets.

It’s important to note that Metrc is simply a reporting tool. It is not a robust inventory management platform or Point of Sale (POS) system. As a dispensary owner, it’s in your best interest to find an inventory management and POS system that integrates with Metrc to make your life easier.

Do California cannabis stores have to use CCTT-Metrc?

Yes, the state makes it very clear that any California cannabis retailer with an annual license is required to use the CCTT-Metrc system. They are welcome to use other technology providers in addition to Metrc, but stores must report their data to the state through Metrc.

When can I start working with Metrc?

The state suggests that potential licensees assign a designated Metrc account manager to complete Metrc training during the license application process. If this training isn’t complete during licensing, it is required before you can start using the Metrc system.

Once you receive your annual retail operator license and your username and password for Metrc (this is either emailed or mailed) you may begin using the system. The first step is ordering CCTT-Metrc UID tags for all of your current inventory (the cost of these tags are baked into the annual license fee).

 



Am I required to report track and trace data in Metrc if I have a temporary license?

No, temporary licensees are not required to report in Metrc. However, temporary licensees are required to keep records of all track and trace information from the time they begin retail operations. Once an annual license has been approved, you must backlog all the track and trace information that you’ve recorded and begin daily reporting in Metrc.

How do I report in Metrc?

Once you’ve set up your account in Metrc, you’ll be able to enter your daily track and trace reports. There are two ways to do this.

The first way is manual reporting. This method requires logging in to your Metrc account at the end of every single business day and manually entering all the data from every transaction and other activity that occurred. Along with being time-consuming and cumbersome, manual reporting puts you at great risk of mistakenly recording incorrect information—which can lead to a serious compliance issue.

The second way is to utilize a retail-specific cannabis dispensary software that can integrate with Metrc and automatically sync reportable data from your store’s transactions and activities as they occur in real time.

How do I report if the system is down or the internet is out?

In the event that you lose connectivity to Metrc or experience an internet outage that prevents you from daily reporting, you must record all reportable information and upload it to the system within three days of restored connectivity.



POINT OF SALE

You definitely need a cannabis-specific POS at your dispensary. Find the most frequently asked tech questions here.

How do I manage state compliance using my point-of-sale?

Every retail cannabis location will need a dispensary POS software that provides complete seed-to-sale tracking functionality. The best POS options will have a number of built-in features designed to help you automatically comply with the legal regulations in your state/province. Here are a few features any POS you evaluate should include:

  • Purchase Limits – The POS system should automatically calculate the correct THC amounts for all products, including concentrates and edibles. By relieving your staff of this complex task, the POS prevents mistakes in calculation and allows your budtenders to focus on customer service—and not on mathematical conversions. The system should also enforce purchase limits by alerting staff when a limit has been reached and preventing budtenders from executing a sale that would place you over the legal limit.
  • Hours of Operation – The system should be easily configured to comply with local laws. Once the operational hours are set up, the POS should not allow sales to be executed outside the legal hours of operation, preventing potential violations before they occur.
  • Customer Identification Requirements – Customer IDs need to be easily scanned and recorded, ensuring your staff double checks IDs and virtually eliminating potential sales to minors or other individuals lacking the requisite documentation.
  • Accurate Real-Time Reporting – Operational visibility is also very important for your team. Worthwhile POS software will generate management reports in real time. These reports should be easily distributed across the organization to ensure the correct data is in the hands of the correct personnel.
  • Fully Compliant Product Labelling & ReceiptsComplete customization of all printed materials, product labels, and receipts, enabling you to comply with all local regulations related to labeling and packaging quickly and easily.



What happens if my internet connection goes down and my dispensary is slammed with customers?

To ensure that you always maintain an expedient transaction pace and keep lines moving, the POS system you choose should come with a built-in offline sales processing mode that enables continuous access to critical functions even when your Wi-Fi or internet connection is unavailable. Once connectivity is restored, all transactions performed in offline mode should be synchronized with the state’s reporting system, the data should be backed up, and reports and inventory records should be adjusted accordingly.

 

How do I make sure I submit timely and accurate taxes each month to the government?

By choosing a POS system with built-in tax reporting functionality, you’ll always know exactly how much tax you need to pay.



Why is it important to have a marijuana-specific POS vs. a retail or pharmacy POS?

There are several reasons why a cannabis-specific POS is ideal for your operation—but the most important one is compliance management. Because traditional retail operations and pharmacies don’t have the same government-mandated compliance requirements, their POS systems aren’t built to manage the complexities involved with track and trace reporting and the other aspects of state compliance.

What happens if the state regulations change?

With the industry still in its infancy, regulations are bound to change. Your technology partner should keep up with industry-wide and state-specific changes to quickly make any necessary software updates.

Is Cova integrated with Metrc?

Yes, Cova now integrates with CCTT-Metrc in California! Once our POS is up and running in your retail location, all inventory should be tagged with Metrc tags, allowing Cova to report your sales to the state for you.

 

How do I do the 14-day inventory reconciliation?

California’s inventory reconciliation requirement will be an ongoing task, required every 14 days. Your POS system should allow you to print a full Inventory-on-hand report. Employees can then check it against your physical inventory with an inventory count. Then make any necessary adjustments directly into your inventory management system. If you have a quality technology partner, it will then sync the data across your network.

Lauren Estevez

Attorney & Founder, LME Law

Legally reviewed by

Lauren Estevez

Lauren is an attorney and nationally-recognized subject matter expert in Cannabis and CBD Law. Based in Los Angeles, Lauren advises licensed cannabis industry brands, operators, and ancillary businesses on legal strategy, regulatory compliance, and transactional matters. Her work has been featured on CNBC, Bloomberg Law, and at SXSW. Lauren has been practicing in the cannabis space since shortly after Proposition 64 was passed in California, and has completed over 100 cannabis projects with U.S. and international clients. In addition to cannabis, Lauren also advises clients on CBD and The Farm Bill. In 2019, The National Law Journal recognized Lauren as a Cannabis Law Trailblazer.

View Lauren's full bio

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