Reporting to your governing body is essential to running a legal (and successful) cannabis retail dispensary. Get the facts here.
PUBLISHED DECEMBER 18, 2017 - LAST UPDATED JANUARY 25, 2021
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. Legal cannabis sales in California hit $4.4 billion in 2020, up 57% from the year prior, as per MJBizDaily, and the largest marijuana market in the US is projected to record sales of over $6 billion in 2021.
To set yourself up for long-term success in this growing but competitive industry, you'll need to know exactly what's required in order to stay compliant with state law. Being found in violation of any regulations - 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. While cannabis dispensary laws in California are relatively well-established, changes still occur. We’ll keep this page updated with any new developments as they arise. This page is informational only and should not be considered legal advice.
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Reporting to your governing body is essential to running a legal (and successful) cannabis retail dispensary. Get the facts here.
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.
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.
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).
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.
You can learn more from this blog about full Metrc integration, real-time reporting, manifest imports, and automatic inventory adjustments.
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.
Keeping your doors open should be at the top of your to-do list. Find how to apply, get approved and more here.
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.
Cannabis retailer application requirements include:
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.
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.
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.
A non-storefront retailer in California sells cannabis products exclusively through delivery. Although a non-storefront retailer must have a licensed premises to securely store cannabis inventory, the premises is not open to the public.
Fees for non-storefront retailers are structured the same way as storefront retailers, including a $1,000 application fee plus a licensing fee based on the projected value of the operation.
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.
Yes. In order to apply for a temporary (one-time) cannabis event license, you must apply for and obtain a cannabis event organizer license.
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.
Yes, as long as you also successfully apply for a cannabis event organizer license.
A lot goes into owning a cannabis dispensary. Let’s review the basics.
Required security measures for retailers include:
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.
No. All cannabis products must be packaged and labeled prior to arriving to the retail facility.
No. Alcohol and tobacco sales are unauthorized at cannabis retail stores.
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.
Retail establishments may conduct business between 6 a.m. and 10:00 p.m. Pacific Time.
No. Cannabis goods may only be displayed in the retail area and may not be visible from outside the store.
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.
The minimum age you need to be to work in a cannabis dispensary in California is 21 years of age.
Licensed non-storefront retailers may conduct sales and deliveries between 6 a.m. and 10 p.m. Pacific Time.
Just like storefront customers, delivery customers must provide valid ID before purchasing cannabis products. Customers must be aged 21 or older to purchase adult-use cannabis, or 18 or older with a valid physician’s recommendation to purchase medical cannabis.
More information on non-storefront cannabis retail can be found here.
Stay on the right side of the law and make compliance your first order of business.
Daily purchase limits in California are as follows:
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.
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.
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.
You definitely need a cannabis-specific POS at your dispensary. Find the most frequently asked tech questions here.
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:
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.
By choosing a POS system with built-in tax reporting functionality, you’ll always know exactly how much tax you need to pay.
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.
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.
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.
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.
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