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Steps to Starting a California Marijuana Business

Jan 26 2018, by Jessica McElfresh in Legal Blog, Marijuana Business, Medical Marijuana, Recreational Marijuana

With the official opening of the California recreational cannabis industry this month, our state is experiencing a green rush. But before you hurry to get into this newly-legal occupation, you should follow certain essential steps to starting a California marijuana business.

If you’re looking to get into the recreational marijuana business and want to know the legalities of such a venture, call McElfresh Law at (858) 756-7107 to schedule a consultation with California marijuana business lawyer Jessica McElfresh.

Steps to Starting a California Marijuana Business

You need more than just an idea to succeed in business. And in an area as heavily regulated as the cannabis industry, your business plan needs to be even more extensive.

Iron Out the Details of Your Business Well Before Applying for Any Permits or Licenses
By the time you begin the license application process, you should have covered all of the following:

  • Develop your business purpose – What will your cannabis business produce? What services will it offer, and to whom? Do you intend to cater to the recreational or medical markets, or both? Who are your competitors, and how will you beat them?
  • Find real estate – Your business needs a physical location, the nature of which will vary greatly depending on the purpose of your business. Bear in mind that some cannabis business activities may not be legal in your municipality.
  • Settle on a corporate structure – Unless you operate as a sole proprietorship or general partnership, your business will need to register with the California Secretary of State for a $150 fee. You should consult with an attorney who can advise you on which corporate form will best suit your business.
  • Maintain your business registration – You need to file Statements of Information within 90 days of first registering your business with the Secretary of State, and once a year thereafter.
  • Determine a fictitious name – Many cannabis businesses operate under a name that is different than the business’ registered name. If you want to do the same, you’ll need to register your fictitious business name with your county or municipal clerk.
  • Know your numbers – Getting a business up and running requires a lot of capital. Since banks are weary of cannabis businesses, you may need to get your funding from private sources. Additionally, you need to consider how your business will handle its cash flow internally once you are in operation.
  • Plan for liabilities – You should have a plan for when things go wrong. Whether its business insurance or an emergency source of funding, you should have somewhere to turn if the unexpected happens.
  • Get ready to pay taxes – Whether you are growing, manufacturing or selling cannabis, you will need register with and pay taxes to the California Department of Tax and Fee Administration (CDTFA). Additionally, you will have to create a federal Employer Identification Number and may need to register with the Employment Development Department.

Obtain Local Permission from Your County or Town
If you live in a city or town, the municipal government will have jurisdiction over your business. If you live in an unincorporated area, jurisdiction will fall with your county government. San Diego County has banned new cannabis retailers and farms from operating in unincorporated areas.

The City of San Diego has put in a procedure for various adult use and medical cannabis businesses to obtain Conditional Use Permits. Many other municipalities in the county, however, have banned recreational cannabis businesses. Assuming you want to operate in an area that allows cannabis businesses, the process of obtaining permission can be expensive and time-consuming. A California cannabis attorney can significantly increase your chances of obtaining a conditional use permit form the local government.

Apply for a State License with the Help of a California Cannabis Attorney
Depending on the type of business you envision, you will need to apply for one or several of a dozen licenses available both for medical and recreational cannabis businesses. There are three state licensing bodies for cannabis businesses:

  • Bureau of Cannabis Control (BCC) – This office of the Department of Consumer Affairs is where you get licenses for cannabis retail, distribution, testing labs, and micro-businesses.
  • Manufactured Cannabis Safety Branch (MCSB) – This branch of the California Department of Public Health issues licenses for cannabis manufacturing businesses.
  • CalCannabis Cultivation Licensing (CCL) – Located within the California Department of Food and Agriculture, the CCL regulates and issues licenses for cannabis cultivators.

These regulatory bodies began issuing temporary licenses on January 1, 2018 that will be valid for four-month periods. Since the adoption of the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), the licensing process for recreational and medical cannabis businesses is going to be more consistent than what was proposed under earlier laws.

The specific requirements for each license type are different, but in general your license application should include:

  • The name of your business
  • Whether you want a medical or adult use license
  • The specific type of license you want
  • A list of owners and employees, along with their background information
  • Proposed address, floor plan, or layout of your business
  • Proof that you own the real estate
  • Proof that you are allowed to operate locally

McElfresh Law Can Help

At McElfresh Law, we aim to help San Diego cannabis businesses succeed. From advising you on the best corporate structure, to advocating on your behalf as you seek approval from local and state governments, to informing you of the precise steps to starting a California marijuana business, we offer the legal tools you need to open a marijuana business in Southern California. To schedule a consultation with attorney Jessica McElfresh, contact us today at (858) 756-7107.

California marijuana laws change frequently. For updated information, see the following pages: Medicinal Uses of Marijuana and Recreational Marijuana Business