California Marijuana Laws
Thinking of entering the legal cannabis business in California? WeedUpdate has gone through the California Marijuana Laws and regulations for shops, distributors and testers, and has summarized the most important parts. However, WeedUpdate will not be responsible for any information that has been omitted or left out. The information set forth below is to help you in assessing the business viability of operating a legal cannabis business in California. The Bureau of Cannabis Control remains your official source of regulations pertaining to adult and medicinal cannabis operations.
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With all that said, the California Bureau of Cannabis Control has released its proposed regulations for temporary licenses, annual licenses, testing laboratories, distributors, transportation licensees, retailers and event organizers. One thing is for sure, the bureau has thought of everything. The rules that were released regulate everything cannabis licensed businesses plan on doing. So, let’s get the most important information out of the way, the costs of applying.
|License Type||Fee per Application ($)|
|All Annual Licenses||$1,000|
|Cannabis Event Organizer Licenses||$1,000|
|Temporary Cannabis Event Licenses||$1,000|
|Physical Modification of Premises||$500|
Once approved for a license, businesses must also pay additional license fee based on projected revenues. Just bear-in-mind that these Fees are non-refundable, and they are in addition to the state’s 15% excise tax and any other additional local jurisdiction tax that is can run from 7-9% extra. Below are the annual—and more complicated—license fees:
|License Type||Operations ($ Million Max. Per License)||Fee Per License ($)|
|Testing Laboratory||Up to 50 Million||$20,000|
|50 Million to 500 Million||$45,000|
|More than 500 Million||$90,000|
|Distributor||Up to 2 Million||$1,200|
|2 Million to 8 Million||$5,000|
|8 Million to 80 Million||$36,000|
|More than 80 Million||$125,000|
|Distributor Transport Only||Up to 2 Million||$500|
|Self-Distribution||2 Million to 8 Million||$2,000|
|Distributor Transport Only||Up to 2 Million||$800|
|2 Million to 8 Million||$2,500|
|Retailer||Up to 0.5 Million||$4,000|
|.5 Million to 1.5 Million||$12,000|
|1.5 Million to 4.5 Million||$36,000|
|More than 4.5 Million||$72,000|
|Microbusiness||Up to 0.5 Million||$5,000|
|0.5 Million to 1.5 Million||$15,000|
|1.5 Million to 4.5 Million||$42,000|
|More than 4.5 Million||$120,000|
In Addition to the fees above (if applicable), a cannabis event organizer must pay the following fees:
|License Type||Planned Events||Fee Per License ($)|
|Event Organizer||1-10 Events Annually||$5,000|
|More than 10 Events Annually||$10,000|
The Bureau is allowing applications for temporary licenses (120 days), but it does not obligate them to give you a non-temporary license. The application process is the usual bureaucratic procedure of submitting paperwork, but there are some unique caveats.
Before applying for a temporary license, you must have a detailed diagram of the space being rented and an approval from the land owner that the premises will be operating a commercial cannabis license. The temporary license can be extended for another 90 days if an application for annual license has been submitted.
The annual license requires a bit more information, which are mostly financial. Other than the usual company papers of ownership and organizational structure, the state is requiring all bank accounts with balances to be listed in the application. They also want a list of loans, investments, and gifts made into the company. Additionally, every owner must submit a plethora of documents, which include the usual governmental identification documents. However, owners with criminal records, convictions, and incarcerations must submit a detailed account of each—including evidence of rehabilitation –if applicable.
Applicants must also supply a detailed diagram of the premises with approval from the land owner that they know a commercial cannabis business will be occupying the space. A bond is required, but it is surprisingly low and set at $5,000. In comparison, a bond for an auto-dealer is $50,000 per the CA DMV requirements.
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Operational Requirements for Annual Licensees
The applicant must provide proof that they have a plan for the transportation and storing of cannabis. Moreover, the applicant must provide their plans for the disposal of deteriorated inventory, plus packaging, testing, and security procedures.
The bureau is guaranteeing itself full access to businesses with a Limited Waiver of Sovereign Immunity. It is requiring that all individuals that may fall within the scope of sovereign immunity must wave that right. That means that any federal entity, tribal entity or foreign entity must wave any immunity and grant the bureau full cooperation under California law. This includes access to the premises, all types of reports, and all records of commercial activity. They are also not allowing any individual employed by the state in any capacity to own a license.
Of course, being in California, businesses must provide proof of complying with the California Environmental Quality Act (CEQA). However, if the local jurisdiction does not have such permits on the books dealing with commercial cannabis, then the business is responsible for preparing documentation to comply with the CEQA.
Reasons for being Denied a License
The obvious reason for being denied a license is an incomplete application, but they will work with applicants and give them time to fix issues. The biggest reason for being denied a license is an owner or owners that have a criminal record with no evidence of rehabilitation. Rehabilitation can be letters from peers, colleagues and employers. The bureau will look at the severity of the crimes and the time passed since it/they occurred.
Other reasons for being denied a license is too many cannabis businesses concentrated in one area. However, this does not apply to applying for temporary licenses.
Locations of Licensees
Under the California Marijuana Laws, cannabis businesses cannot be within 600 feet of any grade school, kindergarten or day-care. Also, businesses cannot force customers to walk through stores that sell tobacco and/or alcohol before entering the premises.
Under California Marijuana laws, advertisements of any kind must be placed in advertising mediums that are expected to have an audience of 21 and older with a probability of 71.6 percent. This data must be available for the bureau at the time that they request it.
The bureau requires that customers are always accompanied by employees of the licensee. Additionally, all employees must wear laminated badges with full-face colored photographs. Video surveillance is also required. The bureau details where the cameras are to be placed and are requiring the 24 hour recording and 90 days storage with time/date stamps. Security personnel are to be hired or contracted, including installing an alarm system by a licensed alarm company that is also responsible for monitoring and responding.
Tracking and Tracing Requirements
The bureau is requiring that licensees design, plan and implement a tracking and tracing system. This system will track the movements of all operational cannabis activities. This includes cultivation, testing, packaging, transportation, sales, and destruction of cannabis material. IBM has proposed a blockchain system to the Canadian government for such tracking when they legalize cannabis nationally. This rigorous requirement of tracking and tracing does not apply to temporary licenses.
Transportation Requirements (Between Licensees)
Under California Marijuana Laws, transportation can only be done by licensees that have a distributor license. Furthermore, it must be done by motor vehicles only driven by a human-being. That means no drones or unmanned vehicles, and definitely no aircrafts or bikes (or other human powered vehicle). The bureau is requiring that the cannabis being transported to be locked and not visible from the outside.
California Marijuana Laws require that the hours of operation can only be between 6:00 a.m. and 10:00 p.m. Licensees must set up a limited-access areas for employees and vendors, which will not be used by retail individuals. Before individuals are allowed access into the retail area, their identification must be verified to prove they are 21 or older for adult purchases, and 18 or older for medicinal purposes.
Cannabis goods are to be displayed, but not visible from the outside. Goods can be removed from packaging for inspection by the customer, but they cannot be consumed nor sold in that condition. Plants and seeds can be sold on the premises as long as they are not flowering.
Daily Limits for Adult Customers
Licensees cannot sell more than 28.5 grams of non-concentrated cannabis to a single customer in one day. They may not also sell more than 8 grams of concentrated cannabis to a single customer in one day. Finally, licensees are not allowed to sell more than 6 plants to a single customer in one day.
Non-Storefront Retailer Requirements
The bureau is allowing the licensing of retailers that are exclusively conduction business for delivery. However, their premises must always be closed to the public. They must also adhere to all requirements, except for the public access requirements.
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Deliveries must be conducted by an employee of the licensee, and must be done in person. The physical address must be in California, and cannot be an address located on public land or leased by a public agency.
Only motor vehicles driven by a human must be used. The vehicle must have a GPS device for tracking purposes. Also, not more than $3,000 worth of cannabis can be carried at any time. Drivers must only drive from the retailer to customers, and from a customer to another customer. No deviation is allowed.
The rest of the requirements are extremely detailed for cultivation, manufacturing and testing. As mentioned before, everything is regulated down to every minute detail. We hope, however, that the above gives you an idea of what the California Marijuana Laws are. Because if you know what is expected, then you can calculate your costs so that you are not going into this business blindly.
In addition to the costs of licensing, fees, and taxes, there are operational costs that the bureau requires that the licensee takes on. The information here should help in preparing the business plan and projections. Again, this a summary of the already available regulations.
The bureau has the official and last say in any regulations regarding California Marijuana Laws, so WeedUpdate cannot be held responsible for any information that has been left out or not mentioned.