There are tons of articles out there detailing the cannabis licensing processes, the high valuations of cannabis companies, and the astronomical costs associated with getting started in this industry. As an entrepreneur new to this space, you may read blog posts and see videos about how licenses are probably one of the most expensive costs of the business. 

Some even call cannabis business licenses the golden ticket to the industry. But in most cases, it couldn’t be further from the truth.  

Our experts field plenty of phone calls from clients and prospective clients who are very uninformed about the value of their license – and sometimes, even about the value of their business. The key issue is that most people don’t know the difference between owning a license and owning an actual cannabis business operating with positive cash flow. The difference between these two assets could not be bigger. 

The failure rate of new cannabis companies is high, even in a country where 20% of all small businesses fail in their first year. We’ve seen an ongoing trend of entrepreneurs shelling out a ton of money to get started in this space, only to bleed cash and ultimately close their doors. 

In this post, we’ll cover some considerations you should make before you spend big on a cannabis license or a cannabis business, and explain what the difference is between buying a license and buying an actual business.

Consider this post a healthy dose of reality: by the end, you may want to buy into a laundromat business instead of diving headfirst into cannabis.

The first question you must ask before investing in either a cannabis license or a cannabis business is whether or not the market is ready. Consider the maturity of the medical cannabis market that you are getting into. That will weigh heavily into whether or not you even want to try to compete for a license or buy a business.

The oldest medical cannabis market in the country is California. Despite the fact that this market has been around for 20 years, there are still plenty of quirks that can make doing business difficult. For instance, a long-existing medical cannabis market usually means an equally thriving black market exists. This means that the local cannabis businesses, both legal and illegal, have been building relationships with their customers and cementing their place in the market for years. The longer that a medical cannabis market has been around, the smaller the incremental bump will in sales be when your state allows recreational cannabis.  

Case-in-point: when California opened up the market for recreational cannabis, there was no flood of new customers flocking to licensed shops. There was a relatively small new group of consumers (an incremental bump in demand), and the black market still is thriving nearly three years later.

Bottom line: the younger the medical cannabis market, the better the business opportunity.

If you believe the market is ready for your investment, then the next step is to decide whether you will pay for a cannabis business license, or buy an existing business. We want to preface this with one thing...there is no answer to this question.  It depends on many factors including your risk tolerance, your experience, growth/exit plans and much more!

A license, in most cases, is just a checkbox; a green light by the powers that be, authorizing you to open a business. A license says you can go ahead with the next steps to starting a cannabis business, but it doesn’t ensure that you win customers or make a profit. 

The process of getting a license is incredibly costly and there is no guarantee that you will actually get it. Once you do, the clock starts ticking for you to build a valuable business.

There are two good reasons to buy a cannabis license: 

1. As an asset: cannabis licenses are valuable when they’re scarce and hard to get in cities with high tourist populations. For instance, in Pasadena, there are only six retail licenses and a ton of tourists, meaning your sales potential is high. In the City of Commerce, there are limited licenses but not much foot traffic, given that the city is an industrial center with relatively low income.
2. As a tax strategy: having certain licenses opens your business to new tax deductions. You’ve probably heard that taxes are egregiously high for cannabis ventures. When you can invest $30k into a license to save $100k/year in taxes, it makes sense to buy that license. For instance, if you’re a cannabis retailer and want to get into manufacturing, getting a license to take advantage of tax laws may be smarter than buying an entire business, especially if you have space in your current facility.

When looking for licenses to purchase, especially retail licenses, make sure that the market makes sense and you’re not just getting overzealous about having a cannabis license. Make sure this license will unlock some type of financial benefit for your current business. Cannabis cultivators, manufacturers, and distributors can be more flexible because you can drive to get to your clients, so you need to make sure you look at the financials behind operating the business and find the cheapest cost of doing business.

On the other hand, businesses are sets of processes, people, and property that create value.  If you’re looking to buy a business, the most valuable ones are obviously those that are already profitable. Look for cannabis companies that have strong SOPs, amazing staff and repeatable success built-in. This goes for retail businesses and all other cannabis verticals. If you don’t look beyond profit, you risk taking on tons of liability with a company that doesn’t have the right compliance measures and documentation procedures in place.

And one last point on buying a business is that you MUST have self-awareness as to whether or not you can actually operate a business.  There is a significant difference between being an owner and an operator. Just because you own a business doesn’t mean that you will be able to run it well.  Operators have a multi-disciplinary skill set that allows them to handle the many facets of running a business from HR, to finance, to supply chain and everything else that comes with it.  This is where the power of having a team is important. If you know you are not an operator then you have two options:

1. Find an operator within your network to bring onto your team.  Consider giving this person equity and make sure that they have experience running a business that is similar to the one you are purchasing.  For example, a general manager at a big box retailer may be a solid candidate to be the GM at your dispensary. 
2. When you buy the business, offer stay-on bonuses to key employees such as general managers, manufacturing managers, head growers, and support staff.  You can keep them on for a certain period of time and have them earn-out that bonus wage or keep them on permanently. Use your time with them wisely so that you can document all of their processes (if not done already) and see what true value they offer within the business.  If you don’t know who to keep on, then consider running functional interviews.​

The media loves to write headlines about the so-called “green rush.” The green rush refers to the spread of legal recreational cannabis across the US, alluding to the Gold Rush of the 1800s and the money-making potential of this industry. 

In reality, the green rush is mostly hype. It’s a storyline pushed by the media that’s become ingrained in cannabis lore, only to be proven wrong at every turn. From our experience, don’t let these news stories or crazy high valuations of public cannabis companies trick you into thinking that cannabis is going to make you rich. Most of the time, it won’t. Once you look at real numbers and the amount of added complexity from working in this highly-regulated industry, you’ll see that making it in cannabis isn’t as simple as digging for gold.

If you’re still considering investing in the cannabis market, then we strongly recommend making your decision as rationally as possible. Do your research, think about the cash expenditure required, and calculate how much you stand to earn on that cash. This is above all a financial decision, not an emotional one. 

Before you buy a cannabis business, do a very thorough analysis of the financials and the opportunity that you’re buying into. Don’t let the green rush narrative cloud your judgment.  You are making a financial decision. Ask yourself, what will this investment yield?

In most instances, businesses are a more valuable investment opportunity than licenses, especially if they are break-even or profitable, have an aggressive tax strategy and have a stable set of clients.

Now that you know the difference between the value of a license and an operating business, think about your budget.  

If you have less than $100,000 in cash, you’re going to have an extremely hard time getting directly into the licensed cannabis business as a sole owner.  The only market that you could reasonably get into with a budget of that size is in Oklahoma. At this time, this state has a much lower cost for licensing. The cost of doing business in Oklahoma is also lower. However, you need to be an Oklahoman resident for two years to get approved.  

If you’re not an OK resident, you may want to find partners to pool funds together. Buy into part of a business or create an ancillary business that helps cannabis businesses succeed. For example, can you get into the waste removal business, set up security cameras, or start an electrical or construction firm that specializes in cannabis cultivation operations.

If your budget is around $200,000-500,000, you’re in the range of being able to take over and turnaround a struggling cannabis business. Recognize that just because someone owns a cannabis business now, doesn’t mean that they are good at running it. There are many great opportunities out there to take a business and run it profitably. Early cannabis operators were excited, got into the industry and really have no idea how to build a business to profitability. Their inexperience is now your opportunity to get into the market.

At this level of investment, we don’t recommend starting from zero and going through the entire licensing process, paying rent that entire time. If you do get approved, you will need to build out a business facility, stock it and then have enough operating capital to run it – and that’s a big IF. 

If your budget is in the $500k-$1.5MM range, then you have many more options. Consider buying an existing business and using that cash flow to finance the rest of your enterprise. It may need a bit of a turnaround, but that cash can float the rest of your business. 

When buying a business (and sellers, pay attention) you need to make sure that the valuation that you’re buying the business at is reasonable. Many operators think that their business is worth more than five times their existing revenue. The green rush causes some owners to over-value their business at a multi-million dollar price tag, but if there isn’t any bite to back up that bark, then the business isn’t worth much. Check out our M&A videos/posts for more info on how to value a business. 

If you need help with evaluating your deals and bringing financial sense to your next M&A prospect, then please reach out to us today.

Last week, we covered some key findings for cultivators, distributors, and retailers released in the California Cannabis Advisory Committee 2018 Annual Report. The CAC provides recommendations o the California’s cannabis licensing authorities, and helps set forth priorities when it comes to the standards and regulations of the cannabis market.

Today, we’ll outline what the CAC recommended for Manufacturers, Licensing Applications, Microbusiness and Enforcement. It’s important to keep an eye on this committee, as they can have direct impact on the regulatory environment for your cannabis operation. Here’s what the committee accomplished last year.

CAC Subcommittee for Manufacturers

Last year, the Advisory Council’s Subcommittee on Manufacturers made a total of four recommendations. The licensing authorities moved forward to implement two of these recommendations, partially implemented a third, and declined to implement one.

1. Illustrative Guide: the Subcommittee for Manufacturers asked for an an illustrative guide for packaging and labeling to be  broken down into clear components. The CDPH developed and published three guides in June in response to this recommendation:
   1. Packaging Checklist
   2. Cannabis Products Labeling Checklist
   3. Cannabis Products (Small Containers) Checklist

Please note that the CDPH website has been updated to include more than 20 FAQs on packaging and labeling as well as some additional checklists to come. The CDPH intends to release a revised set of checklists, updated FAQs and an illustrative guide after adoption of the permanent regulations.

1. Clarification on Packaging: The Subcommittee asked the CDPH to clarify the concepts of primary packaging, secondary packaging, and child-resistant packaging (with respect to primary versus secondary) and labeling. As a result, the CDPH issued the Packaging Checklist (linked above) which outlines guidance for child-resistant packaging. They also cover this topic in the FAQs on their website.
2. Child-Resistant Packaging: The Subcommittee asked the CDPH to clarify how and where child-resistant packing should be used. When the CAC’s annual report was published, the questions and timeline surrounding child-resistant packaging was still unclear, but we recommend reviewing the guidance on this checklist as well as section 5303 of the Bureau’s regulations and section 40417 of CDPH’s proposed regulations.
3. Dosage Limits: the committee asked for an increase the limitation on dosage from 2,000 mg to 4,000 mg for any non-edible medical product that is not restricted by statute; and raise the dosage limitation from 1,000 mg to 2,000 mg for non-edible adult use products. This recommendation was not adopted by the CDPH.

CAC Subcommittee for Licensing Applications

This subcommittee specifically addressed the risk of large, consolidated cannabis operators dominating California’s nascent cannabis market. The Subcommittee for Licensing Applications was primarily concerned with adding transparency to the licensing process; offering financial relief and lowering barriers to entry for new applicants; encouraging marketing stability; and protecting the health and safety of workers in the cannabis industry. As a result, the Subcommittee had four recommendations which were adopted by the committee, of which two were implemented, one was partially implemented, and not implemented one.

1. Disclosure of Owners: The Subcommittee asked the licensing authorities to require any license applicant who lists a corporation or other entity as an owner to also disclose the names of the owner(s) of the corporation or other entity. This recommendation was adopted via regulatory language found in section 5002.
2. Annual Fees: under this recommendation,  the licensing authorities should evaluate the amount of annual fees, especially fees paid by people with disabilities, military veterans, locally licensed equity applicants, and nonprofit compassion programs. This recommendation has been partially adopted in the permanent regulations.
3. A and M Licenses and Transition Period: the Subcommittee asked to combine application and annual renewal fees for A and M licensees conducting the same business activities at the same licensed premises and to extend the grace period until January 1, 2020 under section 5029 subdivision (b)(1). This was adopted by the licensing authorities. All three licensing authorities included a provision that allows applicants to conduct both A and M activities at the same licensed premises as well as to conduct business across licensing types regardless of A or M designation.
4. Use of Preparers:  finally, the Subcommittee asked for applicants to be allowed to use preparers to assist in the preparation of an annual license application. This was not adopted by the licensing authorities; the owner must verify the accuracy, attest, and submit the application. However, owners are not prohibited from using or seeking the guidance and assistance from experts.

CAC Subcommittee for Microbusinesses

Cannabis microbusinesses are operators that meet a minimum of three out of four of these allowed commercial cannabis activities:

• The commercial cultivation of cannabis on an area less than 10,000 square feet.
• The ability to act as a licensed distributor.
• The ability to manufacture commercial cannabis as a Type 6 manufacturer.
• The ability to sell commercial cannabis as a retailer.

The Subcommittee for Microbusiness offered four recommendations, of which one was partially implemented and three were not implemented.

1. License Tiers, Incentives for Compassionate Use and Rural Operators, and
   Fee Schedule Cap: the Subcommittee asked to clarify the definition of a “microbusiness” to include tiers based on gross receipts and number of employees. Then, the fee schedule would be redefined to include a ceiling at which point the operation is no longer considered a microbusiness. This was not implemented by the Bureau.
2. Recommendation #1: the Subcommittee asked state regulators to provide a “sub-microbusiness” or “microbusiness A” license which would allow up to 10,000 square feet of cultivation including nurseries; three out of four activities to be fulfilled by allowing any type of non-volatile solvent manufacturing including shared space manufacturing; retail sales to happen at events in addition to storefront sale and delivery; and distribution to be fulfilled by full distribution or distribution transport only. This recommendation was partially implemented by the Bureau:
   1. The Bureau has stated that nursery licenses qualify as cultivation so long as the nursery does not exceed 10,000 square feet.
   2. The Bureau has also stated that microbusinesses authorized to engage in retail and / or distribution activities may conduct any activities allowable by the corresponding type of license.
   3. The Bureau has amended language to include licensed infusion as a license type option to fulfill the manufacturing activity  requirement.
3. Recommendation #2: the Subcommittee asked the Bureau and CDPH to create a document that to jointly clarify that local governments may further limit the types of activities that are permitted to occur under a microbusiness  license. This is because although the state allows multiple activities under this license type, local municipal regulations may restrict certain types of activities if they so choose. This recommendation was not implemented by the Bureau / CDPH.
4. Recommendation #3: finally, the Subcommittee asked the Bureau to remove the prohibition on activities allowed within the home, so long as the activities that the applicant is choosing to conduct are activities commonly allowed under cottage business. This provision was not implemented by the Bureau.

CAC Subcommittee on Enforcement

Last, but not least, the Subcommittee on Enforcement is dedicated to improving public safety and protecting the business interests of the cannabis operator. They strive to “ensure that there is a balance between allowing for the feasible operation of cannabis businesses while deterring illegal and criminal activities.”

The Subcommittee adopted five recommendations; in response, the licensing authorities implemented two, partially implemented one, and declined to implement two.

1. Enforcement Authority: the Subcommittee asked the Bureau to:
   1. clearly identify the enforcement authority regarding advertisement and placement;
   2. clearly communicate who the enforcement authority is and how to contact them with complaints;
   3. collect data on enforcement actions; and
   4. require all advertisements have information regarding the license holder placing the advertisement.

This request was not implemented by the Bureau as it was not deemed to be a “policy/regulatory change.” Meanwhile, the Bureau did provide additional clarification on advertising.

1. Clarify Difference Between Citations and Orders of Abatement and Clarify
   References: the Subcommittee asked the Bureau to clarify an order of abatement versus a citation. They also requested that the Bureau clean up language and clarify the process and procedural guidelines within the regulations, reference, and citation sections. This was implemented by the Bureau; see section 5802. Citations; Orders of Abatement; Administrative Fines for details.
2. Advertising: the Subcommittee asked the Bureau to clarify rules around the type and location of advertising permitted, as well as the collection of data on when and where advertising rules were violated. The first part of the recommendation was adopted via section 5040. Advertising Placement and section 5415.1. Deliveries Facilitated by Technology Platforms.
3. Public Records Act Requests: the Subcommittee asked the Bureau to include language related to sharing information between the Bureau and local government entities that acknowledge the information shared is in accordance with the Public Records Act and protects information that is not discoverable under the Public Records Act. This was not implemented by the Bureau.
4. Labor Standards: the Subcommittee asked that all licensing authorities be
   required to include violations of labor standards as part of the licensing process and enforcement, which shall include revocation of the license. This was implemented by the Bureau.

If you have any questions about the CAC or their policy recommendations, please get in touch with our experts. You can also read the full 2018 Annual Report, which covers every Subcommittee statement, to see more about how the regulations in California continue to evolve.

​

The north side of California seems to be on a roll when it comes to accepting adult-use cannabis, and we proudly welcome Union City back on our list of cities now accepting commercial cannabis applications.  

Union City officially re-opened their cannabis application window on Friday, August 16, so you can officially apply NOW.  Union City is awarding the follow cannabis permits:

• Up to 3 Testing Permits
• 2 Permits for Cultivation
• 2 Permits for Manufacturing
• 2 Permits for Distribution
• 1 Permit for Retail

Union City is giving preference to businesses who are vertically integrated, aka any location that will have two or more uses. In addition, they are also accepting applications from applicants who submitted prior but were not awarded a permit. The city will close their application window on December 7, 2018. Today, we will discuss the application process for Union City and what you need to do to ensure you have the best chance of being awarded a cannabis permit.

There are a few documents that Union City has prepared to provide you with the most up to date information about the cannabis application process.  It is suggested you read these before filling in your application.

• Union City has highlighted specific application procedures and compiled a list of important Commercial Cannabis FAQs.
• You will need to complete a Background Application and sign this waiver to submit with your application.  Each owner and employee must complete one.
• You must obtain a Zoning Verification Letter by filling out this Zoning Application. This letter must come from the Economic and Community Development Department.  Keep your proof of receipt as you will need to submit it with the application.

Union City Cannabis Application Submission

All applications must be submitted online via this website.  One of the perks of an online application is the ability to complete just a small portion, save it and then complete the rest at a later date.  You will also be required to submit about 23 different attachments in a PDF format. These will include:

• Zoning Verification Letter (here is the zoning application) and proof of payment for Zoning Verification.  As noted above, this must come from the Economic and Community Development Department. To get started, provide the address of the proposed location to Union City’s Planning Manager.

 

• Carmela Campbell – 510.675.5316 or carmelac@unioncity.org

Once the Planning Manager states that the location is in the appropriate district, you can submit the zoning application to the office at 34009 Alvarado Niles Road in Union City.  Once submitted, and your fee is paid, you should be expected to receive your final Zoning Verification Letter within 10 days.  This letter is required to be submitted online with your application. You can find a zoning map here. Cultivation, distribution, manufacturing, testing and medicinal retail uses are able to locate within the ML (light industrial) or MS (special industrial) districts.  

Keep in mind a cannabis business must be 100 feet from any youth businesses. Union City may provide some exceptions based on your business plan, so if you’d like to be within 100 feet of a youth business you must explain the reasoning clearly within the application.

• Background applications and proof of payment for each owner/employee
• Security Plans
• Business Plans
• Business Proof of Status (anything that shows incorporation, partnership agreements, etc)
• Site Plans, Floor Plans, Development Plans and Air Quality Plans
• Vicinity Map
• Location Information that includes photos of the location site and buildings
• Labor and Employment Plans
• Enhanced Product Safety Plan
• Environmental Benefits Plan
• Local Enterprise Information
• Qualifications of Principals

You will also have to submit personal information for each principal which will include:

• 2 high quality photos of each principal
• Social security cards and ID Cards of each principal
• Proof of Address

Important Document Details

As you upload these documents, it’s important to note a few details.  

• If you are uploading a document that has multiple pages, all pages must still be within one upload/PDF file

• Minimum 11-point font for every document
• File upload limit of 100MB
• Label each document with the last name of the primary contact and then the business name.  For example, if the primary contact is Gary Jones and the business is Cannabis 123 – label the document “Jones – Cannabis 123”

Union City Cannabis Application Fees

Each city has different protocols for application fees.  Union City prefers Cashier’s Checks or Credit Cards. They will not accept cash or personal checks. Please note there is a 2.25% fee applied to credit card payments over $2,500.  The application fees are:

• $272 - Zoning Verification Letter
• $300 per person – Background Check
• If you proceed in the process, you will go through 3 different phases:
  • Phase 1 - $3,979
  • Phase 2 - $1,581
  • Phase 3 - $1,568 (in this phase you will also pay a LiveScan application fee of $174 per person)
  • Phase 4 - $2,030

Applicants are also encouraged to attend a city cannabis meeting on Wednesday, September 19 at 1:30pm in City Council Chambers.  This will be the only and primary opportunity to discuss any application or cannabis related questions with the city staff.

If you have further questions about obtaining a cannabis permit in Union City, GreenGrowth CPAs is happy to help you walk through the process to ensure your best chances of opening a successful cannabis business.

Recently, our experts led a webinar outlining everything you need to know to get your Los Angeles cannabis business license. If you missed it, you can listen to the full webinar on-demand. We covered many topics, including Los Angeles’ cannabis social equity program.

Los Angeles’ cannabis social equity program is a part of the city’s commercial cannabis licensing system. The goal is to give a boost to past victims of cannabis criminalization by offering assistance and benefits to any communities that were unfairly punished by the drug war. Read on for more information on how this program works and how your cannabis business might be able to participate in the program.

What is Los Angeles’ Cannabis Social Equity Program?

LA’s social equity program has the stated goal of promoting “equitable ownership and employment opportunities in the cannabis industry in order to decrease disparities in life outcomes for marginalized communities and to address the disproportionate impacts of the war on drugs in those communities.”

The program intends to offer assistance in the form of funding, physical space, and a separate licensing timeline to any commercial cannabis licensees who meet the program criteria. Some of the program benefits as of July 2018 include:

• Verification of the program qualification without premises verification (e.g., a candidate may be approved without a site evaluation);
• Priority processing (more on that in a minute);
• Business, licensing, and compliance assistance (TBD by the city);
• Training via an incubator (TBD by the city);
• Fee waiver (TBD by the city);
• Access to an industry investment fund (if established in the future)

As you can tell from some of the notes next to the listed benefits, the city is still developing the specific benefits of the cannabis social equity program.

Who qualifies for Los Angeles’ Cannabis Social Equity Program?

There are three tiers qualifications under which a prospective cannabis business owner might qualify for the social equity program.

• Tier 1:  the candidate is considered “low income” with earnings of less than $41,230 annually, as well as EITHER (a) a cannabis conviction prior to November 8, 2016 (the date when Prop 64 was enacted) that now would be prosecuted as a misdemeanor or citation OR (b) 5 years cumulative residency in a qualifying zip code.  
  • Qualifying zip codes include:  90057, 90037, 90062, 90003, 90061, 90059, 90061, 90001, 90011, 90008, 90016, 90013, 90059, 90002, 90014, 90021, 90044, 90043, 90037, 90058, 90008, 90027, 90033.

 

• Tier 2: the candidate is considered “low income” with five years cumulative residency in a qualifying zip code OR has ten years cumulative residency in a qualifying zip code.  

 

• Tier 3: the candidate is a landlord entering into a Social Equity Agreement with the city to provide capital and/or leased space, as well as business, licensing and compliance assistance to Tier 1 and Tier 2 applicants. The landlord agrees to provide access to real estate property for Tier 1 applicants rent-free and with prorated utilities for a minimum of two years, provided that the property meet certain requirements.

Please note that to be eligible for the benefits of the social equity program, you must own at least one third (and for Tier 1, 51%) of the business applying for the license.  

Even if you do not fall under one of the three tiers, you can qualify for the social equity program. To do so, you can either pay a fee to the city fund or agreeing to provide a small portion of your physical space to help the beneficiaries of the program.  

How can I apply for Los Angeles’ Cannabis Social Equity Program?

If you recall from our webinar, Los Angeles is issuing cannabis business licenses in three phases. Phase 2 of the cannabis licensing program started on August 1 and will remain open for 30 days. During this phase, applicants must qualify under the social equity program.

You can currently apply for a Phase 2 license on the Los Angeles City cannabis page. Read this primer for instructions on how to log in to your account and submit an application. Our experts are standing by to help out if you have any questions.

For more information on getting your cannabis business license in Los Angeles, check out our webinar or read our three-part guide on cannabis in Los Angeles:

• Part 1: Los Angeles Rules and Regulations for Cannabis Businesses
• Part 2: Los Angeles Zoning for Cannabis Businesses
• Part 3: Los Angeles Requirements for Cannabis Licenses

​

If you have specific questions related to your business, please get in touch with our experts today.

​

This week’s California cannabis updates come to you from Long Beach, Antioch, and the counties of Contra Costa and El Dorado.

• Long Beach passed an Adult-Use Business Ordinance last week at their city council meeting. First, Mayor Robert Garcia must sign the ordinance into law. The ordinance will take effect 31 days after the law has been signed. The city will begin accepting applications after this.
  • The city still has to issue a few more pieces of information, but we are eager to start helping you get those Long Beach applications in. Expect a full article about cannabis and the city of Long Beach ASAP!
• Antioch has always been conservative about their marijuana licensing. However, recently the city began solidifying business zones for potential commercial cannabis activity.  In late June, a second reading was held and an ordinance was adopted approving the new cannabis zoning regulations.
  • This indicates Antioch is one step closer to allowing cannabis business in their city. No announcements yet on when applications will open or what permit types will be available, but we will be sure to keep you updated.

• Contra Costa County: two cities, El Cerrito and Richmond, currently lie within the county’s borders and are pro-cannabis. In late June, the board of supervisors held a meeting and passed a commercial cannabis activity ordinance. The ordinance allows for:
  • Up to 2 non-volatile manufacturing permits
  • Up to 4 storefront retailer permits
  • Up to 10 cultivation permits
  • Distribution and Testing

A hearing was also held on July 10 to further clarify cannabis taxes.  It is suggested the proposed cannabis taxes go on the November ballot. We will keep you updated as Contra Costa County moves forward with the cannabis application process.

• El Dorado County currently has a ban on commercial cannabis licenses, but things may be starting to change. El Dorado County recently held a meeting suggesting cannabis taxes and activities be on the November ballot. This will likely include a general cannabis tax, cannabis cultivation, retail, dispensary, and distribution. As of this moment, no further decisions are likely to be made prior to November. Check this space for future updates!

Have a question about licensing in one of the cities we discussed today? Contact Green Growth CPAs.

The world of commercial cannabis applications is ever changing.  Each California city takes it upon themselves to decide why, when and what form of commercial cannabis business they will allow into their jurisdiction.  Some cities have hard application deadlines, while others see it as an opportunity to bring in additional revenue and accept applications on an ongoing basis. Palm Springs is one of these cities.

Palm Springs is a California city with a mere 50,000 people but covers almost 100 square miles, making it the 10th largest California city by land area.  Palm Springs adopted ordinances in late 2017 that allowed for commercial cannabis activities, and now they are accepting applications with no end date in site.

Palm Springs Cannabis Licenses

Palm Springs is accepting applications for the following cannabis business activities:

• Dispensaries
• Cultivation
• Manufacturing (Non-Volatile)
• Testing Facilities
• Transportation
• Distribution Facilities

The city approves of both medicinal & adult-use cannabis.

Submit a Palm Springs Cannabis Application

Palm Springs does a nice job of organizing the application process and detailing the steps in one complete PDF document. You can find that document here.

Within the PDF document, you will find each of the following documents that are required for submitting an application. Everything must be completed in order for your application to be fully evaluated. This includes:

• Cannabis Related Businesses and Activities Permit Application
• Cannabis Related Businesses and Activities – Indemnification, Acknowledgement re: Public Records & Copyright Materials Release
• Cannabis Related Businesses and Activities – An Application Submittal Checklist
  • This 11-page document will walk you through EVERYTHING you need in order to submit an application. It’s a great way to stay organized and outlines additional details, like the security plan you will need for your facility.
• Cannabis Related Business and Activities – Supplemental Info & Initial fee calculation worksheet
  • This worksheet will specifically walk you through the fees you owe the city for the initial application. Basically, anyone with a 20% or more stake in the cannabis company will have to pay, get a background check and fingerprinted. See below for an example of the calculation.

 

• Application and subsequent materials must be submitted in a 3-ring binder. They must also be:
  • Single-sided
  • 5x11 sized pages
  • Do not use spiral or comb bindings, but staples will be accepted
  • Building plans are an exception and are allowed to be on larger sized paper up to 30 x 42. They may also be folded, collated, unstapled and secured together with rubber bands.
  • Make sure you include an electronic copy, preferably PDF, on a CD or thumb drive.

The initial filing fee covers the costs of all background checks and fingerprinting. The city will not issue refunds.

• Once an application is submitted & the Cannabis Related Business/Activity Application Fee is paid, applicants need to make an appointment for LiveScan fingerprinting. You can do this by contacting the Police Department at (760) 323 – 8166.  If you intend to have a 20% or more financial interest in the cannabis business, you must get finger-printed.
• Once fingerprinting is complete and the city has verified your prints, you will be notified via email if you are allowed to move forward in the process. The next step will be a background check.
• Once the background check is completed, the application will be reviewed.

Palm Springs is not specific about how many licenses they will issue within each category, but as Green Growth CPA is alerted of further details we will be sure to update this article.
​
Palm Springs isn’t the only California city accepting commercial cannabis applications on an ongoing basis. We will be continuing a series of articles that detail cities with open application deadlines, so stay tuned.

Can we help you get started on your application? Give us a shout and ask how we can help.

​

This week: cannabis licensing updates from the California cities of San Rafael, South Lake Tahoe and Pasadena. In addition, San Bernardino’s application deadline is quickly approaching!

• San Rafael has recently announced the opening of their pilot medical cannabis licensing program. The following 4 types of licenses will be available:
  • 4 licenses for cannabis testing labs (State License Type 8)
  • 8 licenses for medical-infused product manufacturing (State License Type N)
  • 4 licenses for medical non-storefront delivery (State License Type 9)
  • 2 licenses for medical distribution (State License Type 11)

The process will be merit-based and all applications will be reviewed by city staff. In addition, if you are a new business you must meet the following requirements.

1. Receive a San Rafael city-approved cannabis operator license
2. Lease or purchase property that conforms with local and state zoning regulations
3. Be approved for a state-level cannabis license

San Rafael has released a separate page making it easy to verify correct zones and permit fees. Have additional questions about San Rafael? Send us a message and we will happily provide further details.

• Pasadena voters decided on local cannabis measures on June 5, all of which passed. Measure CC was passed with 66% approval and will lift the city’s current ban on cannabis dispensaries. Measure DD was passed with 75% approval and will tax marijuana businesses at a 6% rate for retail businesses and a 4% rate for all other businesses. The following licenses will be approved:
  • 6 Retail Stores
  • Retail stores may deliver
  • 4 Indoor Cultivation
  • 4 Testing Labs

As additional dates and information continue to roll out about these licenses, California Cannabis will update you through our newsletter and blog posts.

• South Lake Tahoe is moving in a positive direction toward boosting the cannabis industry. They will approve licenses for the following business types:
  • 2 retail cannabis operations
  • 2 indoor cultivation sites that are less than 5,000 square feet
  • 2 micro-businesses, which can operate three cannabis related activities — like manufacturing, retail and cultivation — under one permit.​

Further details are expected soon and California Cannabis CPA will be sure to keep you updated as application details are announced.

Don’t forget: applications for San Bernardino close in two weeks! Applications must be submitted by June 25 to be considered for cultivation, manufacturing, retail, microbusiness and distribution opportunities.

Looking to submit an application for one of these cities, or perhaps a specific license type? We have a database of cities that have open and quickly approaching application deadlines.  Contact us today.

​

This week, we have updates from the cities of Jurupa Valley, San Rafael and Goleta. Also, we share a few cities that are accepting applications on an ongoing basis for cannabis cultivation licenses.

• The city of Jurupa Valley is proposing an initiative that would allow (but regulate) medicinal and adult-use cannabis. The city is considering allowing retail, delivery, cultivation, microbusinesses, manufacturing, distribution, testing and nurseries within their borders. We will continue to keep you updated as we get more news!
• The city of San Rafael has completed a final adoption of an ordinance that amends current code. This amendment will allow for issue of a cannabis distribution license.
• The city of Goleta is considering moving forward with a cannabis business license ordinance. But first, they are holding a roundtable this week and would like your input!
  • The roundtable is being held Wednesday, June 6, 2018 at 1:00 p.m. in City Council Chambers. A consulting group is leading the charge and will ask for feedback on local’s concerns regarding any operations, the cannabis application process, enforcement of the current laws and future potential regulations.  
  • Questions can be directed towards the city manager (Carmen Nichols) at cnichols@cityofgoleta.org or 805-961-7522.​

In addition, these cities are accepting cannabis cultivation applications on an ongoing basis.  While some cities may decide to have hard application deadlines, these cities keep their acceptance windows open ended (for now) for cultivation licenses:

• San Bernardino
• Sacramento
• City of Adelanto
• Palm Springs
• Port Hueneme
• City of Desert Hot Springs
• Cathedral City
• Willits
• Point Arena

California Cannabis CPA has helped many cannabis businesses with the initial research that goes into finding the right city for your business. Need some assistance with a particular license? Ask how we can help.

​

We hope you had a nice long weekend. This week, we have cannabis updates from the cities of Ojai, San Luis Obispo and Fillmore. Plus: a few cities are accepting cannabis manufacturing applications on an ongoing basis. Not every city has a hard application deadline!

• Ojai recently had a second reading and adopted an ordinance that would allow for testing labs.  The city has yet to release further details. In the past, Ojai has accepted applications for dispensaries and delivery services.
• San Luis Obispo’s city council adopted an ordinance that amended regulations for commercial cannabis business and cultivation. The ordinance goes into effect on June 14.  
  • NOTE: voters need to approve the cannabis revenue measure first before permits are issued. This ordinance would allow medicinal and adult-use cannabis delivery, retail, cultivation (indoor), distribution, non-volatile manufacturing, nursery, microbusiness and testing.
  • It may be a bit of time before we see these permits issued, as the city council wants to put this on the ballot in November. Let’s see if voters approve this new tax that will create additional revenue for the city.

• Fillmore presented an ordinance that would allow indoor and mixed-light commercial medical cultivation. This would be a big step for Fillmore, though they would still prohibit outdoor cultivation and other commercial cannabis activities.

While most of our newsletters focus on upcoming and open cannabis application windows, it’s also important to note that some cities accept applications on an ongoing basis.  For example, the following cities accept manufacturing licenses on an ongoing basis:

• Sacramento
• Cathedral City
• Port Hueneme
• Desert Hot Springs
• City of Adelanto
• Palm Springs
• Willits
• Point Arena

Looking for some additional guidance on the licensing process? California Cannabis CPA is here to help make sense of it all. Contact us today with your questions and we can get you started.



​

Just announced: West Hollywood, California is now accepting screening applications for cannabis business licenses through May 31, 2018. West Hollywood has provided a lot of detailed information on how to obtain a license, and here’s what you need to know about the process.


West Hollywood Cannabis Ordinance

Back in November of 2017, West Hollywood enacted a Cannabis Ordinance that would allow cannabis businesses to be licensed. According to the West Hollywood Cannabis Business License Screening Application Packet, the following numbers of licenses are to be issued:

• 8 Adult Use Retail Licenses
• 8 Delivery Service Business Licenses (the physical location must be in West Hollywood).
• 8 Consumption Area business licenses with on-site adult use retail sales (sales of products to be consumed on-site). This includes smoking, vaping and ingestion.
• 8 Consumption Area business licenses with on-site adult use retail sales (sales of products to be consumed on-site). Edible ingestion only.
• 8 Medical-Use Dispensary Business Licenses

 
West Hollywood Cannabis Application Process


West Hollywood will select its applicants based on specific application weighting criteria. By providing the grading criteria up front, the city is challenging applicants to tailor their application to the city’s exact needs. Be sure to take advantage of this knowledge!


The first step to getting to the actual application, however, is submitting a screening application (screening applications will be accepted May 2 – May 31).  The screening application must include the following:

• A completed Application/Owner Information Form
• Proof of Payment of the Screening Application Fee. The fees are as follows:
  • Adult-Use Retail - $9,880
  • Cannabis Consumption Area (both types) - $9,880
  • Medical-Use Dispensaries - $9,880
  • Cannabis Delivery Services with a Physical Location in West Hollywood - $5,025
  • The proof of payment must be a cashier’s receipt. Further details provided on page 4 of this document.
• Cover Letter: this should not exceed 5 pages. The cover letter should include the type of licenses you are applying for.  In addition, provide a brief overview of your application and business plan.
• Business Plan: the business plan should include the design concept, security plan and any experience that showcases both industry and business skillsets.

West Hollywood has also provided a comprehensive application overview as well as an application checklist. If you have additional questions, the city has also provided answers to commonly asked questions.


West Hollywood has done a great job providing all the necessary information needed in order to submit a successful screening application.  If you would like additional assistance in submitting a successful application, please don’t hesitate to contact California Cannabis CPA.​

How will San Bernardino evaluate cannabis license applications? 
Applications are evaluated and ranked based on the following:

• Location (200 Points)
• Business Plan (400 Points)
• Neighborhood Compatibility Plan (300 Points)
• Safety Plan (300 Points)
• Security Plan (300 Points)

If you complete Phase 2 with a score of at least an 80%, you will move on to Phase 3.  There will be a maximum of 34 applicants that move on to Phase 3. If you make it to Phase 3, there will be an extensive interview process. You can find the details of the process on page 4 of this document.


San Bernardino will begin accepting applications starting April 23, but they close on May 23.  With only one month to complete your full application, contact California Cannabis CPA to ensure you have everything in order to nab a commercial cannabis permit!

​​

It’s an exciting time to be a cannabis business in Moreno Valley!  Applications are now open for commercial cannabis business permits.

Moreno Valley Cannabis Business License Application
Moreno Valley has set up the full application process through a third party vendor named PlanetBids. To begin the application process, click the link and register as a new vendor. Once you’ve registered, Planetbids will send you a registration email within 24 hours. After you receive this email, the Moreno Valley website suggests searching for bid opportunities and look for invitation number 2018-019.

The PlanetBids site houses the full application and lists the supplemental details and forms you will need to submit for your cannabis business license. You have until May 11, 2018 at 4:00pm to submit for a commercial cannabis permit. Don’t even try to submit an application outside of the PlanetBids system: the city will not accept it.  Luckily, if you run into technical issues there is a PlanetBids hotline that can be reached at (818) 992-1771.

Before you apply, Moreno Valley suggests the following:

• Review this webpage to get the full run down on the business side of things
• Review the full application procedure that provides insight into how Moreno Valley prefers you operate a commercial cannabis business (located within the PlanetBids system).  
• Read the Commercial Cannabis Business Permit Application carefully.
• Start compiling the Background Application Forms for employees and owners

• Review the information regarding the commercial cannabis business permit process here: www.moval.org. This site covers local regulations, municipal codes, ordinances, resolutions, live scan instructions (for the background check) and FAQs.

Remember, a majority of the documents you’ll need to submit (the application, background application, as well as Moreno Valley’s overview on the city’s limitations) are available through PlanetBids.


Details on Applying for a Cannabis License in Moreno Valley

• According to the Commercial Cannabis land use (Ordinance 932), you must be at least 600 feet from any schools or youth establishment.
• There is an application fee of $9,551 for the Permit Application.
  • In addition, there is a $300 background application fee per employee/owner and a $150 background application fee for each employee.
  • All of the fees must be submitted to the cashier located on the first floor of City Hall at 14177 Frederick Street, Moreno Valley, CA 92553 (City Hall). Receipts must be submitted with the application through the online PlanetBids system.
• On the application, you may choose from the following license types, although we are still investigating how many of each Moreno Valley is awarding:

• Indoor Cultivation license
• Manufacturer – Type 6 license
• Non-Volatile Testing Lab – Type 8 license
• Dispensary/Retailer – Type 10 license
• Storefront Distribution – Type 11 license
• Microbusiness – Type 12 license

Moreno Valley will evaluate and select candidates based on a points system. Things like location, business plan, safety and security plans, air quality plans & community benefits will be considered.  You can review the full details of the point-based system on page six of the Moreno Valley cannabis business application guidelines.


In addition, applications must achieve a minimum of 70% score within each individual category. In order to be eligible for the next step in the application process, you must score an overall grade of 80%. It is likely that scoring an 80% will grant you an interview and move you to the next step.  Note that a fee of $1,556 will be due prior to the interview and you will be notified (via email) of next steps.


As Moreno Valley releases additional information about the process and next steps, we will be sure to update you! Act quickly on this one – applications close May 11, 2018.  Need help hitting the ground running with your application? Contact California Cannabis CPA today.



​

Check out this week’s breaking news from Moreno Valley, Gonzales, West Hollywood and Oxnard. Don’t forget: California cannabis tax returns are due in one week!

• Moreno Valley’s City Council adopted an ordinance that added cannabis micro-businesses as an allowed category. This likely means they will issue more licenses, but nothing is official yet.
  • The city is still accepting commercial cannabis applications until May 11, so get that application in if you’d like to receive an indoor cultivation, manufacturer, testing lab, dispensary/retailer, storefront distribution or micro-business permit. More on that later this week. 
• Gonzales recently adopted an ordinance that increased the maximum number of marijuana cultivation and manufacturing permits from three to eight.  As more details emerge about when they will be awarded, we will be sure to inform you.
• West Hollywood continues to inch closer to finalizing all of their application information and grading scales. It looks as though applications will open May 2.  Finalized application materials should be ready and online by April 25. However, West Hollywood is still finalizing details so nothing is confirmed.  The city website does state that most of the information and required documents will likely stay the same or very similar, so feel free to check out their website to get a head start.  We will provide a full-fledged write up once the information is 100% cleared with the city.
• Oxnard recently adopted an ordinance stating that it will allow deliveries of medical cannabis from licensed businesses outside of its city. As an exact date becomes available for this new ordinance, we will provide an update.

Every week, we will continue to update you on the California cities that are opening their application processes so you can get a head start.  Have a question on an existing city or application? Contact us to get started.