Whether you are starting or growing your recreational marijuana business, there are some things you need to know to stay in compliance with California laws and achieve success. The cannabis industry is complex. However, a San Diego recreational marijuana business lawyer can help you navigate the landscape.

Attorney Jessica McElfresh is uniquely qualified to handle your recreational marijuana business needs. She has worked with countless businesses in the cannabis industry, from startup through growth periods. Call McElfresh Law today at (858) 756-7107 or use our online contact form to schedule a consultation.

Key Considerations for Starting a Recreational Cannabis Business

You may be wondering how to start a recreational marijuana business or how to expand what you’ve already started. There are several items that you’ll need to consider when managing a recreational cannabis business. These include compliance with licensing requirements, formation of your entity, and following zoning regulations.

Licensing and Compliance

California operates under a dual licensing system for recreational cannabis businesses license. This means you must go through both state and local approval processes.

The first step to apply for or renew a recreational marijuana business license is to complete your local permitting process. Many cities and counties have regulations and permitting requirements for cannabis businesses.

What Type of License Do You Need?

Next, you need to obtain or renew a state license through the California Department of Cannabis Control (DCC), which issues a license based on the activity your business will perform. Some of the types of cannabis business licenses you may obtain include:

You will need to gather application information and documents and create a licensing system account. Once you complete your state license application, you will pay an application fee. If the DCC has questions, they will email you.

Once approved, you must pay a license fee. DCC licenses are valid for one year. Don’t forget to post your license in a visible location near the entrance of your recreational cannabis business.

Entity Formation

Forming a business entity is one of the first steps towards opening a recreational marijuana business in California. Limited Liability Company (LLC) is a popular choice due to its liability protection and flexibility. Corporations and partnerships are also possibilities.

Each structure has its own tax implications and management requirements. A San Diego recreational marijuana business lawyer can help you research and choose one that best suits your business plan. Once you decide on a type of entity to form, you must register your business with the California Secretary of State.

Real Estate and Zoning

California’s recreational marijuana business landscape presents unique challenges regarding real estate and zoning. California allows localities (cities and counties) to decide whether to allow recreational marijuana businesses within their borders. This creates a patchwork system where some areas are completely prohibited, while others have established “green zones” for cannabis businesses.

What to Look for When Researching Cannabis Real Estate

Before diving into real estate, thoroughly research your target area’s zoning ordinances. Look for information on:

  • Whether recreational marijuana businesses are permitted.
  • Specific zoning districts where these businesses are allowed.
  • Any limitations on the number of businesses allowed in a particular area (“undue concentration”).

Properties zoned for cannabis businesses often command a price premium compared to similar properties in non-zoned areas. Additionally, not all landlords are comfortable leasing to cannabis businesses. Be upfront about your business activity and seek landlords open to the industry.

McElfresh Law Can Help You Start a Recreational Marijuana Business

McElfresh Law has successfully helped many companies navigate local permitting and state licensing processes in the cannabis industry. Our experienced San Diego recreational marijuana business attorneys stay up to date on California cannabis laws and we provide trusted legal advice to an array of marijuana companies.

Attorney Jessica McElfresh has focused her practice on the cannabis industry. She has in-depth knowledge about how to start and manage a recreational marijuana business. If you are diving into the world of cannabis businesses in California, you need her trusted legal advice.

California Recreational Cannabis Business FAQs

What are the key differences between medical and recreational marijuana business regulations?

There are a couple of key differences between medical and recreational marijuana businesses regarding purchasing limits and taxes.

Medical marijuana patients may buy a larger quantity of cannabis with a doctor’s recommendation. While both medical and adult marijuana businesses are taxed by the state with a 15% excise tax, some localities have created an additional tax for recreational marijuana purchases.

What is the best business structure for a recreational marijuana business?

The business structure you choose will depend on the characteristics and needs of your business. However, many recreational marijuana business owners opt for a Limited Liability Company (LLC). An LLC shields owners from personal liability for business debts and lawsuits. There is also more management flexibility and many tax advantages for LLCs.

How will taxes be different for a recreational marijuana business compared to other businesses?

Recreational marijuana businesses in California face a unique tax structure compared to most other businesses in the state. In addition to the 15% excise tax, recreational marijuana businesses also collect the standard California state sales tax, which ranges from 8% to 10% depending on the local jurisdiction. Unlike most other businesses, recreational marijuana businesses may also be subject to additional taxes imposed by local cities or counties.

A San Diego Recreational Marijuana Business Lawyer Can Help You

If you have already started your business and have questions about renewing your recreational marijuana business license or want to make changes to your organization, we can help with that also. Attorney Jessica McElfresh has worked with all types of marijuana businesses throughout California.

Call (858) 756-7107 today or use our online contact form to learn how to get started.

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