In the regulated cannabis market, everything begins with your license application. To put it simply, without a license, you’re not a legitimate partner no matter where you fit in the cannabis supply chain. While the licensing application process differs from state to state, there are some common elements and potential pitfalls. We thought it might be helpful to provide some tips on how to apply for a cannabis retail license.
What Business Are You In?
In the cannabis licensing world, one size does not fit all. Most states with legal cannabis programs require separate licenses for cultivation, manufacturing, testing, distribution, delivery, and retail sales. While a company may own more than one type of license and become a “vertical company” controlling several parts of the supply chain, each segment requires an independent license. For many license holders, owning a retail dispensary license is the ultimate license to possess.
Study, Plan, Then Study Some More
Every legal retail dispensary in a state must be licensed in that state. For example, a dispensary licensed in California is not automatically licensed in Nevada, even if the same company owns the two dispensaries. As a result, you must abide by your state’s rules for completing the application process. From the beginning, it’s important to understand that it’s the state’s sandbox, you’re simply playing in it. It may be difficult, even frustrating to comply with the rules, but in reality, you have to abide by the state’s requirements. Fortunately, state governments provide basic online information to help guide the process. California’s Bureau of Cannabis Control, for example, has an online learning page, video tutorials, and reference guides. California operates a two-tier licensing system where licenses are issued at both the state and local levels. This provided some semblance of local control for cities, but it also had the unintended effect of many cities choosing to continue prohibition and thereby limit the number of available licenses.
Five Tips for Obtaining a Cannabis Retail License
1. Research the dispensary license regulations and begin collecting data.
This is a highly arduous process that requires vast sums of documents, records, and the time needed to collect all the required data. Know what you need well in advance of actually submitting an application, and you can begin by studying any state-issued online checklists or FAQs. Even in this initial research stage, it is never too early to seek legal advice from an attorney, a cannabis compliance specialist, and technology partners like Blaze about what the road ahead may bring.
2. Determine how much working capital you’ll need.
Depending on your state, the National Cannabis Industry Association (NCIA), advised in 2018 that opening a dispensary can cost anywhere from $250,000 to $750,000, or more. The application process itself can easily cost tens of thousands of dollars even before your doors open for business. Do you have access to this kind of capital or are you going to seek investor partners? If you’re bringing on partners, what are the ownership terms and how might this affect the application process? Again, issues like this must be sorted out prior to submitting an application.
3. Location, Location, Location
Most states have very particular requirements for the location of cannabis dispensaries. Aside from normal commercial zoning requirements, cities typically ban dispensaries from areas close to schools, daycare centers, churches, government buildings, etc. You must do your homework to see if a potential location meets the regulatory requirements. Keep in mind that some states require the physical location to be set prior to submitting your application. This might be limited to designated industrial areas where several dispensaries are concentrated within it. It is crucial to understand the location requirements as your decision could directly affect the success of the business.
4. Business Structure and Business Plans
The competition is intense for dispensary licenses. You need to bring your “A-game” to the process and be ready with everything that goes into a successful application process. It starts with having a valid business itself in place whether it’s an LLC, a traditional corporation, a sole proprietorship, limited partnership, etc. Be prepared that everyone connected to the ownership of the entity seeking the license must be disclosed. Chances are that the state may also require a realistic business plan which is an enormous project unto itself. This is especially true if you’ve never prepared one as even experienced entrepreneurs spend countless hours creating the plan. The business plan serves as a roadmap not only for the company but also for the regulators to determine if the company is suitable for receiving a highly-coveted dispensary license. It must be taken seriously by all concerned.
5. Project Management
Cannabis compliance and application specialists will tell you again and again that seeking a retail dispensary license is a marathon and not a sprint. Solid project management skills are essential as key dates and submission requirements cannot be missed. Again, consider working with an experienced cannabis-centric law firm or compliance company that can help manage the application process.
Social Equity Licenses
The failed War on Drugs was particularly hard on communities of color. For decades, thousands of black and brown men and women languished in prison while their families suffered at home, simply for the crime of selling cannabis. To help right this horrendous wrong, several municipalities and states set up social equity programs to assist minorities seeking to enter the legal cannabis marketplace. The application process differs from the mainstream procedure as applicants need to provide information and data explaining and supporting their need for a social equity license. Look for organizations and companies in your area that specialize in social equity licenses as it’s a whole other level of requirements to qualify.
Blaze is here to help our customers run a successful dispensary business. Whether its improving transaction times or managing invoices, purchase orders and expenses, Blaze has you covered. Contact us to learn how we may serve you or visit our Help Center for more information.