If you’re wondering how to open a dispensary in California, we’ve assembled a guide on becoming a dispensary owner in California. We cover the different types of retailer licenses, dispensary application costs, tax considerations, and general requirements for operating a dispensary in the Golden State.
California led the legalization effort when it became the first state to pass medical marijuana laws in 1996. In 2016, recreational marijuana use was approved by voters for those over 21 years of age. California has awarded more than 10,000 licenses to growers, dispensaries, manufacturers, testing laboratories, distributors, and other cannabis businesses.
Opening A Dispensary In California
Opening a dispensary in California requires individuals to obtain a license from the state’s Bureau of Cannabis Control (BCC). Applicants must file an application online and seek help on the BBC’s E-Learning page. Prospective dispensary owners must choose the Retailer application form from BCC’s application form page.
On the application form website, applicants can apply for different types of retail licenses to open a medical or recreational dispensary in California. The applicant must also select the appropriate license type such as adult-use (A-license) or medicinal (M-license).
Applicants must fill out the application form and include required documents including a business and operations plan, a financial plan, an inventory control plan, a patient education plan, a patient recordkeeping pan, a dispensary security plan, and a staffing plan.
Applicants may include comprehensive plans on dispensary location and a premises diagram indicating the boundaries of a property, entrances, exits, limited access areas, camera locations, and descriptions of other cannabis related activity. Dispensary owners can include standard operating procedure, tax compliance, and financial documents to ensure a speedy approval.
Cannabis Dispensary Restrictions
While opening a dispensary in California is possible, owners must also consider certain restrictions unique to the cannabis industry. Banking restrictions due to federal regulations prevent banks from working with cannabis businesses. Businesses are forced to operate in an all-cash market. A cash-heavy industry opens up the door for security vulnerabilities.
Cannabis businesses must also overcome certain tax restrictions. In October 2019, California Gov. Gavin Newsom signed a bill allowing legal cannabis businesses to take business deductions, a stark departure from the IRS’ 280E tax policy preventing marijuana businesses from deducting such expenses. Still, businesses must face changing tax laws in California and remain compliant or risk losing a license.
Cannabis businesses must also work around the state’s thriving black market and citywide bans on retailers. Cities with bans have sued the state for allowing cannabis delivery statewide regardless of city policy. Some California counties, however, have repealed their retail bans to stimulate their local economy and provide job opportunities in a burgeoning industry.
Completing The Application To Open A Dispensary In California
Before opening up a dispensary in California, it’s important to brush up on cannabis laws in California. A prospective retailer must choose between two types of retailer licenses including a Type 9 non-storefront retailer license for delivery services. A Type 9 delivery license allows an operator to maintain a facility but it won’t be accessible to the public.
A Type 10 retailer license is intended for operators that want to sell marijuana products to consumers on-site and by delivery. A Type 10 cannabis business has a licensed facility where they can sell cannabis products. Dispensary managers must apply for either license with the local and state governments. Regulations vary by county or local city.
Applicants must choose their business organizational structure such as sole proprietorship, corporation, limited liability company, limited partnership, general partnership, and limited liability partnership. Sole proprietorships and general partnerships are exempted from registering with the Secretary of State and paying a fee of up to $150.
Dispensary owner applicants must also provide the following information in the license application:
- Social Security Number or Federal Employer Identification Number (FEIN)
- Primary contact person
- Seller’s permit from the California Department of Tax and Fee Administration (CDTFA)
- Evidence of California Environmental Quality Act (CEQA) compliance or exemption
Employers must register for a FEIN and register with the Employment Development Department, as well as provide for payroll taxes. Registering for the right tax permits ensures dispensary owners meet all of their tax responsibilities in California.
Dispensary managers must also submit a $5,000 bond payable to the state of California. A dispensary location must also be at least 600 feet away from a school, daycare, or youth center. In California, retailers can sell and deliver marijuana from 6:00 am to 10:00 pm.
Professional services and application writers or cannabis training services can help dispensary owners properly complete an application properly to open a dispensary in California.
California Dispensary Fees
To open a dispensary in California, individuals must obtain local and state marijuana licenses and consider additional costs, some of which may be non-refundable, when obtaining a license. Licenses must be renewed every year. The application fee can be paid by cash by scheduling an appointment with BCC.
- State marijuana license fee: $1,000
- State marijuana annual fee: $2,500-$96,000 (depending on income)
- Local approval fees: $5,000-$30,000 (depending on project)
- Environmental permits and assessments: up to $30,000 (depending on project)
- Consulting fees: $20,000-$40,000 (depending on project scope)
Once a retailer license application has been approved, the applicant will pay the license fee, which is separate from the application fee. After submitting the license fee, the applicant will be issued a license number. Once the Bureau issues the license number, the applicant can begin commercial cannabis activity.
License applications can be denied for a number of reasons. If errors are found or an applicant sent an incomplete application, the applicant will be notified. Denial of a license can occur if the dispensary does not comply with state and local regulation or an owner has a felony conviction. Under certain conditions, a felony conviction can be considered on a case-by-case basis.
Online Marijuana College
Are you interested in learning more about opening a dispensary in California? If you’re looking to understand the basics of cannabis and need additional help properly filling out the license application, sign up for Cannabis Training U’s online cannabis college. One of our seven marijuana courses covers how to open a dispensary and delivery service.
The 15-lesson video prepares you to operate a turnkey operation. Enroll from anywhere in the world to learn about forming a corporation, securing financing, obtaining business insurance, finding a location, setting up security systems, developing a budget, forming a collecting, and stocking dispensary shelves with the most popular cannabis products.
Our course doesn’t just cover how to open a dispensary, but also how to keep it up-and-running by instituting the proper policies and performing the best marketing and advertising practices to promote and scale a retail cannabis business. Enroll with CTU today!