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How to Apply for a Cannabis License Part 5 - State License

Updated: Oct 6, 2021

This is the final article our five part series on applying for a cannabis license.

In most cases, cannabis business licenses require both state and local approvals. The roles of the state and local jurisdictions may vary from state to state, but in all cases you will need a state license to operate. In fact, the local permit will stipulate that the permit is valid only if state licensure is obtained.

The state may grant a temporary or provisional approval while the application works its way through a full review for an annual license.

Expert Tip: States vary in the number cannabis licenses they issue, with some states putting annual caps on the total so being prepared early in states that are just beginning their process may prove to be a competitive advantage.

  • In addition to materials submitted at the local level, states may require additional material and forms including state agency–specific operational forms, federal and state tax identification and annual anticipated or estimated gross sales in order to determine state licensing fees.

Expert Tip: It is very important to have an accurate estimate of your anticipated gross sales for the year. The licensing agency will revise the fee based on the difference between anticipated sales and actual sales and retroactively charge the applicant for the difference so if you grossly underestimate sales, you may end up with a large unanticipated fee.

  • State may also require a surety bond to ensure that the business will have the funds to pay off any debts when it eventually closes.

  • Some states may also require environment impact studies depending on the size of your operations. In California, for example, those requirements are governed by the California Environmental Quality Act (CEQA).

  • Financial information disclosure. The applicant must demonstrate (1) where the funding of their operation will be coming from and (2) that the applicant has enough funds in its accounts to cover startup costs.

  • The state will often grant a provisional license for the applicant to operate if all initial requirements are met while the annual license is being fully reviewed.

Congratulations, you are now on your way to being part of the fastest growing industry on the globe. Depending on the jurisdiction, there may be some additional local permits required to run your cannabis business such as public health, alarm, a seller’s permit, and others, but they are usually easy to obtain and often granted as part of the general local application process.

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