Navigating California’s Commercial Cannabis License Framework

Last Updated on Dec 5, 2017

Following the approval of Proposition 64 (in November, 2016) legalizing the adult use of marijuana, lawmakers in California have approved a regulatory foundation for the cannabis industry within their state. The statewide regulatory framework, known as the Medical and Adult Use Cannabis Regulation and Safety Act (MAUCRSA), establishes 20 cannabis business license types available for cultivation, manufacture, distribution, and transportation of cannabis.

The state will begin issuing commercial cannabis licenses for businesses in 2018. While there are still some unknowns, we recommend that business owners become familiar with the various commercial cannabis license types and associated regulations as they take shape.

A commercial cannabis license in California will fall into one of 3 main catagories:

The Department of Food and Agriculture will review applications for cannabis cultivation licenses. The department will issue 17 types of licenses ranging from Specialty Cottage Outdoor (up to 25 plants) to Medium Indoor (up to 22,000 square feet of canopy) to Processor only. More information about each specific commercial cultivation license is available , although regulations have not yet been published.

Businesses will be able to apply for manufacturing licenses through the Department of Public Health. Regulations are open for public comment  now. California will offer two types of manufacturing licenses – Type 6 for non-volatile solvent and/or mechanical extractions and Type 7 for volatile solvent extractions.

Finally the California Bureau of Cannabis Control will issue licenses for distribution, dispensaries, micro businesses, and testing laboratories. Cannabis business regulations are available for comment here  along with more information about each of these types of business licenses.

Finally, there is potential for vertical integration, but it is limited due to regulations. Cannabis businesses will be able to hold licenses in up to two categories and the state established a specific list of combinations allowable under the law. Check out the California Growers Association for  a list of the approved vertical integration combinations for commercial cannabis facilities. Stay tuned to 3C social media channels for updates on the latest changes to marijuana regulations in California.