How to Get Licensed in Medical Cannabis Market

Many businesses must comply with various licensing, permit, or registration requirements. These requirements are in place for tax or public safety reasons.

The medical cannabis cultivation license is difficult because the cannabis products and its industry is highly regulated. Compliance Requirements can vary from one state to another. They can also change depending on the type of business (cultivation or retail), and where you plan to operate.

It is crucial that you have all required business license and permit requirements in order to legally operate. Before you start a cannabis company, here are some licensing basics.

Basic legal requirements

There are some basic legal requirements that you must follow, regardless of the type of business you are interested in. These may differ depending on where you live and what industry you are in, but these are the most common.

• Formation of a business: It is important to incorporate your business or form an LLC with your state. This protects you from potential liabilities and debts that may arise from your business.
• Your tax ID number: Also known as an employer identification number (EIN), this is your federal tax identification. This number is used by the IRS to identify your company for tax-related matters.
• General Business License - This license allows you to legally work in your county or city. (Note: This license doesn't give you authorization to run a marijuana business.
• DBA Filing - Your DBA (Doing business as) permits you to use a name other than that included in your incorporation papers.
• Sales Tax Permit - This permit is for sellers of physical or digital products and services. It can be used online or offline. This permit is required if you are going to collect sales taxes from the state or local governments.
• Permits: Different businesses require different permits. If your business involves food preparation, for example, you will need a permit from the health department. Business owners may need permits to signify, zoning or use their land.

Not all businesses are the same. A home-based business or an online one requires the same compliance requirements as traditional bricks-and mortar commercial establishments.

Cannabis License requirements

Like general licensing requirements, requirements for business licenses for cannabis differ from one state to the next and even between cities. Some states have an open application period, which allows for many licenses to be issued, but others are more strict and limit the number of licenses that can be issued.

Residency and background restrictions (those with prior convictions may not qualify) can also apply to employees, contractors, and owners.

What department is responsible for the license?

You may be required to file your organization paperwork in certain states with the Secretary-of-State's office. However, you will often need to work with local licensing authorities.

The Department of Taxation in Nevada is responsible for licensing and regulating marijuana retail businesses as well as the state's medical marijuana program.

Potential business owners in California can apply to any of the following agencies:

Bureau of Cannabis Control: This agency regulates commercial cannabis licenses in California for adult-use and medical cannabis. Their licensing is only available to certain businesses such as retailers, distributors and testing labs. They also license temporary cannabis events.

CalCannabis Cultivation Licensing CalCannabis is a division of California Department of Food and Agriculture (CDFA). It licenses businesses that cultivate medicinal and recreational cannabis. They manage the state's track-and trace system that records the movement of cannabis products through the distribution chain.

Manufactured Cannabis Safety Branch - This division of California Department of Public Health regulates cannabis producers. This applies to anyone who makes or sells cannabis-infused edibles, for medical and non-medical purposes.

Licenses differ based on the business category

You'll need to be licensed as a cannabis business based on many factors. One factor is the type of business you are operating, whether you're selling, growing, manufacturing, or investing. These are just a few examples of licensing that differs depending on the business category.

• Medical cannabis cultivation license: Growing cannabis can be very difficult because of the strict regulations. This operation will require significant initial investment, a thorough site plan review, as well as practical and proven horticultural knowledge.
• Retail Some states may require you to be able to provide sufficient product and building security. You may be limited in the product you can sell to one person and have restrictions on pricing. Nevada, for example, requires that cannabis business owners have at least $250,000 worth of liquid assets that can be converted within 30 day after receiving a request for liquidation.
• Edibles - Some states require you to cook and maintain edibles in a commercial kitchen. It is possible that you will need to make the cannabis oils and butters used in your product at home.
• Investors Those looking to invest in cannabis businesses will need to adhere to specific regulatory and statutory requirements. Anyone who is interested in investing legally in Colorado's marijuana businesses must follow specific requirements.

Licensing of employees

Employees working in a cannabis-related business must also meet licensing requirements. In some states, employees must be licensed to work in a cannabis-related company.

All employees and volunteers in Nevada must apply for and be issued a registered agent card. Nevada.gov states that this agent card is subject to background checks and issued by the state.

Two types of licenses are available in Colorado that come from the MED Occupational License. This license allows holders to work in MED-licensed Medical and Retail Marijuana establishments or as vendors who provide services to MED Medical and Retail Marijuana licensees. According to Colorado.gov, there are two types of this license:

Key employee - This is required for employees who make operational or managerial decisions that directly affect the business. This could be the master grower who decides what or how many strains to produce.

Support employee - This is for employees who work within the company but aren't involved with operational decisions. This is the most common occupational license category.

Pay attention to local regulations

Although cannabis businesses may be legal in some states, there may be obstacles at the local level.

California's Medicinal and Adult-Use Cannabis Regulation and Safety Act gives local governments the power to regulate what activities can be done in their area. While some cities require approval from the local government, others could ban your business activities.

In Mill Valley, this is also the case. Proposition 64, the 2016 voter initiative to legalize marijuana in California, received 74% of the vote. However, the city strictly adheres to local regulations prohibiting any commercial cannabis activities including growing and selling.

Get to know your cannabis licensing rules

It can be difficult to start a business within this highly-regulated industry. To understand and comply with all legal requirements, it takes a lot of preparation and planning. Before you take the first steps towards owning a cannabis company, do your research. Learn about the regulations and rules at the local, state, and county levels.

Once your business has been established, you can expect to have ongoing legal obligations such as renewals of licenses or changes to existing regulations and rules