For anyone running a cannabis business in California, the Bureau of Cannabis Control is where you’ll get your license. From medical to recreational cannabis product manufacturing companies to operating businesses in this space, this page aims to reveal what to expect from this department.
Whether you’re just breaking into this space or have been at it for a while, this blog post will answer many of the questions you may have about this California regulatory body and how it impacts your business.
What is the California Bureau of Cannabis Control?
The Bureau of Cannabis Control is a California state agency that oversees the licensing and regulation of marijuana within the State. State law gives the Bureau of Cannabis Control broad authority to regulate every aspect of commercial marijuana activity in California, from seed to sale.
For anyone operating a medical or adult-use cannabusiness, this California bureau is the regulating department for state law. Retailers, distributors, testing laboratories, microbusinesses, and temporary marijuana events must go through the Bureau of Cannabis Control to obtain appropriate licensing.
The California Bureau of Cannabis Control has come a long way 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 create one that’s legitimate with regulations in place.
Significant Bureau of Cannabis Control Cannabis Updates
After the Compassionate Use Act legalized medicinal marijuana in Cali, most of the regulation was through local governments. However, since then, we’ve seen this department implement many a measure to regulate the industry, including:
2015 – California established a comprehensive state regulatory framework for licensing and enforcing cultivation, retail sale, transportation, manufacturing, delivery, testing, and storage of medicinal marijuana. This involved enacting AB 243 (Wood, Chapter 688), AB 266 (Bonta, Chapter 689), and SB 643 (McGuire, Chapter 719). This regulatory scheme is called the Medical Cannabis Regulation and Safety Act (MCRSA), creating the three marijuana licensing authorities in California.
November 2016 – In November of 2016, Proposition 64, also known as the Adult Use of Marijuana Act (AUMA), was passed. This legislature made it legal for adults 21 years and older to grow, possess, and use marijuana recreationally, with specified limitations. Furthermore, AUMA legalized selling and distributing marijuana as a regulated business, which began on January 1, 2018.
June 2017 – Cali passed Senate Bill 94, which integrates MCRSA with AUMA to forge a single regulatory system that’s responsible for governing the medical and recreational marijuana sector in California. This is the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA).
December 2017 – Emergency cannabis regulations adopted by the BCC offer clarity and specify licensing and enforcement criteria for commercial cannabusinesses through the MAUCRSA. These laws remained in place as the Bureau decided on rules to develop its non-emergency regulations.
January 2018 – The BCC issued temporary licenses to retailers, testing laboratories, distributors, event organizers, and microbusinesses that allowed them to continue operating with a short-term license. This led to over 10,000 cannabusiness operators in possession of state licenses, which created the largest market in the U.S.
January 2019 – State laws for the entire marijuana supply chain were approved by the Office of Administrative Law. These laws took effect upon approval, which voided the emergency regulations established in 2017.
How does the Bureau of Cannabis Control regulate cannabis businesses?
The California Bureau of Cannabis regulates all cannabusinesses in the space. This includes all Bureau licensees, such as distributors, retailers, microbusinesses, cannabis events, testing laboratories, and more.
This California department ensures cannacompanies comply with all state rules. But the agency is also responsible for implementing disciplinary actions, as needed.
What are some common violations that can lead to fines and penalties from this California department?
Cali isn’t always fun in the sun for cannabusiness operators. Enforcement actions the BCC agency and other associated agencies could undertake are serious. If licensees are found violating any acts or laws, they may be subject to fines, denial of license renewal or issuance, interim suspension, and licensing restrictions.
Common cannabis violations that can lead to fines or another negative response from this agency include:
This involves failing to use and/or maintain traceability as a processor or retailer. The agency wants to see the end products and know where, how, and when the flower was grown. If it’s an operation producing oil, topicals, edibles, tinctures, or another cannabis derivative product, they want to know who processed it and how. This is why a robust seed-to-sale tracking application is crucial while operating in the cannabis space.
Security and surveillance laws ensure legal cannabis doesn’t get sold on the illicit market. Without these preventative measures in place, there’s a greater chance someone will steal or “misplace” products and sell them on the black market. This is why it’s essential to invest in a cannabis security system that accounts for state and local law.
Sales to Minors
Anyone purchasing cannabis products or services must be at least 21 years old in California. In some cases, regulators send undercover purchasers to cannabis retail shops to try buying products without providing proof of their age. Other times, an underage user is arrested with cannabis products that are traced back to the retailer. Avoid these problems by giving budtenders and other people who provide products and services proper training on the proof of age requirements.
Improper displays and signage can also result in costly infractions and penalties. Make sure you understand California’s advertising laws before you begin marketing your cannabusiness.
How do I apply for a state license with the Bureau of Cannabis Control?
You can find online applications for cannabusiness licensing through the Bureau’s Online Licensing System. Once you fill out your application, you can file it electronically. The Bureau also offers applications on its Application Forms page. You can submit these via mail or personal delivery at one of the BCC’s offices’ locations.
If you’re interested in applying for state licensure with the Bureau, it recommends contacting your local government first to learn more about the rules and requirements for cannabis activities in your city or county before you apply.
Before applying, review the Bureau’s demands and all relevant requirements in the MAUCRSA. The Bureau lists its regulations and updates on its “ Laws and Regulations” page.
Also, feel free to check out the BCC’s Facebook and Instagram for more insight. This California department has regularly reported information to both Facebook and Instagram, as well as news regarding the industry.
Bureau of Cannabis Control Navigation
The Bureau of Cannabis Control agency regulates cannacompany activities in California. Compliance is essential to operate, and as these laws continue to change, it’s crucial to keep track of all updates.
Our compliance-savvy services will scale your business! If you need help navigating these laws or are considering entering this space, contact our team today!
The cannabis industry is growing and evolving at a rapid pace. New York legalized cannabis for medical purposes in the past, but now that it’s legal to sell and consume recreationally, everyone is wondering what to expect.
New York became the 15th state to legalize recreational cannabis on March 31, 2021. Once the market becomes established, we’re looking at a $7 billion sector.
The legislation in New York is not a free-for-all either. There are strict regulations and compliance requirements for conducting business, but you can set up your company properly to run smoothly with proper guidance.
Looking for help establishing your cannacompany in New York? Contact us now for assistance structuring and scaling your cannabis venture.
Cannabis Legalization in New York: What’s Happening?
Cannabis sales in New York will not begin until sometime in 2022. However, it’s now legal for New Yorkers 21 years of age or older to possess and smoke cannabis.
Governor Cuomo recently signed a bill that legalized adult-use cannabis and expanded the state’s medical cannabis program. He added to the list of qualifying medical conditions for medical marijuana, as well as the product options. The current program prohibits cannabis flower products. However, with the update, this prohibition could be lifted.
This is a significant win for New Yorkers with previous marijuana convictions, as well. Under the law, those records will be wiped clean.
New Yorkers are allowed to grow marijuana at home, have it delivered, and consume it in consumption lounges through this legislation. This is expected to spark new businesses and innovations throughout the region.
But with these advances, more legislation is essential to regulate the market.
So far, we understand that existing medical operations in New York will be some of the first allowed to do business in New York’s recreational sector. But they’ll need to pay a fee. However, as vertically integrated operations, these businesses will have an advantage over the entrepreneurs looking to get involved in the space.
The law’s goal is to have 50% of the licenses distributed to social equity applicants. These are the applicants from communities disproportionately affected by the War on Drugs, small distressed farmers, service-disabled veterans, and women.
There will be a 13% sales tax on cannabis products. According to the bill, this includes 9% allocated to the state and 4% to the local municipality. New York will also have an excise tax that’s based on milligrams of THC in the products.
This tax revenue will fund a social equity fund, education, and drug-education programs.
The bill has also formed an Office of Cannabis Management and a Cannabis Control Board to regulate New York’s cannabis sector. However, advocates throughout the industry have worked and will continue to work to shape New York’s legal cannabis market. These lawmakers, advocates, and company executives will continue to play a significant role in how regulations and the market progress.
What to Expect Bringing Your Cannabis Company to New York
While cannabis business operators will not be permitted to vertically integrate due to New York’s cannabis regulations, it’s still possible to obtain your piece of the NY cannabis pie. The state has over 19 million residents and attracts millions of people globally each year, meaning there should be more than enough consumers to go around.
Some large-scale cannabis operations are planning their move into New York’s cannabis sector. Mainly cultivators. This is because these operations are choosing to focus more on their branding and product quality over their retail presence. Analysts believe that as the New York adult-cannabis sector matures, these operations will start to operate as consumer product companies.
Anyone interested in coming into New York as a vertically integrated cannabis company might consider obtaining an existing license holder. Some of the current operators are financially troubled or privately owned, which means they’ll likely get acquired through an M&A deal.
Looking to obtain an existing license holder in New York through an M&A? Contact us now for expert assistance analyzing their financials.
More on New York Adult-Use Cannabis Legislative Progress
The state has been working to legalize recreational cannabis for years. Still, Governor Cuomo and the state legislature have found it challenging to determine terms and set up the recreational program. Now that the bill has been agreed upon and the legislature has been passed, the industry will progress with more transparency, more preservations for social equity programs, and less gubernatorial control.
New York will now rival other Northeast states that have legalized, including New Jersey.
Cuomo has discussed the pressure New York is under to establish its recreational market.
“We have passed the point of legalized cannabis,” Cuomo explained just before the agreement was reported. “It’s in New Jersey. It’s in Massachusetts. To say we’re going to stop it is not an option. It is here. The only question is, do we regulate it here, do we gather the revenue here, or do we have people driving to New Jersey, which is right there, or to Massachusetts if you’re in a northern part of the state. But it is here.”
What’s in New York’s Adult-use Legalization Bill?
Cannabis is legal for adults 21 years old or older.
Adults can possess up to 3 ounces of cannabis and 24 grams of cannabis concentrate.
New Yorkers are allowed to grow up to three plants per person and six plants per household. Advocates view this as a crucial component of cannabis equity because many people cannot afford to purchase at dispensary prices.
The tax rate for cannabis in New York will be 13 percent. Nine percent will go to the state, and four percent is allocated to localities. The governor’s office believes that it will raise approximately $350 million each year in tax revenue once the program is operating fully.
The state will establish an Office of Cannabis Management (OCM). This will be in charge of overseeing the recreational and medical cannabis spaces. There will be a five-member board leading the office; the governor will appoint three members, and the state Senate and state Assembly will each appoint one.
The OCM will offer oversight using a two-tier licensing program that will separate growers and processors from the cannabusiness owners operating retail establishments. There is no information regarding how many licenses it will issue.
The state will allow cannabis delivery, along with club-like consumption sites. However, these consumption locations for cannabis will not allow alcohol.
Cannabis Ancillary Firms in New York Experiencing an Influx
Now that the new cannabis market in New York is opening up, companies are preparing for it. Cannabis-focused ancillary firms, including but not limited to law practices, marketers, and recruiting agencies, are experiencing an increase in business.
We’ve also been experiencing our share of inquiries about structuring cannabis businesses in New York, organizing the financials for cannabis operations interested in M&A, and more.
Need help with your cannabis business in New York? We have you covered! Contact us now for assistance structuring and scaling your cannbusiness in this maturing market.
The War on Drugs is no longer a priority, but for the legal cannabis market in New Jersey, the black market poses a threat.
The prohibition of marijuana was so strict that it forced those who wanted to sell weed into illegal markets. This resulted in no tax revenue in this unregulated industry lacking oversight.
Now that legalization is in full effect, many are wondering how they should proceed with their business when there are now two avenues available for them: the black market or the legal one.
Fortunately, advocates are working hard to bring legacy cannabis business operators in New Jersey to the light. But for some, it’s still going to take some convincing to leap through the regulatory hurdles and take on additional expenses to make their operations legal.
New Jersey’s Legal Recreational Cannabis Market Could Disrupt the Black Market
New Jersey’s legal adult-use cannabis market is new and exciting. With the state’s medical cannabis program in place for two years already, legal recreational use of marijuana is set to go live in the state. This will open up the state’s economy to much-need tax revenue, particularly essential following COVID-19’s impact on the state.
The pandemic has ravaged New Jersey. The state’s population is suffering from the spreading illness and its economy is battered by unemployment rates that exceed national averages. But legalization is a beacon of hope that has the potential to refresh the local economy.
Legalization will give the Garden State a way to recoup some revenue from weed sales, whether it be through taxes or other means (such as licensing). It will also give the illicit cannabis dealers of New Jersey the chance to become legal cannabis entrepreneurs.
The state will have an opportunity to undo some of the damage done by prohibition, like new job creation and entrepreneurial opportunities in the cannabis space. It also will offer opportunities to those who’ve been impacted most by the War on Drugs.
“Now is the time to innovate regulation and thoughtfully incorporate legacy operations into emerging marketing in New Jersey and New York,” Dawson explained to NJ.com. “We must learn from their successes and shortfalls, absorb the knowledge and expertise of longtime operators, and offer them a space in the industry, rather than criminalization and exclusion.”
According to Trenton-based consultant, Leo Bridgewater, New Jersey will offer provisions to support minorities. These will include formerly incarcerated people to ensure they have the opportunity to run canna-businesses in the Garden State.
“Cash out, cash in,” Bridgewater explained. “Cash out of the legacy market and cash into the adult-use market. Everyone that I know, I tell them ‘get out of the game, your customers are about to go somewhere.”
If New Jersey provides an amnesty period for legacy operators, this should effectively lead many of these people away from the black market cannabis operations.
“If the state gives an amnesty period where you can come to light in some kind of way, that’s literally turning the legacy market inside out if you think about it,” he said.
New Jersey’s Black Market for Cannabis
New Jersey’s black market for cannabis is nothing new, and some believe legal cannabis taxes will encourage the black market’s operations. This is something we’ve seen in California, and it’s likely to continue as long as illicit dealers are willing to take on the risk.
Legitimate cannabis distributors selling through legitimate channels have reason to worry. The black market for cannabis is still thriving in California, and there’s a good chance it will continue to expand despite the state’s legal weed shops.
“You’re going to get people who don’t know their left from their right and won’t know what to ask. That’s who the state’s going to capitalize on,” DC, a black market cannabis seller, explained to the Asbury Park Press. “But, after a while, it’ll be, ‘Why am I paying taxes on this? Why am I paying double the price?'”
Even though pricing is a pain point for legitimate cannabis distribution operations, that’s the least of someone like DC’s worries. He still has to deal with more risk than those who are legit because his product is unregulated and untested. While it’s more costly to become legitimate, the fact of the matter still stands: there’s more to gain by switching to operate legally.
However, many N.J retailers seem to agree with DC’s sentiment. The reality is that the legal market will inevitably be more expensive than what’s found on the black market, and not everyone can afford to pay a higher price. This competition will result in some consumers choosing the cheaper, more dangerous option. But some advocates are working to displace the illicit cannabis market in New Jersey.
Displacing New Jersey’s Illicit Cannabis Market
Minimizing the illicit market is a difficult-to-achieve goal of all legal cannabis authorities. However, the tax structure currently proposed for New Jersey’s legal cannabis sector is likely to encourage dealers to continue operating outside of the law.
The main factor driving the illicit market’s success in legal states is the tax structures and compliance-related regulations. These taxes and elevated costs of doing business are artificially inflating the price of cannabis and associated products throughout the supply chain.
For example, in Cali, adult-use cannabis became legal on January 1, 2018. But even with the largest addressable market, sales weren’t anywhere near what was predicted. Actually, the sales fell for the year, damaging companies and leaving the state government with a dwindling budget.
But why? Because the taxes throughout the supply chain forced cannabis flower prices to soar nearly 80% higher on the legal market than the average black market dealer was offering.
Advice for Illicit Cannabis Distributors in New Jersey
Illicit cannabis distributors in New Jersey should be aware of the risks that come with continuing to operate illegally. As more businesses become legitimate, they’re not going to want to sell to black market operators as they understand they can lose their licenses, have to pay costly infractions, and even face prison time. Thus, dealers will need to determine how they may change their business model accordingly.
With this in mind, some advocates are working to ensure equal opportunities for the legacy market to participate in New Jersey’s legal cannabis sector. To handle the black market issue, Dasheeda Dawson is hosting a five-hour virtual conference, which is presented by Weedmaps.
“Legacy to Legal: Transitioning into a Regulated Cannabis Market” will discuss New York and New Jersey, and how legacy market operators can make the transition to operate within the law. This conference will happen on Friday April 30, from 5 pm to 10 pm, with several notable speakers set to deliver insight.
New York State Assembly Majority Leader Crystal Peoples-Stokes will deliver the keynote. With her experience forming recently legalized cannabis legalization within New York and advocating social equity measures, she’ll present information that will help illicit cannabusiness operators switch to legitimacy.
“We found long and hard for equity-centered legalization that provides investment and restoration to communities battered by the War on Drugs. Now, we must work to ensure that those most harmed by prohibition reap the benefits of the blossoming industry,” Peoples-Stokes explained. “I’m proud to support the Legacy to Legal education series because it brings Black and brown entrepreneurs who’ve been working in the shadows to the table so that they can be part of New York’s adult-use market. In order for legal cannabis to be equitable, we must integrate them into our framework. These events are a powerful start to that process.”
Legacy operators in New Jersey will have a chance to contribute to the legal market as a form of equity. With this in mind, it’s important to keep in mind that legalization will permit legitimate cannabis operations, and advocates are working to ensure legacy operators will have a chance at success.
New Jersey’s Legacy Operators
At Northstar, we understand that the industry is evolving. The plant was prohibited, and now that it’s becoming legal throughout the nation, we want to bolster that progress with our services.
Interested in structuring and scaling your cannabis business? Contact us today for expert guidance.
Medical cannabis in Michigan was expanded upon in the summer of 2018 after the state approved eleven new measures for cannabis patients. But what’s the deal with the recreational side of things?
This guide provides insight into some of the most common Michigan cannabis business questions we receive and clarifies how the Great Lake State’s cannabis industry will operate. If you have any questions about establishing, organizing, or scaling your cannabusiness in Michigan, we’re here for you.
Interested in scaling your cannabis business in Michigan? Contact us today to learn more about how we can help.
Michigan Dispensary Laws
We recently published an article discussing how to start a cannabis business in Michigan. But once you get past starting a dispensary in Michigan, you’ll need to understand how the laws surrounding these operations work to remain compliant.
In November 2018, Michigan’s voters approved the Regulation and Taxation of Marijuana Act. The state then became the 10th state in the US to legalize recreational cannabis.
While medical marijuana was legalized in Michigan in 2008, the state lacked dispensary allowances. But with the new legislation, Michigan established a framework for licensing and operating medical marijuana dispensaries in Michigan. Michigan calls its dispensary operations “provisioning centers.”
New legislation put the Michigan Marijuana Regulatory Agency (MRA) in charge of overseeing cannabis business licensing in Michigan. At first, they announced they’d only accept license applications from currently licensed medical marijuana dispensary operators for the initial 24 months. However, starting in March 2021, Michigan began accepting applications for recreational cannabis licensing opportunities from ganjapreneurs who’d never held a medical marijuana license before.
Some municipalities chose to avoid participating in Michigan’s legal cannabis sector. However, now, especially with the pandemic’s impact on tax revenue, many are considering allowing recreational cannabis.
Detroit released its rules for licensed adult-use marijuana sales. The city kept social equity in mind to ensure fair opportunity for people from all backgrounds, too.
Detroit legacy applicants, or the people applying who have lived in Detroit for 13 of the last 30 years and are low-income applicants, will receive half of the city’s recreational cannabis licenses. Applicants who’ve been disproportionately impacted by prohibition also receive up to 75% off on licensing fees and properties the city land bank owns.
Michigan Cannabis Laws to Regulate Medical and Recreational Marijuana in Michigan
Who is allowed to purchase cannabis in Michigan?
Provisioning centers sell medical marijuana to Michigan residents who have a state-approved medical marijuana patient card. For adult-use marijuana in Michigan, adults who are 21 years of age and older can legally buy, possess, and consume marijuana.
Is home growing allowed in Michigan?
Yes, medical marijuana patients are allowed to cultivate up to 12 cannabis plants at home. Furthermore, the Michigan Regulation and Taxation of Marijuana Act permits the cultivation of up to 12 cannabis plants by adults who are 21 years and older.
Retail Cannabis Licensing in Michigan
What state agency is in charge of cannabis licensing in Michigan?
The Michigan MRA, or Michigan Marijuana Regulatory Agency.
What is the process for obtaining a medical marijuana dispensary license in Michigan?
Michigan medical cannabis dispensaries go by the name “provisioning centers.” The Michigan MRA has a two-step application process for marijuana facility licensing. First, you’ll need to prequalify, which involves a background check of everyone involved with the application.
The next step is to qualify for the license. This involves giving information specific to the type of license you’re applying for, which in this case, is a provisioning center license.
What are the costs surrounding applying for a medical marijuana provisioning center license in Michigan?
Those interested in applying for a medical marijuana provisioning center license in Michigan will have to pay two fees. The first fee in the provisioning center licensing process is an application fee of $6,000. You have to submit this before anyone will process your application.
The other fee is for an annual regulatory assessment. This has to be paid before you receive your license.
What is the process to get a marijuana retail license in Michigan?
The Michigan MRA has accepted applications to get adult-use cannabis facility licenses since November 1, 2019. However, at least at first, the only applications accepted were from people who currently hold a medical marijuana operating license.
On March 1, 2021, the MRA stopped this requirement, which opened the application process to everyone. Social equity qualifying applicants were given discounts on the process, as well.
The MRA uses the same two-step application process it uses for its provisioning center licenses. This involves prequalification, including submission of information, background checks, and an application fee. Then, the MRA conducts a review of the proposed retail establishment, which includes a physical inspection. Applicants must pay a licensure fee upon approval.
Keep in mind that you also might need approval and a license from your municipality.
How much does it cost to apply for an adult-use marijuana retail license in Michigan?
Getting an adult-use marijuana retail license in Michigan has two fees involved. The first is your application fee, which costs $6,000 and has to be submitted before you can get your application processed. After approval for your license, you’ll have to pay a licensure fee for an adult-use marijuana retailer in Michigan, which costs $25,000.
Each year, you can expect to pay between $30,000 and $50,000 for renewal fees. This cost is connected to your gross sales compared to other license holders.
You may have to pay additional fees at the municipal level, as well.
Are there any restrictions on how many licenses one entity can possess?
The state hasn’t and will not limit how many licenses are issued. But local municipalities have the option to limit the type and number of facilities licensed within each jurisdiction.
Cannabis in Michigan 2021
While operating a cannabis business in Michigan in 2021 has impressive potential, it’s crucial to consider all regulations involved. Understanding compliance and maintaining proper bookkeeping practices ensure you never have to worry about costly infractions that could shut your business’ activity long before achieving profits.
Interested in starting, structuring, or scaling a cannabusiness in Michigan? Contact us today for expert assistance.
California cannabis business taxation is in a constant state of motion. With each update, it becomes more crucial to remain up to date on the regulations in place, which is why we’re covering Cali cannabusiness taxes and the latest updates to keep in mind.
Need someone to handle your cannacompany’s financials? Contact us today to learn more about how our fully-integrated financial partner model will scale your cannabis business.
California ensures all retail sales of tangible personal property are taxable. However, in some cases, the law might provide specific exemptions. Cannabis and cannabis products fall into the tangible personal property classification and do not have a specific exemption, which means sales of this property are subject to sales and use tax.
California Cannabis Excise Tax & Cultivation Tax Insight
Retail purchasers of cannabis or cannabis products must pay a 15 percent excise tax. This tax is determined in accordance with the average market price of the cannabis or cannabis products as they’re sold in a retail setting.
Furthermore, harvested cannabis has a cultivation tax upon entering the commercial market. This is the responsibility of cultivators, and the tax is based on cannabis weight and category. These are the three categories in place:
Fresh Cannabis Plant
Qualifying for the fresh cannabis plant category means weighing the unprocessed cannabis plant within two hours of harvesting.
The CDTFA must adjust cultivation tax rates annually for inflation. However, Assembly Bill 1872 ensured that cultivation tax rates would remain the same for the entire 2021 calendar year. However, beginning in 2022, the CDTFA plans to adjust cultivation tax rates in California.
Registering for a Sales and Use Tax Account & a Cannabis Tax Account in California
You can register for your sales and use tax account and a cannabis tax account or add your business location to your existing account online here. If you already have a username and password, log into your account to register.
To register for your cannabis tax account under your existing username, you’ll click on the More link in the I Want To section. From there, you’ll select the Register a New Business Activity on the Online Services homepage, choosing Cannabis business activities to begin. Then, you’ll enter your information.
Besides registering with the CDTFA to acquire the essential tax permit(s), you’ll also have to get the right cannabis business license(s). Cannabis cultivators get their licenses from the California Department of Feed and Agriculture. Cannabis manufacturers obtain licensing from the California Department of Public Health. Cannabis distributors, microbusinesses, retailers, and testing laboratories receive licensing from the Bureau of Cannabis Control at the California Department of Consumer Affairs.
Business operators also must contact their city and/or county government office to obtain information on which local licenses, if any, they’ll need. Here’s some insight from the CDTFA that should give you a good idea of which permits and licenses you might need:
Seller’s Permit Requirements for Cannabis Businesses in California
If your business doesn’t sell tangible property in California, you don’t need to hold a seller’s permit. But if you need to meet the state’s commercial cannabis licensing application requirements, you’ll still need a certification letter from the licensing agency. This letter explains that a seller’s permit is not necessary.
Once the CDTFA receives your email, they will review your information. If you’ve provided enough information, you can expect a certification letter mailed to the address you provided. However, if they need more information, they’ll reach out to you directly.
California Marijuana Business Filing and Payments
Sales and Use Tax Return
If you sell cannabis, you’ll need to file regular sales and use tax returns to report your sales. However, even if you don’t have taxable transactions to report, you’ll still have to file your sales and use tax return. Also, you still must report your activities to the CDTFA.
Cannabis Tax Return in California
If you distribute cannabis or cannabis products, you must electronically file your cannabis tax return with the CDTFA. This is how you’ll report how much cultivation tax and cannabis excise tax you owe. If you don’t have taxable transactions to report, you’ll still have to file your cannabis tax return and report your activities to the CDTFA.
You’ll have to file your cannabis tax return by the last day of the month after the reporting period. Keep in mind, your cannabis tax account is separate from the other accounts you might have with the CDTFA.
Paying California Cannabis Taxes in Cash
Many Cali cannabis business operators pay their sales and use tax or cannabis tax in cash. If this is something you’re considering, you’ll need to contact the CDTFA to arrange the transaction and request an exemption from its No Cash policy.
The CDTFA grants exemptions if a cannabusiness operator must pay in cash to avoid undue difficulties. You can fill out a No Cash Exemption Request form to explain your business’s operations and why you cannot establish a bank account or pay using a cashier’s check or money order. Once your request is approved or denied, the CDTFA will notify you in writing, offering more information on how you should proceed.
Once you’re approved to pay in cash, you’ll need to contact your local office to schedule an appointment to pay at least 21 days before the payment is due. If your estimated monthly tax liability exceeds $20,000 for cannabis tax accounts or $10,000 for sales and use tax accounts, you’ll have to pay by electronic funds transfer (EFT). If you don’t pay by EFT, you’ll be charged a 10 percent penalty. However, if you receive approval to pay in cash, you’re excluded from this EFT requirement.
California Cannabis Business Tax Assistance
We monitor California’s cannabis regulations for our clients, and we’ll stay up to date on them for you too. Contact us today for expert assistance managing your business’s financials.
With more regulation now than ever before, the cannabis sector demands good decisions to succeed. But how to make the best decisions for your cannabis company?
Use this actionable list to ensure your cannabis business decisions guide you through many of the most common challenges in the cannabis sector.
Interested in implementing these actions? Contact us today to learn more about how we can help.
Have a Cannabis Business Strategy in Place
The right cannabusiness strategy should outline your plan going forward, outline present- and long-term business objectives. Since the cannabis sector has so many moving components, you should be able to highlight an area that’s aligned with your company’s strengths.
For example, if you’re operating a cannabis nursery out of Oregon, you might have access to some of the most fertile soil in the US. The Willamette Valley is known for its living soil, and if you can take advantage of that for your grow, you can likely produce high-quality organic products that can compete with top brands.
Checking every box in a niche is challenging. But if you outline where your company fits and why, along with which niches you’ll target today and in the future, you have a better chance of succeeding in the cannabis space.
Even though many cannabusiness operators believe in scaling impressively, some are interested in sustainable approaches. Starting and maintaining a “mom-and-pop” style operation that supports your lifestyle is still a fulfilling option for some.
However, for those interested in a higher potential for revenues operating a larger, commercialized cannabusiness, it’s within the realm of possibilities. This is something that we can help you with.
Looking to scale your cannabis operation? Contact us today to learn more about how our services facilitate and support your growth.
Track & Analyze Key Cannabusiness Metrics
Your key cannabusiness metrics will vary from niche to niche. But one thing remains the same; you’ll use these metrics to show critical success factors. Your metrics should help you identify areas for improvement, along with how aligned you are with your projected operating costs.
For instance, cultivators use various metrics to measure their successes and shortcomings. These usually include average yield, yield per square foot, yield per watt of light, production per acre, fixed costs, variable costs, and stain cultivation. This offers insight into how much product they’re generating, as well as how each variable could be affecting their yields.
Metrics are also necessary for interested third parties, like investors. If you’re seeking investment, potential investors will want to analyze the metrics to evaluate your operation, comparing it to the competition. Your metrics will also add credibility to your operation.
Software for cannabis recordkeeping can work, although the options for accounting software for cannabis aren’t robust enough to handle all aspects. This is why we recommend keeping a log of everything and using Excel or Google Sheets for recordkeeping to all of our clients.
Your metrics allow you to focus on what works by putting the data on display. Rather than growing 30 strains with 25 unsuccessful, cultivators can concentrate on the five successful strains that dispensaries purchase. The same train of thought works for other cannabis operations.
Organize Your Books
As a cannabis business operator, having your financial framework and processes organized facilitates your success. Most of the time, this means hiring a CPA specializing in cannabis.
Cannabusinesses are under more scrutiny from regulators. These governing bodies are usually quite strict with their regulations, dishing out costly infractions without hesitation.
Section 280E makes it challenging for cannabis operations to deduct expenses. This is something that will continue until cannabis is reclassified. Cannabusiness operators cannot write off their rent, payroll, and other common business expenses – unless they have the right cannabis CPA organizing their books and structuring their entities.
Staying up to date on your accounting and finances is an excellent way to outdo the competition. Entities lacking organizational skills are at a financial disadvantage, which is why it’s always important to have your bookkeeping practices on point.
Need help managing your books? Contact us today to learn how your cannabusiness will benefit from our bookkeeping services.
Surround Yourself with the Right People
The right people will support your cannabusiness’s operations. Cannabis experts in various fields will understand what your business is capable of and advise you on sustaining and growing your operations while remaining compliant.
For example, the best cannabis CPA you can afford has the potential to enhance your business’s operations tremendously. This individual will offer value by saving time, energy, and capital that can be used to support the operation in other ways. Since each state’s regulations and taxes for cannabis differ, the right CPA will guide you, allowing you to avoid common errors you may overlook.
Experienced cannabis accountants and lawyers should be your operation’s first investments. Several other roles will guide your cannabis company’s decisions, including finance, marketing, valuation, and other areas. These team members and advisors will offer valuable insight when it’s most important, so it’s crucial to make hires you can trust.
As you look for a solid financial advisor, consider that individual’s long-term vision, as well as their background working with cannabis and planned strategy. What options have they considered? Is he or she only focusing on short-term results?
Advisors who think in the short term aren’t working for your long-term success. They want to work quickly without considering sustainable options that will support your long-term vision. Find people who plan to contribute to your vision and guide you in your decisions with expertise.
Have Cannabis SOPs in Place
We spoke about the importance of cannabis SOPs in the past. But communication and operational procedures are essential for success. Without a firm understanding of your processes, your business cannot operate effectively and efficiently.
Something as basic as purchasing procedures can be the glue holding your endeavor together. Accountability for important transitional tasks should be distributed among more than one person. This is possible through internal controls like signatures, dual-approval, and time logs for purchasing and cash handling.
Inefficiencies in your processes are a time suck, which is also a money drain. Don’t waste your time and money blowing through multiple bookkeepers without an effective system in place. Create SOPs for every aspect of your business where applicable.
Making Decisions for Your Cannabis Company
As you make decisions, know that they will impact your cannabis company’s success in one way or another. Acting, not acting, saying ‘yes,’ saying ‘no,’ it all directs the direction of your business. Simply put, it’s all in your hands.
By making the right choices and taking action, you’ll support your endeavor’s vision – and scale it to reach or even exceed your expectations. But keep in mind that the right team working with you should always be a priority.
Looking for the right team to support your cannabis company’s vision? Contact us today for expert guidance.