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!
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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.”
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