Primary Regulations for Dispensary Operators in California

Primary Regulations for Dispensary Operators in California

Posted by Toker Grace on Dec 5, 2019 5:03:23 PM

The numbers are in; cannabis business is becoming BIG business. Here are a few key regulations that potential cannabis business owners need to consider when establishing a successful, legal cannabis dispensary in the state of California


.Disclaimer: Cannabis laws vary from upon state. This article is not a substitute for legal counsel or binding business advice. Consult a California Lawyer for more information

1) Types of Cannabis Licenses in California

Three organizations regulate cannabis at a state level in California: the Bureau of Cannabis Control (BCC) regulates Medical and Recreational retail licenses, the California Department of Public Health (CDPH) regulates edibles, and the California Department of Food and Agriculture regulates cultivation. In addition, municipalities may have their own regulating bodies. For example, Los Angeles has the Department of Cannabis Regulation and San Francisco has the Office of Cannabis. You’ll need to obtain a local license before applying for a state license.  

Potential cannabis business owners ought to know California law provides two types of cannabis sales licenses. One type of license is referred to as an A-license, and the other is known as an “M-license.”

  •  The A-license, which is short for California’s Adult Use License, allows the sale of recreational cannabis in the state. The A-license covers cannabis as well as cannabis products only intended for adults who are at least 21 years of age and older. This means individuals with a valid government-issued ID do not need to possess a recommendation from a licensed physician. 
  •  The other type of license for potential cannabis business owners is an “M-license. This license, formally known as California’s Medical Cannabis License allows the commercial production of medicinal-grade cannabis. This form of license is typically reserved for health professionals. Medical users need to be 18 years of age.

Moreover, each cannabis facility must have a separate license. California regulations state that each cannabis facility can only have one license per facility.

Delivery services can be operated from both “A” and “M” type licenses.

2) Who is Eligible for a License to Sell Cannabis?

Eligibility for obtaining a license is outlined in California’s “Pursuant to Business and Professions Code, §26001, (A1,) The term “owner” is defined as any of the following:

  •  A person with an aggregate ownership interest of 20% or more in the person applying for a license or a licensee, unless the interest is solely a security, lien, or encumbrance.
  •  The chief executive officer of a nonprofit or other entity.
  •   A member of the board of directors of a nonprofit.
  •   An individual who will be participating in the direction, control, or management of the person applying for a license.

3) How Much Does a Cannabis License Cost?

Unlike Colorado, California does not have an application fee for applying to sell recreational cannabis. A temporary license for a cannabis event is $1,000. All other forms of cannabis licensing are also $1,000. In addition, retailers will need to pay fees ranging from $4,000 to $72,000, depending on the sales of the retail outlet.

Keep in mind, the fees discussed in the preceding paragraph are state fees. Municipalities have separate fees, which will need to be paid in addition to the state fees. 

4) Purchase Limits

In California, you can sell up to 28.5 grams of flower, and up to 8 grams of concentrate per customer. Keep in mind, you cannot give product away as part of a promotion or as part of any other merchant activity.

5) Track and Trace Regulations

One of the most notable dispensary laws applicable to California is to consider is that all operating MED Licensed Retail Cannabis operations are mandated to possess an active Metrc account. Moreover, these facilities must have all inventory as well as plants associated with the business tagged with a Radio Frequency ID, or RFID, before the first transfer or sale of cannabis or cannabis-related products. Additionally, Licensed Testing Facilities are tasked with timely as well as accurately providing test results of cannabis products into the organization’s active Metrc account.

6) Labeling and Proper Symbolism

Another essential regulation for those who are interested in opening a dispensary to comply with is proper labeling. In regards to cannabis and cannabis-related products, all products and inventory that a dispensary sells must ensure that all packaging and labeling of retail cannabis comply with California state laws and uses the proper regulatory language. For a few years, California has made use of a recognizable symbol. The symbol is an exclamation mark accompanied by a cannabis leaf inside a cautionary triangle. Virtually all cannabis products require this symbol.

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