Legally reviewed by Ron Segev, Cannabis Business Lawyer and Founding Partner of Segev, LLP.
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.
A temporary cannabis operator license allows retailers to commence commercial cannabis activity while their annual license applications are being processed. Both temporary and annual licenses are issued through the California Bureau of Cannabis Control, the agency responsible for overseeing and licensing cannabis retailers.
Temporary licenses will be valid for 120 days. The temporary license may be extended for an additional 90 days if a complete annual license application has already been submitted to the BCC.
The temporary license application requires a diagram of the retail premises as well as basic information related to you and your business. You’ll also need to indicate whether you’re applying for an adult-use or medicinal retail license; you may only apply for one license type per application. If you want to sell adult-use and medicinal cannabis, you’ll have to apply separately.
Most importantly, you’ll have to provide some form of authorization from your local jurisdiction to engage in commercial cannabis activity. This could be a business permit or simply a letter of support from the local government.
There are no application or licensing fees associated with the temporary license.
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.
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.
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
No. Alcohol and tobacco sales are unauthorized at cannabis retail stores.
Yes. A California cannabis microbusiness may engage in three or more commercial cannabis activities.
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
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.
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
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
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.
It’s important to note that
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
Once you receive your annual retail operator license and your username and password for
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.
Once you’ve set up your account in
The first way is manual reporting. This method requires logging in to your
The second way is to utilize a retail-specific cannabis dispensary software that can integrate with
In the event that you lose connectivity to
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.
Cannabis Business Lawyer & Founding Partner, Segev LLP
Ron Segev is the founding partner of Segev LLP. A practical-minded business lawyer with expertise in the cannabis industry, he represents cultivators, dispensaries, CBD extractors, oil extractors, food processors, media and marketing companies, consultancies, and other businesses in the legal cannabis market.