Starting a licensed cannabis business doesn’t happen overnight – thousands of hours are invested in the planning, building, and launching of a cannabis business.
As cannabis is regulated by the states and still federally illegal, you’ll want to make sure you’ve understood the laws, regulations, and taxes working in the industry. You’ll need to review the state requirements to make sure cannabis is legal in your state and the requirements for applying for a cannabis license.
Many cannabis businesses don’t do enough research on the requirements of getting started, costing them additional consulting fees or even failing to move forward in the licensing process or in their business.
When you begin the cannabis license application process, you’ll want to first look into the local cannabis ordinance, the taxes that are associated with operating a cannabis business, and the requirements to apply.
The Cannabis Application Process
Cannabis applications in certain states are highly coveted, making the cannabis application process even more competitive. YOU SHOULD NOT and physically cannot apply for a cannabis license in one day. Highly competitive cannabis applications deserve thoughtful time and energy, and should not look like a broiler template. Often, you might be required to have a property before you can even apply for a license.
The application process for a cannabis license requires keen attention to detail, a collaborative team, and the process should not be done in a vacuum.
Regardless of local or state licensing, you most likely need the following in your application:
- Business Plan including an overview of the business, operations, marketing plan, team, and growth plans
- Financial Plan including startup budget and 3-year financials
- Security Plan including security controls, training, and seed to sale tracking overview
- Premise Diagram that illustrates the premises, drawn to scale, showing the areas where cannabis is packaged, procured, shipped, delivered, and stored.
- Employee Training and Hiring Plan including recruiting, training methods
- Operations Plan including cultivation plan, quality assurance, SOPs for inventory, waste management, packaging, inventory management, and sales
- Ownership Dossier and Financial Disclosures
- Corporate Documents and agreements. Generally, you are required to have a business entity to apply for a state cannabis license. When you apply for a cannabis license you will need to have a legal entity and should consider working with a professional to form your corporate documents and operating agreements.
- Evidence of right to occupy the premises where you will be doing business
- A few other things that help the licensing body understand the business model, funding, and the team behind the cannabis business
Depending on the state, the cannabis application process is different. For example, in California and Michigan, a cannabis business applicant must apply for both a local and state cannabis license. In other states, cannabis applicants only need to apply for a state license.
Which professionals to work with
Cannabis is not your time to be a jack of all trades. I promise you, this is a team industry.
If you are applying for a cannabis license, I can guarantee you will need to hire multiple professionals for advice and input on the application. This may include an expert in law, cannabis regulation, a CPA, an architect, security, and risk management specialist, just to name a few.
There are certain nuances that you may not catch if you’ve never worked with a cannabis business or within cannabis regulation – this can be anything from a compliance protocol or standard operating procedure to how the front room of an architecture rendering should look. You should hire experts that have been through the application process before, and can easily identify red flags or areas where key information is missing or not competitive.
As a business owner or applicant, you should be highly involved in the process. Although there is no magic number of how long it takes to apply for a cannabis license, entrepreneurs should allocate several months to this process. The last two weeks prior to submitting the application should be spent on review and minimal revision.
It’s imperative that you build a project roadmap that outlines key milestones and estimated costs associated with applying for a cannabis license. The pre-licensing phase is a difficult phase that can take significant amounts of capital and resources.
If you want to learn more about starting a cannabis business, check out my Cannabis Finance Bootcamp.