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How to Start a Cannabis-Related Business


Are you interested in starting your very own Cannabis-Related Business (CRB) in California but don’t know where to start? The proper due diligence is required to ensure your future business is operating in compliance with federal, state, and local laws. Before you dive headfirst into these green pastures, this guide will help get your ducks in a row.

1. Get Licensed to Handle Your Hemp/CBD/Cannabis

California offers various types of licenses for different aspects of the cannabis industry, including cultivation, distribution, manufacturing, testing, retail, and more. Consider your business goals to help determine which type of license you need. Follow this checklist for a deeper understanding: Annual License Application Checklist

2. Get Permitted to Do Business in Your City and County

Before you can apply for a state license, you should receive authorization from the local government where you plan to operate. Obtain any local business permits, and all documentation regarding zoning requirements that apply to your cannabis business. You can find this form here: Form 19: Standard Operating Procedures

3. Register Your CRB with the Secretary of State

Register your CRB to operate legally within the State of California. Your business can operate as a corporation, limited liability company (LLC), partnership, or sole proprietorship.

4. Acquire a Permit to Sell Cannabis

Once you have local authorization you can apply for a state cannabis license through the California Department of Cannabis Control. Be prepared to provide detailed information about your business and how you plan to comply with any regulations, ordinances, and statutes.

5. Document Everything Related to Your Business

Be sure to have proper documentation and records readily available for any inspections that require your cooperation. These could include general business structure, location, security measures, product selection, staffing, financial projections, deeds, insurance, etc.

6. Obtain Insurance Specific to Your Cannabis Operation

General liability insurance should comply with local, state, and federal guidelines. We recommend working with an insurance broker or agent with cannabis industry expertise given the numerous regulations required.

7. Did We Mention Taxes?

Cannabis sales in California are subject to a 15% excise tax as well as state sales taxes which range 7.25% to 10.75% between certain areas. However, it should be known that local districts in California tend to impose additional taxes. Be sure you’re up do date on the latest tax revisions: Tax Guide for Cannabis Businesses

8. Recurring Administrative Expenses

Cannabis retail licenses typically need to be annually renewed along with any other insurance/certifications in which your business adopts. Ensure you are up to date with any and all payments.

9. Proprietary Considerations

If you’re planning on offering a unique product or service you may want to consider trademarking and/or copyrighting any name and/or likeness associated with your CRB.

For a more detailed consultation regarding how you can initiate your course of cannabis business action you can reach out to the Maverick Bankers at TASI® Bank.