It’s a tough nut to crack, but once you do you’ll be facing far less competition.
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In recent years, the California adult-use industry has seen a boom in consumer demand, but surprisingly only a blip in manufacturers.
As of January 2019, there were roughly 5,000 licensed cannabis-based businesses in California. However, there are only about 400 manufacturers with temporary licenses to service the industry, according to the California Department of Health (CDPH). With more businesses diving into the market and the rise in consumer demand, why are there still so few licensed manufacturers?
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The issue stems from the rigorous licensing process itself, as well as the unforeseen obstacles manufacturers may face when trying to secure the proper authorizations from state and local municipalities.
When looking to set up a manufacturing operation legally, it is important for operators to consider the licensing process in advance and proactively plan to meet and exceed compliance and safety standards, as well as navigate unforeseen circumstances that may arise during the process.
Want to secure a cannabis manufacturing license the right way? Here are the steps.
1. Get local approval
Prior to obtaining a license from the state, operators must first seek approval from the local municipalities to conduct business at their current locations. For cannabis-based manufacturers, the process often goes beyond securing approval of land use and zoning permit(s) and business license(s) from cities and counties, the primary land use regulating authorities. To help ensure the safety of employees and adjacent tenants or properties, often, the operator will work with local fire and police departments in addition to city planning to meet compliance and safety standards.
In addition, local municipalities are required to evaluate whether the project could have negative implications on the surrounding environment. In most instances, a cannabis manufacturer will take over an existing facility or commercial property, which may require only minor updates that will likely not impact the surrounding area. However, for manufacturers that are looking to break ground on a new site or creating a new facility, it may require the municipality to conduct an environmental review, which may result in a supplemental cost.
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2. Secure building permits and certificate of occupancy
After securing approval from the local governments, a manufacturer will likely need to obtain a building permit to make improvements to the facility, including building out lab-grade rooms, installation of operating and safety equipment, and updates to fixtures and furnishings. Once the updates are complete, the building must be inspected and secure a Certificate of Occupancy, in order to be deemed suitable for use.
3. Fill out all licensing applications
Each state has its own governing agency that oversees the licensing process. In California, commercial cannabis manufacturers must obtain licensing from the CDPH’s Manufactured Cannabis Safety Branch (MCSB). Applications for annual licenses can be submitted online.
The application requires information about the business, its owners, financial interest holders, operating premises, and procedures for waste disposal, inventory and quality control, transportation, and security. In addition, the operator should have several documents on hand, ready to upload, including business formation documents, proof of surety bond, written statements by the property owner, premises diagram, evidence of compliance with California’s Environmental Quality Act (CEQUA), among others.
In terms of timing, it depends on the local municipality, but in general it is safe to assume that the whole process to obtain a manufacturing license can be achieved within 12 to 24 months, with the wait period being longer in newer markets such as California (applicants should plan for 18-24 months), and at least 12 months in established markets like Colorado.
Ultimately, when it comes to securing a cannabis manufacturing license, knowledge is key, so it is important that operators keep a realistic outlook on the process and plan accordingly in advance.