Medical Marijuana Business Licensing and Permitting


If you’re thinking about starting a medical marijuana business in San Diego, McElfresh Law Inc. can help. Our firm has significant experience helping San Diego medical marijuana dispensaries go through the complicated legal process to get approval to operate. We have the knowledge and skill as medical marijuana lawyers to help you navigate the new rules for starting a medical marijuana business.

Free consultation for criminal defense cases only. Cannabis business consultation requires a fee.

With historic new reforms to California’s medical marijuana laws signed by Gov. Jerry Brown in early October 2015 come changes in how medical marijuana businesses can operate in the state — including:

  • Legalization of “commercial cannabis activity” in the state including cultivation, manufacturing, testing, dispensing, distributing, and transporting medical marijuana
  • Provides immunity to arrest and prosecution for licensed medical marijuana business activity
  • Creation of a licensing system for medical marijuana businesses
  • Implementation of taxes and fees for medical marijuana businesses
  • Medical marijuana businesses can operate for profit
  • Medical marijuana products must be lab tested to ensure quality before being sold or provided to patients and caregivers
  • Phases out-growing collectives in favor of a new system of licensing medical marijuana cultivators and small farms

However, much remains to be seen about how these new laws will be implemented in the state.

The three bills making up the package of reforms, known as the Medical Marijuana Regulation and Safety Act or MMRSA, create some framework for the oversight and regulation of medical marijuana businesses such as dispensaries and collectives, but state agencies have rulemaking authority to determine many of the details, including fees.

With new rules comes the potential for confusion among people who want to start medical marijuana businesses, particularly if they’ve already been working toward that under the old system. New rules and regulations mean more requirements to meet in order to start a medical marijuana business — and more opportunities to be rejected if your paperwork isn’t in order.

Medical Marijuana Regulation and Oversight

Under Assembly Bill 266, California’s Department of Consumer Affairs will create a new agency called the Bureau of Medical Marijuana Regulation. This agency will have the power to write and implement rules to enforce the provisions of the Medical Marijuana Regulation and Safety Act.

Additional rulemaking power rests with the Department of Food and Agriculture to regulate medical marijuana cultivation, and the Department of Public Health to regulate edible medical cannabis products such as cookies.

Medical Marijuana Business Licensing

One important facet of the MMRSA for medical marijuana businesses is the creation of a state licensing system that includes 17 different license types for the operation of these businesses. The licenses are based on the type of business activity. In general, the new license system allows the following types of medical marijuana businesses to be established in California:

  • Cultivators, limited to up to 4 total acres of growing area
  • Manufacturers
  • Testing labs
  • Dispensaries that can offer medical marijuana products for retail sale
  • Distributors that can procure, sell, and transport from licensed business to licensed business
  • Transporters that can deliver products from a dispensary to a patient or caregiver

The license classifications under what is now Section 19300.7 of the California Business and Professions Code include:

  • Type 1 — Cultivation; Specialty outdoor; Small
  • Type 1A — Cultivation; Specialty indoor; Small
  • Type 1B — Cultivation; Specialty mixed-light; Small
  • Type 2 — Cultivation; Outdoor; Small
  • Type 2A — Cultivation; Indoor; Small
  • Type 2B — Cultivation; Mixed-light; Small
  • Type 3 — Cultivation; Outdoor; Medium
  • Type 3A — Cultivation; Indoor; Medium
  • Type 3B — Cultivation; Mixed-light; Medium
  • Type 4 — Cultivation; Nursery
  • Type 6 — Manufacturer 1
  • Type 7 — Manufacturer 2
  • Type 8 — Testing
  • Type 10 — Dispensary; General
  • Type 10A — Dispensary; No more than three retail sites
  • Type 11 — Distribution
  • Type 12 — Transporter

License Restrictions

Under Section 19328, you can only hold a state license in two of these 17 categories at one time, and only in certain combinations. For example, if you have one of the small cultivation licenses you can also have a manufacturer license, but you cannot have a manufacturer license if you are a medium cultivator or a nursery. Further, if you apply for a distribution license you also must apply for a transporter license and can hold no other license type.

Additionally, when you apply for a medical marijuana business license you must submit your fingerprints for a criminal background check and may be denied if you have:

  • Prior felony conviction for drug sales, manufacturing, transportation, cultivation, or possession with intent to sell
  • Prior felony conviction for a violent crime
  • Prior felony conviction for a serious felony crime
  • Prior felony conviction for fraud, embezzlement, or a crime of deception

You also may be denied if you have a record of violating local ordinances, such as medical marijuana ordinances, or if you previously had a local license to operate a medical marijuana business that was revoked within 3 years prior to your application for a state license.

Vertical Integration

There is an exception to the licensing restrictions for existing businesses that are “vertically integrated,” or in other words for businesses that already are permitted to fulfill multiple functions, such as dispensaries that also operate testing labs and deliver medical marijuana to patients and caregivers. Businesses that are already vertically integrated before July 1, 2015, can continue to operate that way until 2026.

Licensing Priority

What do you need to know about starting a marijuana business in San Diego?

Businesses that are already legally operating as of Jan. 1, 2016, get priority for state licensing. Additionally, medical marijuana businesses that are legally operating by Jan. 1, 2018, meaning they have local zoning permission and meet state and local requirements, will be allowed to keep operating while their state license application is pending. That makes it important to immediately start the process of getting local zoning and permits if you haven’t already.

Local Zoning and Permitting for Medical Marijuana Businesses

In addition to state licensing, you also are subject to local licensing and permitting of your medical marijuana business. However, local jurisdictions such as cities and counties are allowed to ban medical marijuana businesses within their borders.

Fortunately for medical marijuana businesses in San Diego, a framework currently exists for zoning and permitting of a limited number of dispensaries. However, it has been a lengthy and complicated process to get this framework into place.

Zoning Permit

Currently in San Diego, medical marijuana dispensaries — known in the Municipal Code as “consumer cooperatives” — are allowed to operate as long as they meet fairly stringent zoning requirements. The city limits the number of cooperatives to four per city council district or a total of 36 citywide.

Zoning restrictions include:

  • Cooperatives cannot be located within 100 feet of a residential zoning district
  • Cooperatives cannot be located within 1,000 feet of a public or private K-12 school, public park, church, child care center, playground, city library, youth facility, residential care facility, or another medical marijuana cooperative
  • Cooperatives can only operate from 7 a.m. to 9 p.m.
  • Cooperatives must meet requirements for lighting, security, and signage

Cooperatives must obtain a conditional use permit from the city in order to operate. A conditional use permit is essentially special zoning permission that must be obtained for each medical marijuana business. That means that zoning permission is never automatic for these businesses, and the city gets oversight over establishment of each one.

Conditional use permits are obtained through the city’s Planning Commission, which involves making an application that includes details about the proposed location for the business and having a public hearing during which citizens can testify about whether your application should be approved.

Public Safety Permit

In San Diego, you also must obtain a public safety permit in order to operate a medical marijuana business. These permits are issued by the Development Services Department and can only be obtained after you have received your zoning permit.

How a San Diego Medical Marijuana Lawyer Can Help

The information on this page represents just a small sample of the voluminous requirements made of California medical marijuana businesses and those who want to obtain licenses to operate such businesses. Additionally, as is noted above, state agencies will be writing new rules and regulations detailing how businesses can operate and what taxes and fees they’ll have to pay.

Because of these complexities, you stand your best chance at getting approval to start or operate a medical marijuana business with the help of a qualified San Diego medical marijuana lawyer. At McElfresh Law, Inc., we have helped several of San Diego’s existing medical marijuana businesses obtain the licensing and permits they need to operate.

We understand the rules, regulations, and requirements placed upon medical marijuana businesses in California and San Diego and how to ensure that your application complies with state and local laws. Call McElfresh Law, Inc. at (858) 756-7107 to discuss your plans for a medical marijuana business today.

This website is intended for informational purposes only. Use of this website does not create an attorney-client relationship. Free consultation for criminal defense cases only. Cannabis business consultation requires a fee.