In 1996, California became the first state in the U.S. to allow a medical cannabis program within state lines. 20 years later, in November 2016, the state of California passed legislation officially approving the recreational market – and cementing the state’s legacy as one of the most established markets in the country. To date, California has issued over 12,000 licenses representing over 30 distinct license types to cannabis businesses, depending on their role in the cannabis lifecycle and how they operate (outdoor, indoor, or mixed-light).
Whether you’re just getting started, have been an industry vet, or are even getting your footing in another state’s market, understanding the blueprint that California has set as a historically significant market can help you get ahead.
If you’re looking to better understand the market and the opportunities that exist within it, here’s a breakdown of the various types of cannabis licenses that California issues each year:
The Origin of the Cannabis Lifecycle: Cultivation Licenses
Cultivators are crucial to the cannabis lifecycle, as they’re responsible for nurturing and growing the product that gets distributed to manufacturers and distributors, and ultimately, consumers. Cultivators represent a huge majority of license holders, representing over 7,500 of the over 12,000 total licensed businesses in California.
In the Cali cannabis market, cultivation licenses are divided into various categories depending on the type of production and lighting used, as well as the number of plants grown or the size of the canopy. Here’s the breakdown of what a few of those types look like:
- Specialty cottage outdoor – up to 25 mature plants or up to 2,500 square feet of canopy
- Specialty cottage indoor – up to 500 square feet of canopy
- Specialty cottage mixed-light tier 1 and 2 – up to 2,500 square feet of canopy
Specialty (By Cultivation Type):
- Specialty outdoor – up to 50 mature plants or up to 5,000 square feet of canopy
- Specialty indoor – 501 to 5,000 square feet of canopy
- Specialty mixed-light tier 1 and 2 – 2,501 to 5,000 square feet of canopy
- Small outdoor – 5,001 to 10,000 square feet of canopy
- Small indoor – 5,001 to 10,000 square feet of canopy
- Small mixed-light tier 1 and 2 – 5,001 to 10,000 square feet of canopy
- Medium outdoor – 10,001 square feet to 1 acre of canopy
- Medium indoor – 10,001 to 22,000 square feet of canopy
- Medium mixed-light tier 1 and 2 – 10,001 to 22,000 square feet of canopy
- *Large cultivation licenses will become available for issue after January 1, 2023
In addition to these types, nursery and processor licenses also expand the types of work available under the cultivator umbrella, representing businesses that only deal with immature plants and processing-only activities. These license types serve as an essential foundation for marijuana cultivators to expand their operations and help meet increasing consumer demands across California retailers.
Getting Products Ready for Market: Manufacturing Licenses
Manufacturing licenses in the California cannabis market are highly complex and require a great deal of regulation. As activities and chemicals used for extraction and post-processing vary depending on the license type, it is essential to know all the details of a would-be manufacturing business to ensure that they remain compliant with state guidelines.
Accordingly, manufacturing license types are sorted into two types, Type 6 and 7, depending on the chemicals used for extraction and post-processing, if any, and whether the manufacturer works in a shared-use facility. In short, this splits manufacturers into two groups: ones that use chemicals that produce vapor or gas, and those that do not.
What’s the impact for operators? It’s all about style. While there are pros and cons to both style, determining which style fits your business best can help you establish your niche and carve our your unique brand within the industry landscape.
Getting Products Out to Market: Distribution Licenses
Distributors play a crucial role in the cannabis lifecycle by connecting cannabis businesses in earlier stages of the lifecycle with retailers and consumers. Distributors in the California cannabis market can obtain one of two types of licenses – Type 11 or Type 13. Type 11 distributors are allowed to move cannabis and cannabis products between cultivation, manufacturing, or distribution premises, as well as provide storage services to other licensees and arrange for the testing of cannabis goods.
Additionally, they can transport finished goods to retail premises. Meanwhile, Type 13 distributors only have the ability to transfer items between cultivation, manufacturing, or distribution premises; however, reduced fees are available if they only transport goods they cultivate or manufacture themselves. It’s important to note that in the California market, distribution license holders can include cannabis delivery operators as well.
Other Specialty And Niche License Types
While the lineup of license types shown above covers a majority of license seekers, it’s by no means a comprehensive list. For license seekers looking to operate within a specific niche, other specialty license types may apply. First, microbusiness licenses can apply for businesses looking to partake in multiple business types, like cultivation, distribution, retail, and more all within one roof. Another example is event-only licenses, which allow event organizers or temporary event hosts to legally partake in business.
No matter your role in the cannabis lifecycle, your business plays a critical role in the over 1.17 billion dollar industry in California. Looking to learn more about cannabis license regulations in California? ProCanna can help by serving as your one-stop shop for compliance while you get your business off the ground. Reach out today to learn more!
For more information about cannabis licensure in California, please visit cannabis.ca.gov.