Frequently Asked Questions

You needed to stay in compliance and good standing with your local city ordinance until Jan 1st 2018, when California began accepting state applications.

There are over 500+ cities/counties in California that currently have medical cannabis regulations. Several are now voting on recreational cannabis regulations as well. This is something that is actively being tracked by several cannabis companies.

With each local municipality having different requirements, each municipality will then have the fee structure independent of others. You can find more information on their city council websites. 

Each local city has set a specific number of licenses for each vertical integration. Pulling up the city website and looking into the medical cannabis application limit, will allow you to see what the cap is for each license type.

Being compliant is an on-going task and requires several things involving both local laws and business operations compliance. Having the business structured properly, knowing your city and county ordinances, having a licensed facility in the county you are currently operating out of, and standardized plans are just a few of the ways to currently be in compliance with the state of California.

In cities that have placed a moratorium or an outright ban on cannabis activities, you will need to cease all cannabis business activities. The cities/counties have the say on whether or not they want cannabis activity in their area. –This was a direct result of MCRSA and giving the rights to the cities or counties to specify if they will allow this type of activity. This could change as more local municipalities come online with allowing cannabis activity, as well as the state regulations, becoming more fine-tuned since January 1st, 2018.

Yes, when your business entity gets filed, you register with the Board of Equalization. This gives your company an EIN number (tax ID) and you are required to file taxes yearly as well you will have a yearly fee with the Franchise Tax Board. Recommendation is to find a CPA that is familiar with cannabis tax codes and 280E.

Since there is no federal bank currently that will openly take cannabis business money, this becomes a very grey area. It has thus far been a strictly cash business. Safes, cash management systems, daily cash drops as well as neatly kept accounting books are very important in this business. Some banks (credit unions, Bank of America) will allow for a licensed cannabis to bank with them its just a matter a finding those establishments.

There are several groups and associations as well as events that allow for networking for cannabis business operators. Look to your local meet up groups, cannabis events, cannabis associations to being this process.

This is still being sorted out as to vertical integration with current laws. Right now, the licenses that cannot be combined are testing, distribution, and transporter.

Currently, you cannot apply for a license nor are you allowed to be a shareholder in a license. This could change as the new regulations come down – to either lessen to offense or it would be on a per applicant basis.

Currently under the regulations that stand, you will need to set up a “collective” or a non-profit mutual benefit corporation. This will come with a seller’s permit, Tax ID number, articles of incorporation and corporate name. You will then need to file by-laws, corporate minutes, and a board of directors for your company. There are additional things that need to be done from an operational standpoint as well, but this is what is required to “start a business entity” in California.

Coming into the cannabis space at this stage of the game can be challenging. You will be going up against established businesses that may already be licensed. It can be done, but the biggest risk to you is finding a city/county that hasn’t already met its maximum capacity for local licenses. I would first suggest researching cities/counties that have open application enrollment and see what it would take to run a business in that specific municipality.

From a federal standpoint, it is still a federally illegal business. You are not protected from arrest and seizure but can be protected from prosecution. Running an illegal business in regards to local laws can also be a risk – from a local standpoint. There then can be the risk for theft and robbery of either your cash or inventory.  

You will want to first conduct an interview with your potential employees (consider off site of your business) and do a background check as well as references. You will want to see a clean record (no cannabis infractions or business infractions – ie, fraud, theft) and be sure they are over 21 years of age. They will also need a California state medical cannabis card.

There is a set procedure to sign up patients to your collective. You will need membership agreements, patient intake forms, verify their CA ID as well as their CA medical cannabis recommendation. You will also need to verify their cannabis physician that approved their recommendation. With the new laws coming online, there are 2 laws – medical and recreational. Medical will still have a process (we don’t know what that will entail as of yet) and recreational will be for clients 21 years of age or older.

There are cannabis real estate brokers as well as buying/renting from a building owner that is approving of your business.

On January 1st, 2018 when recreational cannabis comes online, you will be able to purchase if you are 21 years of age or older.

Yes, anyone working in the current CA cannabis business market needs a medical cannabis card to do work and become part of the collective – this may change with new regulations, but currently this is what stands.

Yes, with their CA cannabis recommendation there is a limit that each patient can have on them at any given time and this includes being able to transport their medicine back to their residence. They cannot, however, consume their medicine in the vehicle.

The links below provide access the full text of the three bills that created the new MCRSA:
AB 243
AB 266
SB 643

Prop 64 is projected to generate billions in new revenue that would be used for social and medical programs, cannabis research, educational programs, and much more.

Licensing fees will be deposited in each licensing authority’s account in the Marijuana Control Fund. Upon appropriation by the Legislature, each licensing authority will use the fees it has collected to perform the licensing authority’s duties under the act.

All related regulations will be based on the language of that initiative. At the same time, the basic priorities regarding public safety, safe products, and environmental safety remain the same.

Just as with the Medical Cannabis Regulation and Safety Act (MCRSA), licensing authorities will develop regulations for non-medical use with public safety as a priority. The regulatory program will include licensing requirements and an enforcement component.

The licensing authorities are closely analyzing the initiative as passed to determine how best to regulate both medical and non-medical use in an expeditious and efficient manner. Proposition 64 requires implementation through California’s regulatory process. The licensing authorities intend to take a similar approach with the initiative by involving stakeholders and the public in the regulatory process.

The initiative includes provisions designed to help keep cannabis away from children, including, but not limited to, marketing restrictions, school buffer zones, child-resistant packaging, and warning labels.

The California Department of Public Health (CDPH) is responsible for regulating the manufacturers of cannabis-infused edibles for both medical and non-medical use.

Although Proposition 64 amends some statutory provisions governing the Medical Marijuana Identification Card (MMIC) program, it does not abolish it. The California Department of Public Health (CDPH) will continue to print identification cards and maintain a registry database for verification of qualified patients and their primary caregivers.

The California Department of Food and Agriculture is responsible for licensing cultivators under the initiative. Cultivation requirements will generally remain the same for growing cannabis both for medical or non-medical use. Cannabis products offered for sale will need to be clearly differentiated as medical or non-medical.