Cannabis Facility / Marijuana Dispensary Licensing

Overview

The marijuana industry is in flux given its budding status and the shaky federal ground upon which it stands. The sale of cannabis — whether medical marijuana or recreational marijuana — is licensed primarily through state health departments and/or specially created enforcement boards within larger divisions. While some states do not allow for cannabis sales whatsoever, those that do require stringent adherence to what are often complex and lengthy application processes. Even in the case of these latter states, many award only small numbers of marijuana business licenses per designated period or have set quotas per geographic region. Many states have adopted a method of grading prospective licensees using a qualitative point system and awarding licenses only to those who score highest.

Cannabis Industry Background

While the federal government still considers cannabis to be a Schedule I Controlled Substance, many states have implemented statewide regulatory frameworks permitting the legal use of recreational and/or medical marijuana within the state. This has led to a disjointed and increasingly complicated regulatory environment that leads to varying licensing requirements from state-to-state. Steep and non-refundable licensing fees, jurisdictional nuances, and the influence of local jurisdictions in the license approval process have made for an overly complex business licensing landscape for the cannabis industry.

License requirements for cannabis businesses generally include local authorization, proof of capital requirements, and background checks. If dispensing marijuana-based edibles, they will also need appropriate licensing required for food processing establishments in the state. California, for example, requires prior approval from local jurisdictions as part of the application requirements. While retail sales are legal under specified circumstances, the state gives local jurisdictions discretion in permitting the cultivation of cannabis until such time that it is legal under federal law.

Marijuana industry licensing fees can vary greatly from one state to another, and they often include significant application fees in addition to ongoing annual fees. Depending on the state and the business activity, licensing fees for marijuana dispensaries can run well over $10,000.

For states in which a point-system is utilized for granting licenses, points are awarded for criteria such as financial preparedness, possession of a robust business plan, design of the cannabis facility, education or experience of owners/officers/employees, having an environmental impact plan, and designation as a historically diverse or underrepresented person-owned business.

Ramifications of Non-Compliance

While several marijuana reform bills are currently being considered by the United States Congress, marijuana sales and use continue to be prohibited under federal law. This makes compliance with state laws particularly crucial. Depending on the state and the amount sold, unlicensed sale of marijuana can lead to large fines and incarceration of six months or longer.

More Resources:



CHOOSE A STATE BELOW FOR SPECIFIC BUSINESS LICENSING INFORMATION:

AL AK AR AZ CA CO CT DC DE FL GA HI IA ID IL IN KS KY LA MA MD ME MI MN MO MS
MT NC ND NE NH NJ NM NV NY OH OK OR PA RI SC SD TN TX UT VA VT WA WI WV WY