September 20, 2016 | Written By: Meital Manzuri, Esq.

For medical cannabis business owners, knowing how to navigate the complexities of the MCRSA’s licensing restrictions will quickly become the key to maximizing business potential.  In general, licensees can only hold licenses in up to two separate license categories.[1]   But … it’s not as simple as it sounds.  The current licensing restrictions are actually quite complicated and deciphering all the “legalese” in the MCRSA is not the easiest of tasks.

If you (like most people) are unclear about how many licenses you can or cannot hold – all while staying compliant with the MCRSA – this simple “road map” will hopefully provide some clarity and serve as a good starting point for planning the future of your cannabusiness.

Cultivators (License Types 1-4)

The MCRSA treats cultivator licensees differently based upon the size of their cultivation.  For simplicity purposes, we will refer to them as large, medium and small.  Here is how the MCRSA treats each respectively:

Large-Scale Cultivators (Types 3, 3A, and 3B):

For “large-scale” cultivators, the maximum allowable size for cultivation is 1-acre outdoors (Type 3) or 22,000 sq. ft. indoors (Types 3A and 3B).[2]   The Department of Food and Agriculture will be limiting the number of Type 3 licenses[3], though it is still unclear right now what that limit will be.

Medium-Scale Cultivators (Types 2, 2A, and 2B) and Small-Scale Cultivators (Types 1, 1A, and 1B):

For “medium-scale” cultivators, the maximum allowable size for cultivation is 10,000 sq. ft. both outdoors (Type 2) and indoors (Types 2A and 2B).[6]

For “small-scale” cultivators, the maximum allowable size for cultivation is 5,000 sq. ft. indoors (Types 1A and 1B) and 5,000 sq. ft. or up to 50 noncontiguous plants outdoors (Type 1).[7]

With respect to licensing restrictions, the MCRSA treats medium and small-scale cultivator licensees identically.

NOTE: If AB 2516 passes, a new cultivator license (Type 1C) will be added specifically for “micro farmers.”  This new license – dubbed the “specialty cottage” license – would allow small-time growers to cultivate up to 2,5000 sq. ft. using mixed light, or up to 25 plants outdoors, or up to 500 sq. ft. indoors.[11]

Nurseries (Type 4):

Type 4 nurseries can only cultivate “clones, immature plants, seeds, and other agricultural products used specifically for the planting, propagation, and cultivation of medical cannabis.”[12]

Manufacturers (License Types 6 and 7)

For manufacturers, there will be two different types of licenses depending on whether you use volatile (Type 7) or non-volatile solvents (Type 6).  Like Type 3 licenses, the Department of Public Health will be limiting the number of licenses for manufacturers who use volatile solvents (Type 7) [15], but it is still unclear right now what that limit will be.

Testing Laboratories (License Type 8):

Type 8 testing laboratories cannot hold any other type of license and are prohibited from having an ownership interest in any other licensee’s entity or premises.[18]

Dispensaries (License Types 10 and 10A)

Under the MCRSA, there will be two types of licenses for dispensaries: Type 10 (general dispensary) and 10A (producing dispensary).

Type 10 licenses will be given for single, stand-alone retail dispensaries.  Type 10A licenses, on the other hand, will be given for what is called a “producing dispensary” – that is, a licensee that has no more than three individually licensed Type 10 dispensaries who wishes to hold either a cultivation or manufacturing license, or both.[19]

As you will see below, there is tons of opportunity for a Type 10A dispensary to maximize its licensing structure because Type 10A dispensaries can pretty much hold all the other types of licenses except Type 8 (laboratory testing) and Type 11 (distributor) licenses.

Distributors (License Type 11)

Type 11 distributors must hold a Type 12 transporter license, but they cannot hold any other type of license.[26]  Type 11 distributors are prohibited from having an ownership interest in any other licensee’s entity or premises, unless it is a security interest, lien or encumbrance on property that is being used by a licensee.[27]

Transporters (License Type 12)

Type 12 transporters only need to obtain licenses for each physical location where the Type 12 transporter conducts business while not in transport or where any transporting equipment (i.e., truck or car) permanently resides.[28]

If the AUMA Passes in November …

If the Adult Use of Marijuana Act (“AUMA”) passes this coming November, this “roadmap” will obviously change.  Though the AUMA provides for 19 different types of licenses – most of which mirror the 17 licenses already created by the MCRSA – there will be several key differences with respect to licensing:



[1] SB 837, § 30.

[2] SB 837, § 30.

[3] AB 243, 19332(g).

[4] SB 837, § 30.

[5] SB 837, § 30.

[6] SB 837, § 30.

[7] SB 837, § 30.

[8] SB 837, § 30.

[9] SB 837, § 30.

[10] SB 837, § 30.

[11] AB 2516, § 1.

[12] SB 837, § 6.

[13] SB 837, § 30.

[14] SB 837, §§ 30, 32.

[15] AB 243, 19332(g).

[16] SB 837, § 30.

[17] SB 837, § 30.

[18] SB 837, § 35.

[19] SB 837, § 35.

[20] SB 837, § 30.

[21] SB 837, §§ 28, 30.

[22] SB 837, §§ 28, 30.

[23] SB 837, § 30.

[24] SB 837, §§ 28, 30.

[25] SB 837, § 30.

[26] SB 837, § 30.

[27] SB 837, § 35

[28] SB 837, § 23.

[29] SB 837, § 30.

[30] SB 837, §§ 28, 30.

[31] AUMA, § 26062(d).

Disclaimer: This article has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice.

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