As the California cannabis industry continues to evolve, so does the regulatory framework that presents potential barriers to entry. Precisely because participating businesses are so strictly regulated, many prefer purchasing an existing business as the faster entrypoint but, even then, there are seemingly endless factors to consider.
For example, even if you purchase an existing cannabis business in California that has a license in good standing, cannabis licenses are not transferable because they are attached to the license-holding individual or entity and its respective owners. Accordingly, unless the ownership change transaction is properly structured, purchasers of cannabis businesses must get their own licenses from the state or wait for approval to continue operations.
Well-drafted contracts provide a level of certainty to operators that allow them to plan and grow their business while limiting the down time. One popular contract in the cannabis industry is the management agreement, which gives an unlicensed consulting company authority to manage the operations of a licensed entity. This agreement must be carefully drafted to adequately protect the rights and interests of both the licensed entity and the third party.
At Manzuri Law, our California cannabis business attorneys have helped procure and/or maintain over 300 local and state licenses for clients and effectuated hundreds of ownership change requests with various cities and the state. We can help pursue the same approval for your burgeoning cannabis company, starting with an initial phone call today.
Understanding the California cannabis regulatory framework is the biggest challenge most people face when they pursue a cannabis license.
First, prospective cannabis business owners in California must obtain a license from their city and the state. Once obtained, these licenses are non transferable and thus the license itself cannot be “bought”
Another challenge is understanding that the state will not issue a cannabis license to any applicant that does not have proof of local approval. Therefore, getting a license starts with finding a city, or county, if located in an unincorporated area, that has approved commercial cannabis activity within their jurisdiction.
For example, the city of Los Angeles approved commercial cannabis activity within city limits, but the county of Los Angeles currently prohibits commercial cannabis activity in its unincorporated areas, although that is expected to change soon, too. Like most cannabis licensing and compliance factors, their existing and future statuses are fluid, which is why it is so important to partner with a legal expert who can ensure you are continuously operating on the right side of the industry.
Once you find a local jurisdiction that allows commercial cannabis business activity and is accepting commercial cannabis license applications, you can apply for licensure/approval with the local authority and from the state. Some local jurisdictions require the applicant to obtain state licensure within a certain period after obtaining local approval/licensure, so submitting both requests simultaneously can be strategically advantageous.
But first, you must be clear about which type of California cannabis license you would like to obtain.
The different types of California cannabis business licenses are issued by the Department of Cannabis Control (DCC) and must be renewed annually.
They include licenses for:
The DCC reviews license applications in the order in which they are received, which means the application review process takes time.
The more complete your information, the faster the review process will be. This is where our skilled California cannabis lawyers can help expedite the process. We will ensure your business meets all local requirements of the city/county where it will be located, create the proper business structure for your start-up, review your business owners’ criminal history, if any, just as the DCC will, complete the application, and submit all the supporting documentation necessary to get your licensing request right the first time.
When retained as your California cannabis attorney of record, will provide the ongoing regulatory knowledge you need to remain compliant through the license renewal date and beyond. We are more than cannabis lawyers. We are industry advocates. We believe supplying our clients with the proper legal resources allows them to make informed decisions about their cannabis companies, so they can flourish.
There are two different California cannabis licensing fees. There is an application fee, which is the fee paid at the time of submitting the application, which is paid to the DCC regulatory body to review and process the application.
Once the application is approved, there is the actual license fee, which must be paid annually to ensure it is renewed and valid. The state license fee varies depending on the type of license you are applying for as well.
If you were negatively affected by the criminalization of cannabis, you can apply to have your license fee waived through the DCC’s Social Equity Program.
In addition to state fees, each city or county will have its own set of application and licensing fees.
Contact one of our California cannabis law firm specialists today by phone at (310) 912-2960 or online to discuss your industry licensing needs, so we can help you properly and compliantly start your business without delay.