cannabis business licensing

Starting a Cannabis Business? Read This First

Are you thinking of starting a cannabis business? A few years ago this might have seemed impossible, but now many regions of North America allow legal cannabis enterprise. This regional legalization of cannabis means you too can become a mogul in this emerging industry. However, you must follow all of the local laws and guidelines.

Cannabis is still very closely regulated, which is a good thing. There have to be guidelines in order to keep the use and supply of cannabis safe for everyone involved.

Basic Legal Requirements

There are a few basics to be aware of. Because of all of this regulation, you need to make sure you are complying with the standards within the state in question. Where your business operates will play a big part, as will the area of business you are working in. For instance, actually growing cannabis might have different restrictions than selling it.

A business license is one of the very first steps, along with a permit and registration documents

You will need:

  • A general business license – this will legally allow you to trade as a business in the area specified.
  • Your tax ID number – This means you can be tracked by the tax authorities and it prevents issues like money laundering.
  • Permits – Issued to allow you to operate in certain business sectors. Different permits may be needed for different cannabis businesses. For instance, if you prepare edibles, you may need a license for food prep.
  • Business formation documents – These formalize the business, partners involved, and who has the responsibility and liabilities within the business.
  • “Doing business as” filing – This is a document that allows you to trade as a name different to your own, and to effectively brand your marijuana business for cannabis marketing purposes.

Business License Requirements for Cannabis

Unfortunately, we can’t give you one specific set of requirements that covers the whole of the U.S. Different states and counties have their own set of requirements and you will need to check these in your locality. For instance, some states have only allowed a few companies to have business licenses for cannabis.

When applying for a cannabis business license in your local area, a lot will depend on your personal background and residency, too. If you have been convicted of crimes in the past it is very unlikely that you would be issued with a cannabis business license.

While we wish we could advise on the specifics of licensing, the best way to get this information is to speak to local state government or consult with local law practitioners to help you to establish what is required. A lawyer will be needed to keep you safe from a legal standpoint.

Which Department is Responsible for Licensing?

This is another question to which there is not one simple answer. The responsible department can vary depending on where you are based, too.

In many states you might need to file all of your paperwork with your Secretary of State office. There may be local agencies who are responsible for cannabis licensing though, so it is worth checking.

In Nevada, for instance, the responsibility of regulating all of the recreational and medical marijuana falls on the Department of Taxation.

Californian businesses have the option to go through agencies such as the Bureau of Cannabis Control, CalCannabis Cultivation Licensing and Manufactured Cannabis Safety Branch. These are all responsible for different areas of the cannabis industry, so work out whether you are involved in cultivation, retail, or production before contacting one. 

Pay Close Attention to Local Regulations

It really is the best piece of advice anyone can give you. States are all responsible for their own cannabis laws, and they all have different pieces of legislation and guidelines. The locality in which you plan to operate will dictate exactly what licenses and permissions are required. There is a lot of red tape when entering this business, so don’t take any chances with what you are doing. Make sure you are legally covered before starting any cannabis business.

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