Best Practices

Is Your Cannabis Business Properly Licensed?

Making sure you are compliant is key to staying in this industry

Understanding the different licenses

Once you’ve decided to get into the industry and gone through the planning phase, the next thing you’ll need to do is start setting up your business. One of the first steps we recommend you take, before spending any money on things like branding, offices, stores, etc., is getting all the necessary business licenses.

All cannabis businesses require a business license, and those touching the plant need a cannabis-specific license on top of the regular one. So you’ll need to properly license and register the actual business that’s going to apply for a marijuana license. “For all license types, at least in California, one of the basic requirements is to have some kind of business formation, even if it’s a sole proprietor,” says Amelia Hicks, senior environmental scientist at California’s Bureau of Cannabis Control. Once you’ve completed your business registration, you’ll be ready to move on to your marijuana license application. The cannabis licensing process varies from state to state, and even from municipality to municipality, so you’ll need to get acquainted with your jurisdiction’s rules, regulations, and requirements. To make things simple, let’s divide the processes into competitive and non-competitive processes.

States with competitive processes (like most of the East Coast states) will offer a limited number of licenses and require applicants to prove they’re the best suitable candidates. Think of it as a government-style procurement process. This is how the application process works in states like Florida, Ohio and New York. Noncompetitive processes (usually found on the West Coast) tend to put no limits on the number of licenses that can be handed out; all that matters is that certain criteria are met. This is the case in Colorado, Washington and Oregon.

Taking into account that the cost of a license and the thresholds to get one are usually lower in noncompetitive states, numerous industry insiders recommend you try and get your first cannabis business set up in one of these.


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