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8 Licensing Factors California Entrepreneurs Need To Know About

Legal advisers have absorbed over 300 pages of regulations released in late November

California has rolled out state licensing for cannabis businesses, and legal advisers have absorbed over 300 pages of regulations released in late November. Los Angeles cannabis attorney Kellsi Booth got her start in the cannabis industry with the Maryland Department of Health, where she helped the Natalie M. LaPrade Medical Cannabis Commission create regulations for their medical cannabis program. We asked Booth – who has read the rules three times over – what California cannabis businesses need to know about the detailed and comprehensive state licensing rules.

1. Local authorization is a priority

“The number one thing at this point is you need local authorization,” Booth said. There are few jurisdictions in California right now that are permitting cannabis businesses, but step one in state licensing is getting local approval. There are two types of state licenses: A license for recreational, and an M license for medical. “Sometimes that decision is made for you. Many jurisdictions are allowing only medical commercial cannabis activity at this time. It’s possible to hold both an A and M license for the same activity at the same licensed premise – there are conditions that need to be met.” In general, businesses will need a license for each premises where cannabis activity is conducted. “One of the great things they’ve done is create more nuanced categories,” she said. For example, there are manufacturing license types “N” and “P” for infusing cannabis products and for packaging and labeling of manufactured products, respectively. There’s also a Type S license for shared manufacturing facilities on the way. “Being able to collaborate will be helpful for small-scale manufacturers. Those regulations are expected from the California Department of Public Health in early 2018.” Licenses are not transferable in the state model. “This means you want to be set up as a for-profit entity, rather than a non-profit collective or cooperative, and some will have trouble making that switch depending on their operating rules,” Booth said.

2. Some jurisdictions are tough

Major cities – Los Angeles, San Diego, and San Francisco – are leading the way for recreational cannabis, but smaller jurisdictions are mostly sticking to medical-only. “I believe more and more jurisdictions will open up now that the state has put forth a regulatory framework. Northern California counties like Sonoma and Humboldt are also setting the standard for cultivation,” Booth said. “Being in a jurisdiction that has granted or will soon be granting local licenses or permits is valuable,” Booth said. One of the most cannabis-friendly jurisdictions is Long Beach, where processing is faster because it follows the standard business license application process and there’s no set limit on the number of cultivation, manufacturing, distribution, and testing businesses allowed, she said.

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