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Starting your own cannabis business in California

The legalization of cannabis for adult recreational use brought varying business opportunities for budding entrepreneurs. In California, any adult* over twenty-one can produce and sell cannabis. While you also consider the demands of starting any business, such as cash flow, growth, advertising and client satisfaction, the cannabis industry has strict compliance regulations. You must remember that cannabis is still a controlled substance. To enter the cannabis business, you need to consider essential details.


*with some exceptions due to prior criminal convictions or competing licensure

What you should know before entering the cannabis industry

The Department of Cannabis Control regulates the growth and manufacturing of cannabis plants and products. It monitors the transportation and sale of cannabis goods throughout the state, and heavily regulates all the movements in the cannabis industry. To ensure you observe and comply with the cannabis guidelines, you must first determine what license you need. The cannabis licenses available in California vary depending on the business category. You can choose from the following:

  • Cultivator: A cannabis cultivation license will allow you to plant, grow, harvest and dry cannabis. You can do indoor or outdoor cultivation.
  • Manufacturer: As a licensed manufacturer, you can process the production of different cannabis goods. You can process the cultivated product by infusing, blending, extracting and enhancing it. You can also package and label cannabis goods and store them for potential sales or recreational use.
  • Retailer: As a retailer, your business sells and delivers cannabis goods to clients and consumers. You can be legally liable for selling cannabis to underaged customers. Your business will need a physical store and the store must comply with the applicable dispensary regulations.
  • Distributor: A cannabis distributor is someone who engages in the transportation of cannabis and cannabis goods. As a precaution, if a distributor does not carry a transport-only license, they may also want to make sure the cannabis product packaging and labeling meet the standard legal requirements.
  • Testing Laboratory: An entity that tests cannabis goods before giving them to the retailers to sell. Note that a laboratory license cannot be combined with any other license, nor can a licensee in any other category obtain an interest in a testing lab.
  • Microbusiness: A microbusiness license is for businesses that opt to do at least three of the following: cultivation, manufacturing, distribution and retail.

There are always basic legal requirements to consider regardless of your chosen business venture. The cannabis business license is only one of many.

What else do I need?

As someone looking to build a cannabis business, you must understand how business formation works and which business entity works for you. The business entity will allow you to determine your tax and legal requirements. You must obtain varying permits to legalize your marijuana business.

You should know exactly what area of the cannabis industry you want to focus on. You can start from there and grow your business. Just make sure you do everything by the book.