Applying for a Cannabis License
If cannabis is legal in your state, you might be thinking about applying for a cannabis license and the steps it takes to go from an idea to open up a cannabis business.
Starting a licensed cannabis business doesn’t happen overnight — thousands of hours are invested in the planning, building, and launching of a cannabis business.
You can break out the cannabis license process into 4 major steps:
- Cannabis Planning
- Cannabis Application
- Cannabis Licensing
- Cannabis Launch
The cannabis application and licensing phase is a difficult phase that will take significant amounts of capital and resources. It’s a lot of hurry up and waits.
You’ll want to understand the key players that are responsible for making cannabis-related decisions in the City or County.
Many cannabis owners have spent several years building relationships with the city, attending town hall meetings, and understanding the local rules before taking action into applying for a cannabis business.
Even though cannabis may be legal at the state level, certain counties or cities might require a local license to operate or prohibit cannabis activity. Commercial Cannabis Activity must be permitted at the Local and State levels.
During this phase, you will want to assess the local and state rules, the costs of licensing, real estate, and start developing your business plan.
When you begin the cannabis license application process, you’ll want to first look into the local cannabis ordinance, the taxes that are associated with operating a cannabis business, and the requirements to apply.
- Validate if cannabis is permitted
- If cannabis is permitted, review the ordinance and determine how many licenses are available, the costs of each license, the taxation in the locality, and the real estate requirements,
- Will there be ordinances that could block business growth?
- Assess the local tax and fee structure favorable for commerce?
- Work with planning and zoning to determine where the cannabis green zone
- Assess properties within the green zone to ensure that it meets the restrictions of the distance needed at the local and state level
Each state’s process is different, but no matter where you are located, the process will require keen attention to detail, a collaborative team, strategy, and cash flow.
Each state will have a different list of documents required for the application, but here are the most common types:
- Business Documents
- Ownership Disclosures
- Business Plan that lays out a type of business and license type. In some cases, a listing of the types of products that will be manufactured, packaged or labeled at the premises may be requested.
- Startup Budget and Pro-forma financials to show liquidity
- Security Plan that lays out security protocols, equipment, and measures to mitigate diversion and theft
- Community Plan to show involvement in the local community
- Proof that there is a legal right to occupy the property. This could be a written statement signed by the owner of the property, or the owner’s agent, identifying the physical location of the property and acknowledging and consenting to the manufacture of cannabis products on the property.
- Premise Diagram
- Cultivation Plan (if applying for cultivation) to show the type of growing, pest management, grow techniques
- Waste Management Plan to show how cannabis will be disposed
- Quality Assurance Plan to show lab testing and Q&A over product
- Inventory Plan to show management of inventory
- Employee Hiring Plan to show the training of staff
The application process for a cannabis license can be anywhere from a few months to several years and will cost more than a few thousand dollars (sometimes it’s hundreds of thousands of dollars).
Cannabis applications in certain states are highly coveted, making the cannabis application process even more competitive. Highly competitive cannabis applications deserve thoughtful time and energy, and should not look like a broiler template. Often, you might be required to have a property before you can even apply for a license.
Business owners and cannabis applicants need to be highly involved in the process and not just hire out all of the work.
After you’ve applied for the cannabis license you will then wait to see if you’ve been awarded a conditional use permit or a license. This can be several months to a year.
When you’ve been awarded a permit, you can actually start building out the cannabis infrastructure.
The fire marshal, local police, or another department will come and inspect your property before they can do a final sign-off of approval.
This step varies and you should work with a professional to ensure you’re doing this efficiently, effectively, and correctly.
I’ve seen many businesses go through delays and revisions because they didn’t work with the right experts in planning and compliance.
Once you’ve received the green light to open your doors, you will then need to train staff on the seed to the sale tracking system and go through an initial onboarding of the regulation.
You’ll want to focus on implementing and refining your standard operating procedures, getting all staff trained on the seed to the sale tracking system, and making sure you’ve gone through all of your compliance checklists.
The first year of the operation will be stressful and full of changes. The regulatory body will continue to change certain areas of the regulation, and the team will be just learning to get its stride.
The Bottom Line
Work with a professional that has a background in cannabis law, regulation, or government affairs that can ensure you’ve done strong diligence before you’ve moved forward.
Like any business, starting a cannabis business you will not see an immediate profit and positive cash flow. It is imperative that you run the numbers, and assess the different scenarios that can impact your business.
Ready to reshape your business and focus on the areas that matter the most? Startup Business Bootcamp will help you lay the foundation to building a profitable cannabis business.