What Type of Cannabis Licensing Application Guides Are Right for You?
One crucial component to getting any business started is understanding the types of licensing your business needs and how to prepare for it. We went through several cannabis license application guides for our clients that allowed them to identify and prepare the right one for them before submitting an application.
In helping our clients submit a cannabis license application, we found out you need to prepare by knowing the types of licenses you want to apply for such as cultivation, retail, manufacturing, distribution, delivery, and lab testing licenses.
When you know the types, you'll discover the path you want to take to get started in the cannabis industry. It will also give you an insight into preparing for a license you want.
We’ve been in the industry for several years helping different types of businesses from preparing for a license application to helping them design and build out their facility and obtaining start-up investments. Here’s our guide to understanding many types of licenses and how to prepare for them for success.
Cannabis Application Licenses
Before applying for any kind of license, you’ll need to discover the type of license you want to apply for. Here are the licenses to know:
There are various cultivation licenses in each state that will allow you to cultivate plants, sell seeds, clones and/or plants. There are application fees and annual license fees that vary significantly by state and some states are not always accepting new cultivation business license applications.
Costs are usually determined by the type of cultivation, whether indoor or outdoor, specialty grows or greenhouse. Some states offer nursery or processor licenses in addition to standard cultivation licenses. A general cultivation license is for larger businesses that want to scale their growth operation to a wider market. If you’re interested in producing large amounts of plants and selling them to qualified parties then this is the license for you.
A specialty cultivation license is for smaller businesses and craft growers that want to focus on specific strains. The focus is more on creating quality plants rather than quantity.
There are even more specific types of cultivation licenses that don’t fall in line with the two common-licenses above. You’ll need a consultant to help you identify the type of cultivation license for your business because there’s more information on the subject.
These licenses will require you to only sell to businesses with authorized licenses and permits and not to the general public or medical cannabis patients.
Cultivation requires a lot of effort from ensuring the plants grow properly under the right environmental conditions and lighting and ensuring the soil and nutrients used can pass lab testing. It requires extra steps, but with the right team and certifications, you will be successful. The real challenge is passing the state application license. Each state will provide different requirements and some states won’t accept applications. When you do pass a cultivation license application, you’ll need to make plans to get permits from building zones to land and other specific components.
Before applying, you’ll need to contact local state government offices overseeing cannabis application licensures to discover if they are accepting any license applications and what requirements they need.
The cost to submit a cultivation license application can be between $5,000 - $100,000 or more depending on the local and state license fee requirements. There are other start-up costs as well you’ll need to take into consideration.
A retail or dispensary license gives you the ability to sell packaged cannabis products to the general public and cannabis patients. For dispensary, there are two common types of licenses that may interest those of you wanting to start a dispensary in your legal state. These are medical cannabis and recreational cannabis retail licenses. Some dispensaries are authorized to sell to both medical and recreational consumers.
The cost to submit a dispensary license application can be up to $1,000 to $15,000 or more depending on the State and local requirements. Keep in mind, you’ll run into other start-up costs with the submission of an application.
A manufacturing or processing license allows you to produce edibles, concentrates, pre-rolls and other cannabis products and in some states packaging, labeling and storing cannabis plants. Manufacturing is similar to selling edibles to the market if you’re interested in this area. To get a manufacturing license, you’ll need to follow your state’s requirements for obtaining a license.
Each state may require you to apply for a specific type of license depending on the type of manufacturing you are targeting. It’s important to work with a cannabis consultant from Califia Gold because we can walk you through the steps to getting a manufacturing license for your state.
The costs to submit a manufacturing license application can be up to $1,000 - $10,000 or more depending on the local and State requirements and type of manufacturing. There are also other start-up costs to think about in addition to the license application.
A transporter and distributor license will allow you to transport medical and recreational cannabis products from one facility to another. The amount being transported is determined by the local and state government. Many states will require different compliance rules, so it’s important to know what your state requires.
Security measures will often need to be met that follows and exceeds compliance laws according to the state. Getting a solid plan in place will help you avoid common pitfalls as a business owner distributing products across certain places.
When considering a distributor business, you need to know everything beforehand. This is so you aren’t hit with a troubling challenge as your business grows.
The cost to submit a license application for a distributor can be up to $1,000 - $10,000 or more depending on the State. You’ll need to consider more start-up costs or fees for getting a license as a distributor.
Cannabis delivery is open to individuals in legal states that want to start delivering cannabis products. In some states, you’ll need a retail license, medical license, and a permit before your able to deliver products. Your state may require different licenses and or permits. It’s necessary for you to contact local state offices in charge of cannabis compliance operations.
In a delivery business, tracking, data checking, security measuring are some of the components you need to apply in everyday business to have a successful delivery. If you are considering becoming a cannabis delivery business then make sure you get a proper license to sell cannabis and a permit to start delivering.
The cost of a delivery license application can be up to $1,000 - $10,000 or more and varies significantly by city and State. It’s essential to consider other start-up costs for getting a delivery license as well.
6. Lab Testing
Getting a lab testing license is not a walk in the park as all state legal regulators will require to uphold and maintain ISO/IEC accreditation. You won’t pass the license application requirements if you don't have the ISO/IEC accreditation to operate your lab or at least have accreditation in progress. Developing testing SOPs, sample prep methods, and validation protocols are also an important part of running a successful testing lab.
Before you operate, the accreditation will give your business a better standard to maintain and operate legally. Equipment alone can cost up to $1.5 million or more and you will need solid metrics on throughput requirements to maximize efficiency.
The cost to submit a testing lab license application can be in between $1,000 - $25,000 or more depending on the State and local requirements. It’s important to think about other start-up costs or fees as well.
How to Prepare for These Licenses
When you prepare for licensing, there are several things you need in place. These are components that will allow you to pass your state application license more easily.
1. Assess the Risks
The cannabis industry comes with significant risks due to its illegal status at the federal level. This makes it difficult for cannabis businesses to open bank accounts and have access to capital. Califia Gold can help mitigate these risks by connecting you with investors and banks that understand the cannabis space.
2. Get Organized
It’s important to gather organized plans together for the type of company you’re building. These plans can vary from crafting a comprehensive business plan to gathering data points for your local state’s regulations to ensure you are compliant. A solid business plan and pro forma is essential to obtaining investment capital and receiving a state cannabis license. The business plan should be created by professionals with cannabis knowledge.
3. Craft Your Standard Operating Procedures (SOPs)
It’s a good idea to get your standard operating procedures (SOPs) together that tie in with your local state’s regulations. Embedding the two together will make your business look more professional and show your updated on your local state’s regulations. However, if you have any trade secrets, then it’s best to keep these out of the procedures for your own property protection. It’s better to provide basic procedures that are thorough that doesn’t involve too much information you don’t want anyone else knowing.
4. Understand Your State’s Licensing Structure
Some states will require you to obtain two licenses to operate your dispensary, cultivation, or lab testing business. If you go into a business that processes oil and sells it to consumers, you may need more than one license. You will need a suitable location, a security plan, environmental plan, local permits and other plans depending on the type(s) of licenses sought. You may have to work with multiple State agencies to obtain licensing and meet local requirements.
5. Be Unique
Identify what makes your business different from anyone else on the market. If you have a different mission to tell than add it to your application. It’s important to set yourself apart and provide value to the market.
There’s more to applying for your state application. If any of the licenses are appealing to you then it’s important to consult with a professional who knows the ins and outs of the cannabis industry from licensing to the actual build-out process.
Consult with Califia Gold to get started on building your business today.