How to open a dispensary in California

Overview

Are you wondering how to open a cannabis dispensary in California? This page will keep you updated on the latest news and information about opening a cannabis business in California. This includes helpful insights into what is to come next for the state.

After the passage of Proposition 215, or Compassionate Use Act, in 1996, California became the first state to legalize the use of cannabis for medical purposes. Both medical and recreational marijuana users are now legal in the Golden State.

During the midterm elections in 2022, voters in California approved 12 local ballot initiatives that would either expand existing retail cannabis markets or establish new ones in a dozen different communities. Most of the gains will be concentrated in Los Angeles and San Diego counties. The victories should result in more than seventy additional retail licenses and more business prospects for plant-touching and auxiliary enterprises that serve those retailers. On the other hand, pro-cannabis ballot initiatives were defeated in six municipalities.

The Opportunity Size

It is anticipated that the value of sales of legal marijuana for recreational use in California will rise to 6.59 billion U.S. dollars by 2025, an increase from the figure of 2.69 billion U.S. dollars in 2016. The most populous state in the United States, California also had the largest cannabis market in 2018, with a total value of 5.6 billion U.S. dollars, including both the illicit and legal markets.

Local Cannabis Restrictions & Laws

Although marijuana dispensaries are permitted at the state level in California, local governments can choose whether to allow them in their communities. In some areas, it is strictly forbidden for any business to engage in the sale of cannabis. Check with the local authorities to ensure that it is not against the law to operate a marijuana dispensary in your community before you take any action toward opening one.

While 44% of jurisdictions in the state permit some form of cannabis enterprise, 56% do not allow any form of cannabis enterprise. In addition, 61% do not permit any form of retail cannabis enterprise.

Discover which types of cannabis companies are legal in your area here.

Medical Marijuana Legalization

The Compassionate Use Act, also known as Proposition 215, was approved by voters in California in 1996. Patients and their caregivers were granted permission under Proposition 215 to possess and cultivate cannabis for medical purposes. It was the first ballot initiative in the history of the United States to legalize medical marijuana at the state level. The mandate and rollout of Proposition 215 in 2003 were clarified thanks to Senate Bill 420, which is notable for its number.

Check out this page for more information about California’s medicinal marijuana program, including how to apply and the list of qualifying conditions. As of the ​end of the fiscal year 2022–23, there are 108,020 medical marijuana patients in the state.

Users of medicinal cannabis are subject to a different set of regulations than adult users. Medical marijuana patients are allowed more cannabis in their possession, can cultivate more plants at home if their doctor advises it, and can buy more marijuana per day if their doctor approves it.

There are different rules for medicinal users and adult users. Medicinal users have higher possession limits, can grow more plants at home if their physician recommends it, and buy more cannabis each day if their physician recommends it.

Adult-Use Marijuana Legalization

On January 1, 2018, marijuana usage for recreational purposes became legal in California. The approval of Proposition 64 by the state’s voters in November 2016 led to the legalization of cannabis regulation and the use of cannabis by adults. It set taxes on sales and cultivation and legalized the possession, growing, sale, and consumption of cannabis for adults aged 21 and older for recreational use.

California law currently allows adults over 21 to possess up to one (1) ounce of dried marijuana or eight (8) grams of cannabis concentrate. Additionally, they are permitted to cultivate up to six (6) plants for personal use, subject to specific regulations.

Adult-Use Cannabis License Types

The Department of Cannabis Control (DCC) issues licenses per the cannabis-related activities your company plans to engage in. You could require more than one license if you plan to engage in many activities.

Retail or Dispensary License

Retailers of cannabis offer delivery and storefront sales of cannabis products. The sale of cannabis products requires a retail license. The retail license necessary will depend on whether the business has a storefront where customers can come in person.

Cultivation License

Cultivators are responsible for the growth of all cannabis plants that are later harvested, turned into products, and sold as flowers. A cultivation license is required to grow cannabis and sell that cannabis legally. The size of the canopy (the area where mature plants are grown) and the type of lighting utilized are two factors that determine the type of cultivation license that must be obtained.

Manufacturing License

Cannabinoids and terpenes are removed from cannabis plants by manufacturers, who then use the extracted compounds to produce other goods. To legally produce cannabis-related goods in the state of California, you are required to obtain a manufacturing license. The kind of manufacturing license you need is determined by the activities you engage in, including whether you do extraction and post-processing, as well as the chemicals you employ (if any).

Distribution License

To transport cannabis and cannabis products throughout California, you need to get a distribution license. Whether you plan to carry cannabis goods to retail locations, store cannabis goods, or transport them for other businesses will determine the sort of distribution license you need and how much the license will cost.

Microbusiness License

The microbusiness license is intended for establishments with at least three operations in a single location: cultivation, manufacturing, distribution, and retail sales.

Event Licenses

Temporary cannabis events are gatherings where people can buy and use cannabis for several days. These gatherings typically occur at a city or county-approved site and run anywhere from one to four days. A cannabis event organizer license and a temporary cannabis event license are both required to stage a cannabis-related event.

Testing Laboratories License

Facilities that test cannabis products before they are sold to retailers must have a testing laboratory license. The Department of Cannabis Control (DCC) requires that every batch of cannabis-related products undergo a series of tests before they can be sold. 

How much does it cost to open a dispensary in California?

Here are the costs associated with opening a cannabis business in California:

License type

Application fee

License fee

Cultivation license 

$135 – $8,655

$1,205 – $77,905

Manufacturing license 

$1,000

$2,000 – $75,000

Distribution license 

$1,000

$1,500 – $180,000

Testing laboratory license 

$1,000

$3,000 – $112,000

Retail/Dispensary license 

$1,000

$2,500 – $96,000

Microbusiness license 

$1,000

$5,000 – $300,000

Cannabis event license 

$1,000

$3,000 – $20,000

You may petition to have your license fee waived if you were adversely affected by the illegality of cannabis. Check your eligibility for a waiver before applying.

How to get a cannabis business license in California

The DCC details the important actions that must be taken to submit an application for a cannabis dispensary license and other cannabis business licenses.

  1. Accomplish local permitting procedures – Numerous municipalities and counties have regulations and licensing for cannabis companies. Some prohibit cannabis enterprises. Ensure that your business is located in an area that permits commercial cannabis activity. Before you apply for a state cannabis license, you must fulfill all municipal and county permission requirements.
  2. Learn the state laws governing cannabis businesses – The Department of Cannabis Control (DCC) has rules for standard operating procedures, personnel training, and facility layout. Ensure that you comprehend and can comply with these rules.
  3. Collect the necessary information and documents for your application – The DCC provides resources that can assist you in the creation of the paperwork required for the licensing process. Send an email to the DCC licensing team with any questions regarding the criteria.
  4. Create an account for the licensing system – The DCC offers different systems for licensing. Make sure to use the one that is appropriate for the kind of license you are trying to get.
  5. Finish your application – The licensing system requires you to fill up the relevant fields and upload any required papers. When you have finished filling out the application, sign it and then send it in.
  6. Pay the application cost and complete your submission – When your license application is complete, the system will instruct you on how to pay the application fee. Your application will not be processed until the application fee has been paid.
  7. Answer licensing team emails – DCC licensing will email you if your application is incomplete. They will tell you what to fix and set a timeframe. DCC processes applications faster if you provide complete information quickly.
  8. Pay the applicable license charge – In the event that your application is accepted, you will be sent an email outlining the steps necessary to pay the license price. Due to security concerns, payments in cash are only accepted with an appointment. After your fee has been processed, your license will be sent to you.

Future Plans

As the state expands its cannabis program, particularly the recreational program, we will keep you up-to-date on all relevant news and legislation on opening a dispensary in California. By adding yourself to our California Cannabis Mailing List (below), we will keep you updated on all relevant news that matters and not so easy to find news and comments based on California Legalization below. This includes but is not limited to:

  • What are the most recent developments regarding cannabis in California?
  • What special programs will be available?
  • And more

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