How much does it cost to get a cannabis dispensary license in California? This is a question that is commonly asked by entrepreneurs who are looking to venture into the legal cannabis market in the Golden State. However, this question can never be answered in one simple sentence, even a full- length article will not do justice. However, I will attempt to guide you through the cost ramifications of obtaining a license in California in this brief article. I will also guide you to all the resources that you will need to fill in any knowledge gaps or answer any questions that may come up along the way. The best way to approach this is through a question and answer format that addresses dispensary costs from different angles, most importantly the cost of obtaining a license.
What Will You Need Before You Can Apply For A Dispensary License in California?
Before you apply for a dispensary license in California, you will need to have the following documents in place:
- A business entity formation
- Local approvals
- Security plan
- Neighborhood context map
- Property lease agreement
- $5,000 surety bond
- Business operations plan
- Site plan
- Employee agreement
If you are planning to open a dispensary in California you should be prepared to have government regulators swing by your premises to ensure that all the requirements listed above are in place. Make sure that you have all your ducks in a row before you proceed to apply for a license and pay the fees.
How To Apply For A Commercial Cannabis License in California
California has three cannabis licensing authorities that accept applications for commercial cannabis activity.
- Bureau of Cannabis Control
- California Department of Food and Agriculture
- California Department of Public Health
Prior to applying for a license you should contact the local government to get guidance on the rules and requirements governing cannabis commercial activity in your city or county.
The type of license that you will need will be based on the type of commercial activity that you want to engage in. This includes cultivation, processing, manufacturing, laboratory testing, distribution, event organizing, retailer, or microbusiness. You can find more information about this categories from the MAUCRSA.
Cal Cannabis Cultivation Licensing is a division of the California Department of Food and Agriculture (CDFA) that is responsible for issuing licenses for cultivation of medical and recreational cannabis in the state. They also track and record the movement of cannabis through the distribution chain.
TheBureau of Cannabis Control is responsible for issuing licenses to cannabis retailers, distributors, testing labs, event organizers, and cannabis microbusinesses.
The Manufactured Cannabis Safety Branch is responsible for licensing manufacturers of medical and recreational cannabis infused edibles.
What is The Cost of Dispensary License in California?
This is the part that we have all been waiting for. As you will learn the cost implications for obtaining a dispensary license are broad and will be affected by a number of factors. Full information about this can be accessed from the licensing authority’s regulation pdf which is linked below.
- Bureau of cannabis control – regulations pages 17-20
Non- refundable application fee of $1,000 which should be paid by an applicant or licensee after the Bureau has approved the application. The license will not be issued until the annual licensing fee has been paid.
The license fee is based on the estimated gross revenue for the 12-month license period of the license. If the licensee pays less than what is required they will be required to pay a 50% penalty on the correct amount as well as paying the full amount as stipulated in section 5014 of the division.
The fees are paid to the Bureau of Cannabis Control by cash, check, money order, debit card, or credit card.
2. California Department of Food and Agriculture regulations text page 4-5 & 21
The annual license application fee is nonrefundable and is to be paid by the applicant when they are submitting their application. A Specialty Cottage outdoor application has a fee of $135, while a Specialty Indoor is $ 205. A Specialty Cottage Mixed varies from $340 to $580 based on the tier. More information on the application fee can be found in the regulations text link as above.
3. California Department of Public Health regulations text page 29
A non-refundable application fee is charged based on the type of license.
Type 7, 6, N, and P has a charge of $1,000
Type S license attracts a nonrefundable application and processing fee of $500
Annual license fees are calculated based on tiers. This is based on the estimated annual gross revenues for a period of 12 months. Licenses cannot be issued until the license fees have been paid in full.
Can You Apply For A Temporary Dispensary License in California?
Currently temporary dispensary licenses are not being issued in California. As from January 2019, the three licensing authorities were barred from issuing or extending temporary licenses for dispensaries.
Do I Need A State as Well as a Local City/ County License?
This will vary based on your jurisdiction; some city/ counties will require you to apply for a license while others will not. It is important to check with your local authority and understand the regulations within your jurisdiction before applying for a state license. The state licensing authorities will require that you comply with your local authority regulations.
However, a state issued license is mandatory if you are to open and operate a dispensary in California.
The three state licensing authorities will not issue a state license in a city or county where the cultivation, manufacturing, or dispensing of cannabis or cannabis- related products has been banned.
Is There A Maximum Limit on the Number of Dispensary Licenses That Can Be Issued in California?
The state has not set a ceiling for the number of dispensary licenses that can be issued in California. However, the cities and counties are free to set a limit on the number of cannabis businesses that they permit to operate within their jurisdiction. Additionally, the cannabis bureau is mandated to ensure that there is no “excessive concentration” of cannabis businesses in the state. So far, the three licensing authorities have jointly issued over 10,000 commercial cannabis licenses throughout California.
In a nutshell, the license fee varies based on the licensing body and the nature of your operation. It includes an application fee plus a tier based annual license fee which is calculated based on the estimated one year gross returns of the cannabis business. Dispensary license cost in California should cost you between $4,000- $120,000 plus an additional nonrefundable application fee of $1,000.