Becoming a legal grower or cannabis nursery business operator in Cali might seem like a daunting task, especially if you’ve been making your living as a part of the legacy industry. But while it takes some time to acquire the right cultivation licenses, cannabis businesses that go through the steps to become legitimate ultimately prosper long-term.
The cannabis industry is thriving in Cali. While regulations ensure the state’s medical marijuana patients and recreational consumers stay safe, cannabis growers must do their part to guarantee compliance.
Cultivation laws can be a bummer for some, but for most, these rules ensure cultivation licenses for each qualified cultivation facility. This article covers the ins and outs of obtaining a cultivation license in California – including some of the license fees – while bypassing run-ins with local law enforcement.
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History of Adult-use & Medical Marijuana in Cali
Governor Jerry Brown officially signed the Medical Marijuana Regulation and Safety Act (MCRSA) into law on November 8, 2016. The law includes three separate bills (AB-266, AB-243, and SB-643), which established the foundation for medical marijuana regulations and the state’s licensing program.
Medical marijuana was legalized in Cali in 1996. But the state has come a long way since then.
At this point, the state has beyond 2,800 marijuana businesses operating. This industry is on track to become a billion-dollar industry, which is why both adult-use and medical marijuana growers like you need the insight to join the legal space.
Legalization has also encouraged other states bordering California, like Arizona and Nevada, to implement similar frameworks. And as more states follow suit with legalization, we can expect cannabis grow businesses to enjoy even more support in the community.
California ignited the cannabis craze in the United States, and with this legislative progress, we’ve observed others following in this state’s footsteps.
As time passes, we expect other states to progress to Cali’s level, but for now, let’s cover this state’s cultivation laws for some additional insight into the way growers can operate in California.
Cannabis Cultivation Laws in Cali
A qualified patient is legally allowed to cultivate medical cannabis under the Compassionate Use Act. However, they need a physician’s recommendation to use and grow their own cannabis for medical purposes.
The Compassionate Use Act (CUA)
The CUA allows a qualified patient to possess up to eight ounces of dried cannabis and cultivate as many as six mature plants.
Because this act doesn’t allow for dispensaries, patients are typically allowed to grow the amount they need for personal use only. While no one can deny that growing in your own home is convenient, there are some drawbacks – namely law enforcement.
California Proposition 64
California Proposition 64, also known as the Adult Use of Marijuana Act (AUMA), allows adults to grow six plants per land parcel in Cali. But locals are allowed to “reasonably regulate” cannabis grown for personal purposes, even if it’s for a qualified patient. Courts are also allowed to ban personal medical marijuana cultivation, which has fueled the state’s medical marijuana program.
While those with a medical marijuana card, including a primary caregiver, can grow to fulfill a qualified patient’s medical needs, a medical patient still needs access to professionally grown medical cannabis. This is why commercial cultivation licenses have become essential.
Locals can license commercial growers, but this requires a license from the California Department of Food and Agriculture. In some instances, permits may be necessary from the state or local Water Board and Fish and wildlife, as well as CEQA analysis.
To learn more about your local ordinance code, you’ll Google the name of the county or city and the word “code.” You can also check for websites listing your locality’s marijuana or cannabis codes.
In some cases, the online listings may not have been updated for a while. With this being the case, you can look at your county or city’s council or board meeting agendas online to see the latest ordinances available.
Water Boards Cannabis Cultivation Policy
The Water Boards Cannabis Cultivation Program was placed in the state’s regulatory code by the Office of Administrative Law on December 18, 2017. This program includes four primary parts that address potential water quality and quantity problems that relate to growing cannabis.
The Cannabis Policy sets principles and requirements for cannabis farming activities. These rules protect instream flows and water quality by ensuring water diversion and waste discharge from cannabis cultivation doesn’t damage water quality, riparian habitat, wetlands, springs, and aquatic habitats.
As a cannabis cultivator, you’ll need coverage or waiver from either one or both of the State Water Board cannabis cultivation regulatory programs. To get an expedited water right for cannabis farming activities, you’ll need to opt for the Cannabis Small Irrigation Use Registration Program.
Cultivation License Requirements for Cannabis Businesses
Even if you plan to grow medical marijuana for those holding a medical marijuana card, you’ll need a cultivation license to grow your own cannabis commercially. According to Cali’s licensing process, here are the stages and licensing fees associated:
- Stage 1: Preliminary Determination of Eligibility $3,258
- Stage 2: Initial Ranking $701
- Stage 3: Second Ranking $1,790
- Stage 4: Public Meeting and City Council Final Selection $1,937
The California City Police Department also conducts a criminal background check on all applicants during the first stage. Since resources to conduct these checks are limited, just six applicants can be processed per day. Thus, you’ll need to schedule an appointment. Keep in mind, there’s a $78 fee you’ll need to pay for each background check.
Cannabis Business Cultivation License Requirements
Location, location, location! Applicants must submit a “Zoning Verification Letter” to the Planning Division in the City Hall. This documentation comes from your local Public Works Department, and the review will take around two weeks and costs $250.
While it might seem like a complicated process, it licensing for cannabis growers has several tiers. Here are the options:
Tier 1: Specialty
Tier 1 growers can use a space that contains as much as 5,000 sq. ft. of canopy or up to 50 mature plants on non-contiguous plots. The types of licenses included in this tier are License 1 (Specialty Outdoor), License 1A (Specialty Indoor), and License 1B (Specialty Mixed-Light).
Tier 2: Small
Tier 2 cultivators are allowed to grow between 5,001 and 10,000 sq. ft. of canopy. The types of licenses included in this tier are License 2 (Small Outdoor), License 2A (Small Indoor), and License 2B (Small Mixed-Light).
Tier 3 grow ops can be between 10,001 sq. ft. and one acre of canopy. However, these licenses have limited access to vertical integration options. The types of licenses included in this tier are License 3, License 3A (Indoor), License 3B (Mixed Light), and License 4 (Nursery).
Steps for Cali Cannabis Cultivation License Success
Failing to prepare is preparing to fail, and without the right preparation, it’s quite challenging to get a cultivation license in the cannabis industry. If you’re considering growing cannabis, you’ll need a license in California.
Keep in mind, the most important aspect to overcome during the application process is site selection. In fact, you’ll need to find a location that meets all regulatory requirements for your cannabis grow license.
If you have a grow site already selected, great! Now’s the time to study up on the state’s rules and regulations involved with cannabis grow licenses.
Here’s a list of the steps you’ll need to take to acquire a cannabis grower’s license in Cali:
Step 1: Create a Business Strategy & Vision Plan
At this stage, you know you want to grow cannabis. But do you know why?
Consider your commitment and capabilities, and figure out how your cannabis business will best serve the masses. Think about your goals, resources, and experience to determine how you can best contribute by growing cannabis.
For example, do you want to grow for the primary caregiver holding a medical marijuana card and patients? Or are you more interested in growing adult-use cannabis?
Think about your long-term goals here. You might find it appealing to grow quality product for every primary caregiver and qualified caregiver in your locality. However, you might be more interested in growing dried cannabis for manufacturing purposes.
But what if it’s only the lifestyle?
In some cases, wannabe cannabis business owners want to grow cannabis to live the lifestyle. They don’t consider marketing or how they’ll scale the operation with retail sales. With this in mind, more often than not, these individuals don’t last long in this industry.
As many plants grow throughout the state, the competition remains fierce. Just because you have a grower’s license in California doesn’t mean you’ll successfully grow marijuana plants a qualified patient needs.
Each qualified patient has his or her own set of unique needs. From cannabinoid content to terpenes, you’ll need to grow specific strains to meet those necessities.
This isn’t to say recreational cannabis isn’t challenging to grow. However, at the same time, it’s crucial to consider the role you’re willing to play in this sector.
This is where your strategy will play a pivotal role in your success.
If your goal is to scale your operation to the point that it’s publicly available on the stock exchange market, you’ll likely have to think about your business differently than someone who is simply in it for the lifestyle.
There’s competition in Cali for cultivation licenses, so if you’re more aggressive in acquiring your market share, you’re more likely to succeed at growing cannabis consistent for the market you plan to serve.
Whether you plant to grow medicinal cannabis for medical use or commercial cannabis to use for a specific cannabis product, the most lucrative businesses have a strategy in place – and you should, too! This strategy should also include how you’ll handle your California cannabis business tax liabilities.
Step 2: Property Acquisition
Local ordinances can be quite restrictive regarding cannabis business activities. To avoid criminal prosecution, it’s crucial to follow all restrictions and guidelines in place, including any legal advice you get from experts.
Restrictions, regulations, and permits from each locality determine where and how you can grow cannabis. To find and obtain a permissible property, you’ll need to learn more about how your local government regulates cannabis plants.
To cultivate cannabis legally, you’ll need to know about the requirements. The federal government still prohibits commercial and personal cultivation. However, some landowners will still allow those seeking a commercial license to grow cannabis within state-established limits, offering a lease agreement on a case-by-case basis.
Consider how the property can fulfill your cultivation needs and whether you can grow adult-use or medical marijuana with a cultivation license. Most of the time, if the property is owned, you probably cannot grow cannabis on it. However, in rare instances, a landowner might be willing to allow it, particularly if you plan to cultivate it as part of California’s Medical Marijuana Program.
After you get your property, you’ll need to obtain a Conditional Use Permit/Land Entitlement.
The local government and community might attempt to block your approval. Since local ordinances offer protection to residents, your property might not allow you to grow medical cannabis or the likes. This is why research is crucial at this stage.
You’ll begin by analyzing the city and county you plan to operate in. After you determine what the city or county allows for cultivation, you’ll need to check for green-zoned parcels that meet the requirements for your grow.
Consider the logistics for the property. For example, the surrounding resources, employee commute time, and utility accessibility are crucial for a successful grow op.
Think about the buildings or structures on the property, too. In some cases, these could be problematic, especially if they’re inefficient or no good for cultivation.
Consider the following to ensure your cannabis plants have a happy home that supports your success:
- Access roads
- Bodies of water
Make sure to analyze this data to determine zoning restrictions that could impact workflow or disqualify the property in another way.
Step 3: Prepare Your Application for Approval & Cannabis Licenses
Now that you have a property to grow marijuana plants and a facilities plan, you’ll need to prep your application for the California Department of Cannabis Control (CDCC).
A cultivation license isn’t simple to obtain; local and state officials will want you to have your business plan organized and ready to go. Regardless of whether you need a cultivation license to grow medical marijuana or adult-use marijuana plants, local approval is essential.
State agencies have recently been consolidated under the CDCC to make the process easier, including the Bureau of Cannabis Control (BCC). This is where you’ll get your grower’s license in California. However, when it comes time for tax season, you’ll need to work with the California Department of Tax and Fee Administration.
To obtain your medical cannabis grow license, your business plan should have all of the essentials, including:
- Compliance inspections and audits
- Tracking and trace compliance
- Information about required permits and licenses
- Safety and security outlines
- Community relations insight
- Odor control plan
- Operations outline
Curious about how taxes will impact your business? Learn about California Cannabis Business Tax now.
Step 4: Submit Application Package to State for Approval
State approvals can be quite in-depth; they require plenty of paperwork and the right technical execution to go through.
Initially, you’ll need to submit your application package to several state agencies. However, this has been made a bit easier with the consolidation under the CDCC.
Ultimately, this means having an excellent business strategy in place and all of the right documentation for your application. This is how you’ll make processing as easy as possible.
Step 5: Get Local Approvals
Once you have your paperwork together, you’re ready to start seeking local approval.
Local government officials often worry about recreational and medical cannabis being cultivated around their homes. Thus, you’ll need to give them every reason possible to like your operation.
If there’s any reason these officials don’t like your business, you may find your project without viability.
At this stage, you’ll have technical hurdles to leap, along with political challenges to overcome. Ultimately, you’ll need to sell yourself as a cultivator and your growing operation to the local government officials to make this work.
You’ll need a “discretionary” conditional use permit (CUP). This means you’ll need to present your plan at a public hearing. Approval or denial will come to a vote from the city council or planning commission.
For your commercial cannabis grow to operate, you’ll need permits, cannabis licenses, and certifications from other local departments. This includes more environmental assessments.
The process takes time and additional funding if state regulators believe your commercial cannabis grow could pose a threat to the environment. But if you understand this before you apply, you can determine ways to reduce these possible impacts in advance.
Step 6: Maintaining Permits and Licenses
After getting your commercial cannabis licenses, approvals, and permits, complying with ongoing regulations is essential. You’ll need to know the rules at the local level and state level to ensure your cannabis operation can continue growing.
To ensure you don’t limit yourself to only one harvest, you’ll need to continue monitoring and reporting all of your business’s operations. This includes tracking your inventory through METRC.
Keep in mind, local and state regulators will inspect your cannabusiness regularly, and annual renewal is essential for multiple license types. While there was a ‘logjam’ with cannabis provisional licenses in Cali, Governor Newsom’s California Comeback Plan should help.
Step 7: Optional Vertical Integration
Over the past few years, it has become apparent that the entire supply chain operates better when it’s controlled. This is why supply chain control in Cali has become easier through these vertically integrated opportunities.
While some states ban vertical integration in cannabis, the main idea here is that this has the potential to enhance quality control and public health by keeping the supply chain more in control.
It starts by limiting third parties from getting involved in grow operations. Most of the time, cannabis plants go from cultivation to manufacturing before distribution manages the supply chain. Then, the products end up in retail shops or dispensaries.
However, vertical integration does not include testing services. This is how the state ensures that cannabis for adult and medical use is tested without bias.
Is the Market Oversaturated with Growers?
Cali is full of grow-ops working for their share of the market. Thus, it’s crucial to differentiate from other operations.
However, there’s more than enough market share to go around. Investors, business operators, and landowners that focus on cannabis have a lot of success in cultivation.
California’s cannabis space is the largest market on the planet. Each year, this industry’s demand is expanding, offering new opportunities for those interested in getting involved.
There’s no easy way to say it; Cali’s cannabis sector is tough. It’s going to take large investments and hours upon hours of work, including but not limited to manual labor. Farming marijuana isn’t easy, but for those who love it, it’s worth the effort.
Ultimately, the level of success you experience among the other California cannabis growers depends on a few variables. But with the right funding, perseverance, and knowledge, you can become successful growing marijuana for Cali’s medical and recreational cannabis consumers.
Growing Cannabis in Cali Commercially
Growing cannabis in California isn’t for the faint of heart. While license fees can be costly, it doesn’t solely come down to your funding. It takes effort, dedication, and plenty of compliance every day.
But this isn’t meant to scare you away from a potentially successful Cali cannabusiness, especially if you plan on following through with your project.
In order for you to comply with state regulations, that means paying attention to every detail. The more effort you put forth at the beginning stages, the better off you’ll be.
Grow Your Grow with Northstar
Looking to grow a cannabis grow facility in Cali? Northstar is here to help!
Contact us now to speak with one of our experts and learn how our financial services can guide your grow facility’s success!