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How to Get a Cannabis Business License

Regulations and laws are changing fast in the cannabis industry. Only a decade ago, the number of states allowing the legal sale and cultivation of cannabis was minimal; now, we’re fast approaching some form of legalization across the entire country. 

Yet, to sell or grow cannabis (or conduct certain other kinds of business) means acquiring a cannabis business license. Without this document, you won’t be able to secure funding, grow the business, or even open your doors. 

Cannabis business licenses differ significantly in their availability across the country. While some states allow a potentially unlimited number of dispensaries, cultivators, and manufacturers to open, others have a set number of licenses available at any time. 

Understanding how to get a cannabis business license is essential to building your business and should be among the first hurdles you complete.

In this article, we’re explaining how to get a cannabis business license – noting some of the biggest challenges entrepreneurs face.

Let’s get started.

How to get a cannabis business license

Learn your local rules

We’d need to write a book to describe all the specifics of each state’s rules for applying for a cannabis business license. However, while the specifics differ, there are some common themes.

You’ll want to learn your local rules regarding the application process. But you’ll also need to consider the viability of your business to ensure the chance of approval is high.

Here are some questions you’ll need to ask yourself:

Licensers will want to guarantee you’ve got answers and solutions to these problems. With cannabis business licenses so valuable, states want only the most viable businesses to proceed. 

Create a business plan

As part of your application process, regulators will want to review a complete business plan. That means you need to write one. Creating a cannabis business plan entails describing how you plan to run and build your business. It’ll need to include funding sources, information about business partners, proposed premises and locations, products you will sell, how you will market your products, and much more.

An extra detail that can go a long way is including a map in your business plan. Demonstrating that your business premises do not interfere with any regulations (e.g., proximity to schools) is essential, and can show regulators you are aware of and plan for all legal aspects.

You’ll also want to include a budget in your business plan. Factors like rent, licensing costs, employee salaries and benefits, utilities, stock, security, and marketing, will all need to be a factor in your estimated profits. A sizable chunk of your initial investment can go on the application fee – so you’ll want to ensure that is accounted for – as well as any cannabis-specific taxes.

Other aspects of your business plan to consider are your planned team and structure and your proposed standing operating procedures (SOPs).

Licensing structure

Not all cannabis business licenses are created equally. Upon legalization, some states went for a one-size-fits-all approach, creating a single license for all cannabis-related businesses. So, you’d be able to open a cultivation business, dispensary, or manufacturing plant, all using the same license. Alternatively, other states have specific licenses for each business practice. In Colorado, for example, there are a few types of cannabis business licenses, e.g., marijuana grower’s licenses, marijuana dispensary license

Application fee

Because cannabis is handled exclusively at the state level, the application fee differs between jurisdictions – sometimes by a lot! 

For example, a cultivation business in Alaska would need to spend $1,000 when applying. In contrast, in Hawaii, the application fee is $5,000, and the annual licensing fee is $75,000 – making it prohibitive to open a grow operation in the state. Even more expensive, Illinois charges $1000 for early approval of adult-use cannabis businesses.

Application fees are particularly important as they are non-refundable. If, for whatever reason, your application is rejected, the application fee is a sunk cost. For most people, it means there’s a limited number of times they can apply before the costs become unaffordable.

Build relationships

Prior to submitting your application, attending local meetings with local and state government officials can grow your reputation. It also presents a helpful opportunity to focus on the details of new cannabis regulations. By talking to these officials, you’ll gain a more concrete idea of what your state expects when reviewing a licensing application and how to tailor your application to the local rules.

Of course, you’ll also build personal relationships and start a dialogue with your counterparts in government. Through these relationships, you can explain what your business proposals bring to the community. 

Be prepared for your cannabis business license application

Whether you’re submitting your application or participating in an interview, you want to be 100% prepared for the process. With the regulations governing the cannabis industry stringent, you can’t afford to overlook any details – especially considering the application fee is non-refundable.

Remember to complete or consider the following:

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