Marijuana in Michigan is making tremendous progress. Between Michigan cannabis law progress, Michigan banking groups backing federal legislation, and the state’s recreational sector expansion, there’s a lot of excitement happening for cannabusiness operators in the Great Lake State.
But there’s even more exciting news with the recent announcement about the access researchers have been granted – to $20 million of Michigan’s marijuana tax revenue!
Researchers analyzing marijuana treatment efficacy for veterans’ mental health now have access to millions that have been collected in marijuana tax revenue. This will be used to fund clinical trials in the state, allowing the industry to progress in a way that supports our veterans.
In this article, we cover the Marijuana Regulatory Agency (MRA) and how it’s supporting veteran mental health through a new request for proposals. The value here is incredible, and it’s worth learning more about this unique demand for research, as well as how your cannabis business might fit in with the growing need for veteran medical marijuana in Michigan!
Have a marijuana business operating in Michigan? Contact us today to learn more about how we can help organize and scale your operation!
Michigan’s Marijuana Regulatory Agency (MRA): What Does It Do?
In 2019, Governor Whitmer’s executive order established the MRA within the Department of Licensing and Regulatory Affairs (LARA). Through this order, he combined the previous functions, authorities, and duties to efficiently manage medical and adult-use marijuana through the MRA.
“I’m confident that the MRA is prepared to implement a fair and effective regulatory structure that protects Michiganders while providing an opportunity for businesses of all sizes to thrive,” explained Gov. Whitmer. “Having a single state agency dedicated to administering all state laws relating to marijuana will allow Michigan to continue to lead the nation in this emerging industry.”
Since then, the dedicated MRA staff have committed to stimulating business growth while ensuring safe consumer access to marijuana. This has involved processing over 180,000 applications for marijuana registry cards and handling the backlog of 800 marijuana facility license applications in just one year.
Now, the MRA is setting its site on improving the cannabis industry by using Michigan cannabis tax revenue to fund research. So far, the agency has issued a request for proposals for the 2021 Veteran Marijuana Research Grant Program on Tuesday, June 1. The deadline for proposals is Friday, July 16.
Even with public attention and funding increasing to resolve the rate of suicide among veterans, the problem has continued to grow worse. The present conditions don’t highlight how it relates to the COVID-19 pandemic, and mental health experts believe that this could result in an increase in mental distress and self-harm among veterans.
We see many public figures and public awareness campaigns highlighting the figure “20 a day,” referencing the number of veterans committing suicide daily. However, VA officials offered some clarification in 2020, outlining that this includes active-duty troops, as well as reservists and guardsmen.
After adjusting for sex and age, veteran suicide rates were around 27.5 for every 100,000 individuals in 2018, a significant increase from 25.8 per 100,000 in 2016. The average among all U.S. adults was 18.3 per 100,000.
In one statement, VA Secretary Robert Wilkie claimed that even though there hasn’t been much progress in suicide prevention among veterans, there have been some areas of improvement.
“The data shows the rate of suicide among veterans who recently used VA health services has decreased, an encouraging sign as the department continues its work and shares what we learn with those who care for and about veterans,” he explained.
Senate lawmakers have passed several VA-themed bills that aim to improve the department’s suicide prevention efforts. This includes offering new training and education for department police.
However, Michigan is making additional efforts by putting $20 million towards research to uncover the role marijuana will play in decreasing the suicide rate among veterans in the U.S.
$20 Million Allocated Towards Research: The Reason
Michigan voters legalized recreational marijuana in 2018. When this happened, they also mandated that “until 2022 or for at least two years,” $20 million in Michigan marijuana tax revenue will go towards research.
Clinical trials that focus on treating veterans for pain and PTSD with marijuana will receive $20 million in funding. These studies will analyze how the plant impacts suicide rates among military personnel.
According to the U.S. Department of Veteran Affairs, veteran suicides account for approximately 14% of the suicides that occurred in America in 2018. Fortunately, legal cannabis sales have been impressive, to say the least, allowing the state to fund essential studies that focus on uncovering what marijuana’s role could be in lessening this prevalence.
From December 1, 2019 – the day legal sales started in Michigan – to September 30 at the end of the 2020 fiscal year, the state’s cannabis sector experienced over$300 million in sales. With these sales, the government collected $31 million in recreational marijuana excise tax revenue for 2020. After adding the application and licensing fees, this totaled $45.7 million.
Then, in March, the MRA and the state Treasury discussed how the state would distribute around $45 million of tax, application, licensing, and renewal revenue collected from adult-use marijuana sales. Initially, the agencies did not allocate any of this money towards clinical trials.
However, at that point, the MRA claimed it would put $20 million towards research. Recently, the agency opened the grant request process with the mission to begin the research program by July 30.
How Michigan Marijuana Business Owners Might Benefit
Michigan’s veteran population is massive, with 634,000 veterans accounting for 8.8 percent of the state’s adult population. As more research reveals how veterans can use marijuana to treat a wide assortment of suicide-related mental health illnesses, several cannabis businesses stand to benefit.
For starters, dispensaries will distribute products to veterans. Offering special veteran discounts could be profitable, and it’s encouraged. Veterans deserve accessible medicine, and with this access comes a host of businesses supporting it.
Cultivators in Michigan can focus on growing and crossbreeding strains that offer specific cannabinoid concentrations known to help with veteran mental health. Furthermore, we can expect some veterans to become home growers, which offers opportunities to shops specializing in home cultivation setups.
Extractors will also have the opportunity to adequately serve this market. It’s legal for adults to possess and transfer up to 15 grams of concentrate to other adults in Michigan. With this being the case, some veterans will want to consume cannabis as a concentrate.
Manufacturing facilities can also cater to veterans by producing products designed to combat mental health issues. Ultimately, your operation, regardless of what niche within the cannabis space you’re in, can work on serving this market as more research reveals the truth about how marijuana can help veteran mental illness.
Michigan Marijuana Insight for Business Owners
Cannabis in Michigan has been successful. But the MRA is focusing on expanding this progress in a way that will benefit veterans.
While the MRA focuses on gaining more insight into how marijuana can help decrease the suicide rate among veterans, the state will need support from businesses. Whether this means producing or distributing products that aim to help veterans or offering discounts for these brave heroes, you can do your part to ensure veterans have access to products that will help them.
Interested in scaling your cannabis operation in Michigan? Contact us today for expert assistance in organizing and growing your business.
The Garden State is offering several financial assistance programs that could cover some of the costs of legal medicinal marijuana in New Jersey.
The state government wants to help patients who can’t afford to pay for their own medical marijuana. This is why it’s proposing a bill that would make it possible for people enrolled in four different financial assistance programs to only have to pay a small copay if they need medical marijuana.
If this legislation passes, health care providers will be required to ask if the patient needs any kind of assistance when filling out paperwork about which medical marijuana products they need.
Interested in expanding your business in New Jersey’s cannabis space? CONTACT US today to learn more about how we can help.
New Jersey Medical Marijuana Financial Assistance Programs
Four different financial assistance programs that help children, seniors, crime victims, and people with disabilities could receive aid with the cost of medical marijuana in New Jersey. This would occur under identical bills that the Senate and Assembly health committees have already approved.
Sen. Joseph Vitale, D-Middlesex, and Assemblyman Herb Conaway, D-Burlington, sponsored these bills in New Jersey. The vote for this medical marijuana cost coverage bill could happen within a week.
These are the New Jersey financial assistance programs that would offer the benefits:
Catastrophic Illness in Children Relief Fund
The Catastrophic Illness in Children Relief Fund is a financial assistance program New Jersey families can use if they have potentially catastrophic medical expenses that result from a child’s condition or illness.
If a family’s related expenses are incurred before the child’s 22nd birthday, to qualify for this program, the costs must:
Exceed 10% of the family’s income that year, plus 15% of any income over $100,000; and
Are not covered by insurance, other State or Federal programs, or other sources such as fundraising.
Any illness can be “catastrophic” when considering uncovered medical expenses and family income over the last 12 months. For the condition or illness to fit the term “catastrophic,” it must be acute or chronic with expenses that aren’t covered by federal, state, insurance programs, or other sources.
Other sources can include – but are not limited to – other State or Federal agency programs, trusts, insurance contracts, proceeds from fundraising, and settlements regarding the child’s medical condition. However, if the child’s source of health coverage pays for ambulatory services from within their provider network, the uncovered out-of-network expenses might not be reimbursable through this program.
“The cost of cannabis can run into the hundreds of dollars per month for individuals,” Conaway explained. “This bill serves those who are financially distressed and … ensures the benefits of medical cannabis are available to all who may need it.”
Through the bill, the Catastrophic Illness in Children Relief Fund will also be allowed to cover the cost of New Jersey medical cannabis for qualified patients. This organization already covers many medical expenses resulting from a child’s illnesses or conditions, and this would enable it to offer assistance to children in need of medical marijuana in New Jersey.
Pharmaceutical Assistance to the Aged and Disabled (PAAD)
The Pharmaceutical Assistance to the Aged and Disabled (PAAD) program is a state-funded program that offers assistance to eligible seniors and disabled persons to afford their prescription drug costs. But at this point, it does not help cover the costs of medical cannabis.
For someone to be eligible for the PAAD program, they must meet these requirements:
You must be a New Jersey resident;
You need to be at least 65 years of age or older or between ages 18 and 64 and getting Social Security Title II Disability benefits; and
Your income for 2021 is less than $28,769 if single or less than $35,270 if you’re married.
Medicare-eligible PAAD beneficiaries also must enroll in a Medicare Part D Prescription Drug Plan. PAAD pays the monthly premium for some standard basic Part D plans (with a monthly premium) at or below the regional benchmark.
For those who are eligible, these Medicare plans cover medically necessary prescription medications under Medicare Part D. But, if a beneficiary enrolls themselves in an enhanced plan at or below the regional benchmark premium amount, PAAD pays the premium if the plan agrees to follow all of the billing requirements.
The federal Medicare Plan and/or PAAD also cover costs above the PAAD co-payment of $5 for every covered generic drug or $7 for all covered brand name drugs. This includes premiums.
However, if the person’s Medicare Part D plan refuses to pay for medication because the drug is not on its list of medicines, PAAD beneficiaries must switch to a drug on their Part D plan’s list. Otherwise, their doctor needs to ask for an exception because of medical necessity directly to their Part D plan.
Medicare Advantage participants need to add a prescription benefit to their coverage. With this in mind, PAAD offers up to the regional benchmark amount to cover the prescription part of the entire premium.
Thus, patients enrolled in PAAD would have to pay a $7 copay for their medical marijuana in New Jersey. The organization already aids seniors and residents with disabilities who cannot afford their prescription drugs. But with medical marijuana ready to utilize as an alternative treatment, many would like it included in the list of medicines supported by this program.
Senior Gold Prescription Discount
The Senior Gold Prescription Discount Program is also a state-funded prescription program. However, it has a different co-payment structure and income eligibility guidelines when compared to the PAAD. And at this point, it cannot cover medical cannabis.
For someone to be eligible for Senior Gold, they must meet these requirements:
You need to be a New Jersey resident;
You must be 65 years old or older, or between the ages of 18 and 64 and getting Social Security Disability benefits;
Your annual income for 2021 is greater than $28,769 and less than $38,769 if you’re single, or greater than $35,270 and less than $45,270 if you’re married.
Furthermore, every Medicare-eligible Senior Gold beneficiary must enroll in a Medicare Part D Prescription Drug Plan. They are then responsible for paying the monthly premium directly to the Medicare Part D plan.
Beneficiaries also are responsible for paying any late enrollment penalty Medicare imposes each month they were eligible to enroll in Medicare Part D but didn’t enroll.
Those who have enrolled in the Senior Gold program only would need to pay a copay of $15 plus 50% of the excess cost of medical marijuana.
However, if a Senior Gold member already spent $2,000 out-of-pocket, or $3,000 if they’re a married couple, the copy is only $15 for medical cannabis if Vitale and Conaway’s bill passes.
“Patients in New Jersey who gain relief from pain or discomfort through the use of medical cannabis cut across a wide swath of our population, and yet the cost of the drug can be exorbitantly expensive for many people who rely on it most,” Vitale explained in a statement.
Victims of Crime Compensation Office (VCCO)
The State VCCO is a program that reimburses victims for crime-related expenses. This includes the cost of medical expenses, mental health counseling, funeral and burial costs, and lost wages or loss of support.
Since the VCCO is a federally financed program, it currently does not offer compensation for medical marijuana-related expenses victims may incur. Thus, the new bill stands to benefit victims, especially those who have experienced some sort of traumatic crime that they are using medical cannabis to treat crime-associated mental illnesses.
Decreasing Out-of-Pocket Expenses with a Medical Marijuana Card
The bill’s mission is to ensure everyone can afford medical marijuana in New Jersey. Since ounces of medical cannabis flower in New Jersey can reach $500 apiece, reimbursement for these expenses is essential for some.
Since the federal government still views medical marijuana as a Schedule I drug lacking medicinal value, federal programs and programs connected to federal funding cannot cover medical cannabis legally. This includes health and medical insurance.
“We’re waiting for insurance coverage for this particular therapeutic but, not having that, we’re moving forward,” Conaway explained. “They are state-run programs with state-run dollars only, so there’s no implication of any federal program or action.”
Medicinal Marijuana Businesses in New Jersey
Medical marijuana businesses in New Jersey stand to gain more customers if this bill passes. The medicinal marijuana patients who would otherwise be unable to afford their medicine will now have the ability to buy what they need.
As the cannabis industry in New Jersey becomes more accessible to those who cannot afford the exorbitant prices, other businesses may also benefit. Particularly, alternative treatment centers fueling the state’s medicinal marijuana program.
Alternative Treatment Centers in New Jersey
Alternative treatment centers in New Jersey allow medical marijuana patients access to medicinal marijuana. All they need is a medical cannabis card, which allows the New Jersey medical marijuana program to thrive.
However, the medical marijuana program in New Jersey isn’t supporting these other programs just yet.
The new bill aims to enable patients, including minor patients and their legal guardians, to get medicinal marijuana, even if they cannot cover the cost of purchasing their medicinal marijuana from alternative treatment centers at a total price.
Quick Tips to Get a Card in New Jersey
To get a card in New Jersey through the cannabis regulatory commission, patient registration is essential. This involves visiting an approved physician – or a licensed physician.
Jersey residents can visit an approved physician to get a card in New Jersey. But they will need medical records showing the qualifying patient needs access to medical marijuana.
While there are some hoops to jump through, it’s possible to get a medical card in New Jersey. However, the cannabis regulatory commission demands qualifying patients – or their primary caregiver or legal guardian – go through the same process to gain access to the medicinal marijuana program.
Depending on the caregiver’s government assistance eligibility, they might be allowed to obtain medical marijuana at a discounted rate, too. However, they must hold a medical card on behalf of the patient.
The New Jersey Cannabis Industry Association has been instrumental in pushing for this legislation, associating themselves with the most vulnerable patients while promoting a viable and sustainable industry that benefits society as a whole.
As we can see from Conaway and Vitale’s stance on the matter, progress is being made in the Garden State. With more movement in the right direction, we’re sure to see positive impacts on the cannabis sector as a whole.
Medical Marijuana Patients in New Jersey
Medical marijuana patients younger than 18 can still get a medical marijuana card. But to get support for medicinal marijuana through one of the new programs, the bills must pass.
The Medical Cannabis Act allowed New Jersey to create its medicinal marijuana program. And while this supports terminally ill patients looking to get a medical marijuana card and visit an alternative treatment center, the New Jersey Medical Marijuana Program is still somewhat limited because of federal prohibition.
Those who have a medical marijuana card in New Jersey can purchase and smoke medicinal marijuana. But despite the Medical Cannabis Act, New Jersey patients can still have trouble accessing the plant through the state’s medicinal marijuana program.
If the patient is too young or disabled, a medical marijuana card can be obtained by up to two caregivers. But each of these caregivers will need to apply for a medical card. However, with recreational cannabis legalization, the plant will become more accessible without a New Jersey MMJ card.
Serving Medical Marijuana Patients in New Jersey
While some might worry about tax dollars going towards alleviating the financial stress that comes with a medical card, cannabis business operators can look at this as an opportunity. With the right marketing, it’s possible to earn supplemental security income from medical cardholders.
New patients will come to the spotlight if this bill passes. And while qualifying conditions in New Jersey limit new patients, more patients will likely get an MMJ card once these programs begin offsetting the cost.
Whether you offer home delivery to each patient or have a dispensary that is interested in supporting every MMJ card patient with excellent customer service, we can expect this bill to support each patient, whether young or a senior citizen, by offering reduced fees for medical use marijuana to those that need it most.
Interested in scaling your cannabis operation in New Jersey? There’s no time like the present!
Contact us now for expert assistance organizing your financials and allow us to help your business reach its full potential!
California cannabis license types are tricky to understand, and California’s Bureau of Cannabis Control is constantly updating them. And let’s not forget about the California Department of Public Health’s Manufactured Cannabis Safety Branch (MCSB) and the California Department of Food & Agriculture.
In California, cannabis businesses need a cannabis license for anything related to the sale or manufacture of marijuana products, whether in-store sales or manufacturing. We’re here to help with Cali cannabis license insight!
Interested in cannabis licensing requirements? We have the answers! CONTACT US today to learn more about how we can ensure your compliance in California.
State Licensing Authorities in California
California cannabis businesses need to be aware of three state licensing authorities. Each has a set of responsibilities that impacts specific aspects of Cali’s commercial cannabis market.
The Bureau of Cannabis Control, California Department of Consumer Affairs, handles cannabis business licenses and regulates businesses. This cannabis control agency oversees distributors, retailers, microbusinesses, and testing laboratories.
The Manufactured Cannabis Safety Brand, California Department of Health licenses and regulates cannabis product manufacturers. If a legal operation is producing products in Cali, this is the authority overseeing its operations.
Then there’s the CalCannabis Cultivation Licensing that’s managed by the California Department of Food & Agriculture. This California regulating force has the task of licensing and regulating cannabis cultivators and operating the Track-and-Trace system. Through these efforts, seed-to-sale tracking is facilitated.
Getting to Know Cali’s Bureau of Cannabis Control
The Bureau of Cannabis Control is a California state regulator responsible for overseeing the licensing and regulation of marijuana. State law grants the Bureau of Cannabis Control broad authority, allowing it to regulate all aspects of commercial marijuana activity in California.
For anyone interested in operating a medical or adult-use cannabis operation in Cali, this bureau is the department that regulates state law. Retailers, distributors, testing laboratories, microbusinesses, and temporary marijuana events must go through the Bureau of Cannabis Control to obtain the right licensing.
The Bureau of Cannabis Control has made tremendous strides for the industry since voters approved Proposition 215, also known as the Compassionate Use Act of 1996. Since then, this department has taken a formerly black and gray market to form a legitimate industry with regulations and compliance leading the way.
This agency is on the lookout for common compliance issues among cannabis businesses. If found, these non-compliant business owners face an assortment of responses from the Bureau of Cannabis Control for various violations, including:
Traceability problems occur when cannabis businesses – particularly, processors or retailers – fail to use or maintain traceability for products.
Security and surveillance laws keep the legal cannabis industry legitimate. These preventative measures ensure people don’t have the opportunity to steal or “misplace” products, which then get sold on the black market.
Sales to Minors
Adult use cannabis regulation is in place. But marijuana product purchases and consumption are limited to those 21 years of age and older in Cali. Sometimes, the BCC will send undercover purchasers into the shops to attempt a purchase. However, there are instances in which an underage user gets arrested and points the finger at a retailer.
Displays and signage must be compliant with the state’s regulations. Cali’s advertising laws must be checked before cannabis businesses begin their marketing efforts.
Getting to Know the Manufactured Cannabis Safety Branch (MCSB)
The California Department of Public Health’s Manufactured Cannabis Safety Branch (MCSB) is one of the three state licensing authorities in Cali. This department has been tasked with licensing and regulating commercial cannabis activity in Cali. It’s also responsible for regulating all commercial cannabis manufacturing in the state.
The MCSB works to protect public health and safety in a few ways. Its main priority is to ensure commercial cannabis manufacturers are operating safely. This involves checking workplace sanitation and making sure these operations are following good manufacturing practices to produce contaminant-free products that meet product guidelines and have proper packaging and labeling.
About the MCSB
So, what does the MCSB do, anyway? Here’s a brief list of what you might notice this regulating force doing:
Licensing from the MCSB
The entire application process for cannabis business licenses goes through this licensing authority. This involves reviewing the qualifications for licensure, following up on application deficiencies, and issuing licenses and payment processing.
Inspection & Compliance
The MCSB assesses compliance, as well. This involves coordination with local jurisdictions, as well as sending notices for corrections of deficiencies. This licensing authority also conducts inspections and investigations for compliance deficiencies.
Application assessment for manufacturing procedures and technical assistance also falls under the MCSB’s duties. This authority reviews remediation plans, reviews and responds to complaints, and handles Track-and-Trace monitoring.
The MCSB is also responsible for regulation research and development, as well as creating and implementing packaging and labeling standards. Policy clarification for licensees is also a task this authority handles.
Outreach & Education
Digital outreach and stakeholder engagement allow the MCSB to support this elevated space directly. It also handles handouts and guidance documents while offering licensee support by email and phone. You might see the MCSB leading presentations, panels, and other events for the cannabis space, as well.
Commercial Cannabis Business License Types
Simply put, anyone who makes or packages a prepared cannabis product is a manufacturer. These products include – but aren’t limited to – topicals, edibles, extracts, vape cartridges, tinctures, and anything else you might find at a dispensary.
Each business manufacturing cannabis products has to hold a state license for every separate premise they plan to conduct their manufacturing operations. Every manufacturer has to disclose all activities that they plan to conduct on their license application.
For online license applications, licensees need to say the license type they require, and this must be based on the activities they plan to conduct on the premises. Cannabis manufacturers are also allowed to package flower and roll and package pre-rolls on their licensed properties.
Type 7 Cannabis Manufacturing License
Type 7 commercial cannabis business licenses are for operations involved in extractions using volatile solvents. This is for manufacturers that use volatile solvents, including but not limited to propane, hexane, or butane. These licensees can also conduct Type 6, P, or N activities.
Type 6 Cannabis Manufacturing License
Type 6 business licenses are for entities involved in extractions using mechanical methods or nonvolatile solvents. Generally speaking, this includes carbon dioxide, water, butter or oil, ethanol, or other mechanical extraction methods. These licensees can conduct Type P or N activities, too.
Type N Cannabis Manufacturing License
Type N manufacturing licenses are for companies that produce cannabis products other than extracts or concentrates that are produced through extraction. This is primarily for those performing infusions, and these licenses are allowed to conduct Type P activities, as well.
Type P Cannabis Manufacturing License
Type P licenses are for manufacturers that only package or repackage cannabis products or label or relabel cannabis product containers or wrappers. These licensees can solely perform Type P activities.
Type S Cannabis Manufacturing License
Type S licenses are reserved for manufacturers that conduct commercial cannabis manufacturing activities at a registered shared-use facility. The shared-use manufacturing facility must be approved for Type S licensees before submitting license applications.
Other Types of Cannabis Business Licenses
Also known as a Type 10 license, Retailer (Storefront) licenses are for brick and mortar dispensaries. However, licenses are quite rare because most local jurisdictions have either prohibited these operations completely or only limit the issuance of these licenses to dispensaries that opened before 2016 under Prop 215. Retailer (Storefront) licensees can also operate a website and can engage in cannabis delivery to consumers.
Also known as Type 9 licenses, Retailer (Non-storefront) licenses are for people who would like to sell cannabis products to consumers solely through an online website or app. However, the licensee must still own a store. This is simply an online-only store that has no physical location for customers to visit. As a Retailer (Non-storefront) license holder, you’ll still need a location for your business to hold its inventory and act as a place for its delivery drivers to congregate.
Also known as a Type 11 license, Distributor licenses are for anyone who would like to transport cannabis products from one licensee to another. For instance, a distributor might transport cannabis products from a cultivator to a testing lab or a testing lab to a dispensary.
Distributors may also participate in the following activities:
1) Arrange for testing of cannabis goods;
2) Conduct quality assurance review;
3) Package, re-package, label, and re-label cannabis for retail; and
4) Offer storage-only services for cannabis accessories, licensees’ branded merchandise or promotional materials, and packaged cannabis goods ready for sale at retail operations.
Distributor (Transport Only)
Also known as a Type 13 license, Distributor (Transport Only) licensees are allowed to transport cannabis goods between licensees and are restricted to the transportation of cannabis goods.
Type 13 licensees may not engage in any of the additional activities Type 11 licensees are allowed to conduct. Furthermore, a Distributor (Transport Only) licensee cannot transport any cannabis goods other than immature cannabis plants and/or seeds to a retailer or a retail portion of licensed microbusinesses.
Type 13 licensees are also allowed to transport cannabis accessories and promotional materials or branded merchandise.
Cultivation licensees are for anyone interesting in growing for the cannabis supply chain. At this point, California has 14 different cannabis licenses, which are categorized by light source and size.
For more information about cultivation licensing, check out the California Department of Food and Agriculture (“CDFA”) CalCannabis homepage. Cultivation licenses encompass Type 1, Type 1A, Type 1B, Type 2, Type 2A, Type 2B, Type 3, Type 3A, Type 3B, Type 4, Type 5, Type 5A, and Type 5B. Type 5, 5A, and 5B licenses are reserved for “large” cultivation operations that use more than 22,000 sq. ft. of total canopy. However, these licenses aren’t issued until after January 1, 2023.
Also known as a Type 12 license, a Microbusiness license lets licensees participate in vertical integration. Each microbusiness licensee has to perform at least three of these six activities:
1) Retailer (Storefront);
2) Retailer (Non-storefront);
4) Distributor (Transport Only);
5) Cultivation operation less than 10,000 sq. ft of canopy; and
6) Level 1 Type 6 Manufacturer.
Also known as a Type 8 license, Testing Laboratory licensees are allowed to test cannabis goods. These testing laboratories need to get and maintain ISO/IEC 17025 accreditation.
Testing laboratory operations may get issued a provisional license that lets them operate as they’re waiting on accreditation, but they still must meet all of the other requirements.
The Event Organizer license is required for anyone interested in organizing cannabis events. A Cannabis Event Organizer Licensee can apply to receive a Temporary Cannabis Event License for a specific event they would like to operate, as well.
A Temporary Cannabis Event License is necessary for anyone looking to hold a temporary cannabis event with authorized onsite sales and consumption of cannabis goods. Still, the location of the event must be indicated on the license. Temporary Cannabis Event Licenses are only issued to Event Organizer licensees.
How to Get Licenses for Cannabis Businesses
Getting a license for a business operating in Cali’s legal cannabis industry isn’t simple. California will not issue cannabis licenses to applicants that don’t have local approval. With this being the case, it’s crucial to find a city or county that approves of commercial cannabis activity within their jurisdiction.
For instance, the city of Los Angeles has already approved the cultivation, manufacturing, and testing of cannabis. This means that California companies that are approved in Los Angeles can apply for a license to perform these activities in the LA area. However, the county of Los Angeles does not allow commercial cannabis activity within its unincorporated areas.
Other California cities have not yet passed any legislation permitting commercial cannabis activity. Thus, it’s crucial to find a place that accepts it. Then, you can apply for a license and approval with your local jurisdiction and the state.
Some local jurisdictions require applicants to get state licensure within some amount of time after getting local approval or licensure. With this in mind, anyone submitting local and state applications should do so simultaneously or within a short period.
On the other hand, if you find a business for sale with an adult-use or medical cannabis license, you can purchase the business. Since a state cannabis license comes with the business, you’ll receive your license without having to go through a regulating authority.
Will I need city or county approval to get a cannabis license?
Think about where you plan to set up shop. Is the location in an incorporated city? Or is it located in an unincorporated area?
If the location is in an unincorporated area, you’ll need county approval. To determine whether your location is in a city or unincorporated area, you can check Google. If it’s an unincorporated area, it will be “Census Designated Place” or “CDP.”
Looking to maintain your compliance as you operate in Cali’s legal cannabis sector? We’re the experts you want on your team!
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Cannabis compliance is by far the most crucial consideration to guide success in this industry. Regardless of whether you operate a dispensary, grow operation, extraction center, manufacturing facility, or something else, your compliance isn’t requested; it’s a demand.
Depending on where your business is, you’ll have regulatory agencies in charge of your compliance. Here’s a quick list of the agencies in charge in each state:
Is it worth it to violate regulations to lessen the upfront costs of cannabis compliance?
In this article, we’re talking about cannabis business regulations, non-compliance consequences, and how to remain compliant in this budding space.
Interested in cannabis compliance? If you’re operating in this industry, it’s a must! Contact us today to learn more about how we can help.
Cannabis Regulations – Are They Important?
While cannabis compliance seems like an unnecessary hassle for most, for consumers and overseers in the industry, it’s a must.
Consumers want safe products.
Cannabis compliance ensures safe cannabis. Just because a company has a license does not mean that it’s upholding cannabis safety standards. The laws are in place to ensure everyone with a dispensary license or cannabis facility license has the documentation showing all aspects of their operations.
This data offers the latest news on the safety of these products, and enforcement of the law keeps every consumer in the country safe.
Regulation is in place to ensure public health.
Public health is of the utmost importance. Compliance issues can result in the forfeiture of licenses. But enforcement ensures cultivation, distribution, and other aspects of the cannabis sector support public health initiatives.
Legalization comes with laws.
The challenges of operating legally include cannabis licensees and their businesses investing time in cannabis compliance. This means following local ordinances and respecting licensing regulations.
Cannabis Compliance & Non-Compliance Consequences
Non-compliance consequences can be costly for cannabusinesses. In fact, non-compliant operations may experience hefty fines or even closure of their business.
Some companies are willing to take that risk in order to lessen the upfront costs associated with cannabis compliance. But they should beware that the enforcement for cannabis-related offenses has shut some businesses down, leaving employees to pick up the pieces after.
Consequences for Non-Compliant Cannabis Businesses
Once cannabis operations get their licenses in order, maintaining compliance is essential. Without accuracy in all documentation, including but not limited to financials, it’s a slippery slope that could ultimately lead to revoking licensing.
Proper training for employees can help. But documentation accuracy through expert financial services ensures nothing is ever lost in translation. Your customers expect the best, and regulating forces demand you submit all information as it pertains to your operation.
Here’s what can happen if your cannabusiness isn’t complying with all regulations:
Notice to Comply
Minor compliance infractions are common in the cannabis sector. If this happens, you’ll get a notice to comply. This is something an agent of the BCC might give during an inspection. Ultimately, you’ll have 15 days to fix the violation and describe how it was corrected.
If your operation doesn’t return the notice to comply before the deadline or fails to fix the violation, you’ll face further disciplinary action. Sometimes, the notice to comply suggests how to fix the compliance-related problem, as well.
Citation for Violation
Next, you’ll face an actual citation for the compliance violation. If a citation is issued, you’ll need to follow the orders of abatement or pay administrative fines of as much as $5,000.
You can contest the fines. However, if the administrative fine goes unpaid within 30 days, you might have your license suspended or revoked.
In areas under BCC control, serious infractions could result in a petition for interim suspension of the company’s cannabusiness license. This gives the operation notification 15 days before the hearing for a petition to suspend.
Non-compliant marijuana companies get issued an interim suspension, which means the business will have to post a notice of suspension on the premises. The notice must stay on the premises for the entire suspension period. If this notice gets damaged or removed, the licensee needs to notify the Bureau within 24 hours.
In extreme instances, a cannabusiness could lose its business license. If it’s revoked, this has the potential to shut down the operation permanently.
This is only enforced if the business had willful intent to perform business outside of compliance regulations. An operation could experience revocation if it’s had multiple infractions and has not attempted to correct the problems.
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The CDTFA (California Department of Tax and Fee Administration) Cannabis Tax Law is a set of regulations that were put in place to ensure cannabis businesses are complying with all state and local tax laws. This law was created by the California Department of Tax to govern the cannabis tax revenues, which includes both medicinal and adult-use marijuana. It also covers activities such as cultivation, manufacturing, distribution, sales, and use taxes.
Throughout this guide, we’ll provide an overview of the Cannabis Tax Law for 2020-2021. Whether you’re worried about cannabis tax revenues you’ll need to report or other revenue numbers, you’ll have a better understanding of how businesses in the cannabis space can make the most of the revenue they earn with each sale.
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Latest Updates on Cannabis Tax in California
CDTFA has determined that an 80% mark-up will be applied to the average market price of cannabis or cannabis products sold to a retailer in California in an arm’s length transaction.
The rate was set at 60% for 2019, but it is now up 33%. Distributors must adhere to the mark-up rate.
Basic Information on Cannabis Business Tax on California
Since January 1st, 2018, you will be charged a 15% cannabis excise tax for any cannabis sales made at the retail cannabis shop or dispensary. This tax is calculated by taking an average market price as your base and adding that percentage charge to it.
You have to pay a ‘Cultivation Tax’ on any harvested cannabis product that enters the commercial market.
When cannabis plants are first harvested, they’re categorized as either “cannabis flower,” “cannabis leaves,” or “fresh cannabis plant.” The cultivation tax is imposed based on these categories and weight.
To qualify for the “fresh” plant category, a California grower must have their cannabis weighed within two hours of harvest.
Cannabis Business Registration
California Department of Tax and Fee Administration offers online registration on sales and use tax account. The service is available 24 hours a day, 7 days a week. For more information and register, click here.
In addition to CDTFA registration, you’ll have to collect tax permit(s) from other responsible authorities. This is a requirement for obtaining a cannabis business license(s).
The Bureau of Cannabis Control within the California Department of Consumer Affairs provides tax permits for cannabis retailers, distributors, testing laboratories, and microbusinesses.
Be sure to contact your city or county government office to learn more about any that you might need for operating the business in the area.
No seller’s permit is required in California if you don’t sell tangible personal property. However, as per the requirements for a commercial cannabis license, one must provide a certification letter stating that no such permit is needed before they can be legally licensed to operate their business within this industry.
Obtaining such certification is not that difficult. You’ll need to email all the credentials to the California tax authority and declare that you are not engaged in any transaction of tangible personal property. After reviewing all the information, the authority will mail you the certification letter.
Sales & Use Tax Return
As a licensed cannabis merchant, you have to file sales and use tax returns regularly. This will show the sales and help the authority to verify tax revenue.
If you incur no taxable transactions, you are still required to file your sales and use tax return, and report your business activities to the CDTFA.
Here you can find the deadlines for submitting tax returns.
Cannabis Tax Return
If you are a distributor of cannabis products, you have to file your cannabis tax return electronically. The tax return should include both the cannabis excise tax and the cultivation tax.
The California Department of Tax and Fee Administration offers a wide range of online services to easily report cannabis sales, revenues, and taxes, especially during the pandemic. Here’s where you can find the link to all the video tutorials on their online services.
Though the CDTFA intends to conduct its activities online as much as possible, it offers some exemptions for those who prefer paying their cannabis taxes in cash. To qualify for this exemption, they require you to make arrangements with one of their offices and explain why a change is necessary from the No Cash Policy before giving them your money.
If you are looking to pay in cash, call the office for an appointment at least 21 days before your due date.
For any amount over $10,000 for sales and use tax accounts or monthly cannabis tax account liability greater than $20,000 subject to EFT payments because they exceed those thresholds. If not paid electronically, will be assessed 10% penalties on top of whatever fees were already owed.
However, if you believe your payment was assessed as wrong, you can request relief from this penalty online.
Cannabis Tax and Fee Administration- Distributors
A distributor is a person who purchases cannabis from licensed growers/manufacturers or one another then redistributes it to their various endpoints, such as retailers on behalf of themselves and others. A microbusiness license can also be issued if they follow all distributor requirements.
Distributors will have to use the mark-up rate to determine the average market price of cannabis or cannabis-related products.
Below are the responsibilities of cannabis distributors:
Collect the cannabis cultivation tax from cultivators and manufacturers.
Collect cannabis excise tax from cannabis retailers.
Provide invoices or receipts to the businesses from which the cannabis taxes were collected.
Electronically submit both the sales and use tax and cannabis tax returns and pay the due amounts to the CDTFA.
Cannabis Tax and Fee Administration- Retailers
Cannabis retailers are those who sell cannabis products directly to the final consumers. A microbusiness can conduct retail sales if it complies with all the requirements of the cannabis retailers.
If you are a cannabis retailer, the CDTFA requires that you:
Register as a cannabis retailer with the CDTFA
Pay all taxes and fees owed to the CDTFA
Collect tax from consumers on every retail sale of cannabis or cannabis products, including any applicable local sales tax. The latest updates for 2021 are that retailers must collect both state excise tax (15%) plus retail sales taxes (7.25%).
Be sure not to remit the cannabis excise tax on the sales and use tax returns. Instead, pay the cannabis excise tax that is due to your distributor.
Taxes on Selling and Donating Marijuana of Medical Purposes
Medical marijuana purchases are not subject to the retail sales tax but still have a 15% cannabis excise tax. Municipalities can also slap on their own taxes.
Sales of cannabis and other related products are subject to sales tax unless they provide a Medical Marijuana Identification Card indicating they are qualified patients or primary caregivers. Along with this card, they will also need a government-issued identification card.
Beginning March 1st, 2020, in California, cannabis retailers are allowed to donate free medicinal products as a way of saying thank you for being dedicated customers. This applies only when given away without charge and does not apply if the customer pays some form of the fee before receiving the product (i.e., donation box). Medical Marijuana is exempt from taxes when donated by retailers.
Cannabis Tax and Fee Administration- Cultivators & Manufacturers
A cannabis cultivator is a person engaged in planting, harvesting, growing, drying, grading, trimming, or curing cannabis. A manufacturer is a person engaged in manufacturing cannabis or cannabis-related products in a fixed location and packages or repackages them or labels or relabels its container.
Microbusinesses involved in any such activities (cultivators or manufacturers) must comply with all the requirements as cultivators or manufacturers.
Cultivators shall pay the cultivation tax to the manufacturers/ distributors. However, they shall file sales and use tax returns and pay any tax due to the CDTFA.
Manufacturers shall pay the cultivation tax to the distributors upon collection from the cultivators.
Cultivators of cannabis and cannabis products in California have to pay a cultivation tax. As discussed above, this ‘cultivation tax rate is determined based on the weight and category of the products.
Effective from January 1st, 2020, the cultivation tax rates are as follows:
The CDTFA has created a cannabis tax guide for COVID-19. This new pandemic is going to affect the entire world and will devastate many lives. To make the lives easier for the cannabis businesses in California, the CDTFA is offering extended filing and payment deadlines.
To find the extended payment and filing deadlines for COVID-19, please click here.
California is one of the most regulated states in America, and it’s no different when it comes to the cannabis industry. The CDTFA has been doing its best to ensure a fair play situation for all parties involved, which means that you need to be educated on how they operate as well!
To help make things easier for everyone, we compiled this guide with everything you need to know about filing your taxes as a cannabis company in California.
Hopefully, this guide gave you a good understanding of the basics of filing with CDTFA. If not, feel free to contact us with any questions you might have!