At long last, it's here: California's commercial cannabis market. And while opportunity abounds, so does regulation.
If you're planning to launch a cannabis retail venture 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 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 retail rules.
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 BCC has already begun issuing temporary licenses; however, the licenses are not effective until January 1, 2018.
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.
There are two separate fees associated with the annual license.
The application fee for an annual retail cannabis license is $1,000.
The licensing fee depends on the estimated value of your planned retail operation, as follows:
Over $4.5M: licensing fee = $72,000
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:
In order to ease the shift to a fully-regulated system, the state has designated January 1, 2018, through July 1, 2018, as a transition period during which licensed cannabis businesses will not be held to the full regulations. What does this mean for retailers?
During the transition period, you may:
Beginning July 1, 2018, retailers will need to be in full compliance with all regulations to avoid being penalized or forfeiting licensure.
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
The only exception applies during the transition period from January 1, 2018, to July 1, 2018. During this time, retailers who already have dry, unpackaged cannabis flower in their inventory may package the flower for sale.
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 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.
Daily purchase limits beginning January 1, 2018, 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 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.
Once you have a temporary or annual retail operator license, have created your account in Metrc and completed the required training, you may begin working with Metrc.
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 software solution that can integrate with
In the event that you lose connectivity to
The state mandates that retailers maintain accurate inventory records. Physical inventory must be reconciled with records at least once every 14 days. You must also reconcile physical inventory with the counts you’ve reported in
Cova POS software provides complete seed-to-sale tracking functionality and has a number of built-in features designed to help you automatically comply with the legal regulations in your state/province. For example, the Cova POS system automatically monitors:
To ensure that you always maintain an expedient transaction pace and keep lines moving, Cova comes 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 are synchronized with the state’s reporting system, data is backed up, and reports and inventory records are 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. At Cova, our team keeps up with industry-wide and state-specific changes so that our developers can quickly made necessary software updates—and so you never have to worry about remaining compliant with the latest regulations.
Absolutely! Cova software is built on technology that has the ability to dynamically scale with your needs. Microsoft’s Cloud Computing Platform, Azure, automatically detects instances of heavy traffic (such as sales on 4/20) and assigns further servers and computing power as necessary to compensate—allowing you to process sales without interruption, even during the busiest retail periods.
Although technically you are not mandated to comply with the new law and regulations until July, it’s a good idea to implement a compliant POS now so you don’t have to switch later.
With Cova, you can easily stay compliant with California’s inventory reconciliation requirement by printing the Inventory-on-hand report and checking it against your physical inventory. You can make any necessary adjustments directly into the POS, which will then sync the data across your network.