Applying for a New Provisional or Annual License in CA
Under CA Regulatory Rules the transfer of cannabis licenses is complicated and can be restrictive. Cannabis licenses are not transferable. Typically in order to effectuate a transfer of a license, the interested purchaser party must execute a stock purchase agreement and navigate the regulatory disclosure hurdles. This purchase will require amending the Ownership on the license and proper disclosure of all new Owners and financial interest holders of the license. These amendments to the license, informing of the change, must occur at both the local (city or county) level and with the State (DCC). The transfer of ownership is not official until it is formally approved by both local and state agencies.
An applicant for a commercial cannabis license shall disclose all “Owners” of the commercial cannabis business. The DCC defines an owner of the commercial cannabis business in TWO important ways.
Additionally, if the commercial cannabis business is owned in any capacity by an entity, the individuals who manage, direct, or control the operations of Owner entity shall also be disclosed as owners.
In addition to disclosing all Owners, a commercial cannabis license applicant must also disclose all financial interest holders.
A financial interest holder is defined by the DCC as:
Financial interest holders do NOT include any of the following:
The Social Equity Program is a major component of California Commercial Cannabis Licensing which means that many commercial cannabis businesses are required to comply with various social equity requirements in order to apply for a license.
This is a very complicated policy and varies from city to city. Most programs require a portion of ownership by an individual that satisfies various elements. Those elements include but are not limited to, a) a cannabis related arrest or conviction b) low income c) cumulative residency in an area disproportionately impacted by the war on drugs.
In California, the Department of Cannabis Control has ruled that State Provisional licensing will soon be limited to social equity applicants.
At the local level, several local jurisdictions in the State have officially approved equity ordinances in their local cannabis regulations.
Relocation of a cannabis business is complicated and the strategy for such should be measured carefully. Depending on the local government’s rules, a cannabis business may or may not be able to relocate. At the state level, relocation generally requires a completely new application.
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