How To Obtain a Marijuana License in My State

About half of all states have legalized cannabis for recreational use. Any cannabis business seeking to operate in those states has to follow strict licensing regulations.

Marijuana licensing varies by state, with additional restrictions by city or municipality. To find out how to get a marijuana license in your state, talk to an experienced cannabis law attorney.

State Licensing Requirements

Marijuana is a controlled substance under federal law, so licensing and marijuana regulations are done at the state level. There are often city and local government restrictions. This can mean applying for both a state license and a city application review.

Getting a distributor or dispensary license involves more than just filling out the application form and paying a license fee. States have strict eligibility requirements for cannabis retailers, including:

• Background checks
• Investment minimums
• Security requirements
• Training
• Business plans
• Inventory control
• Fire safety inspection
• Disclosure of all investors

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Applying for a Marijuana License in Your State

The following is a chart showing which state agency regulates recreational marijuana licensing in each state.

Types of Recreational Cannabis Licenses

In most states, there are different marijuana license types available for cannabis businesses. This varies between medical marijuana and recreational marijuana.

For recreational marijuana licensure, the type of business licenses may include:

• Recreational marijuana producer license: Designed for growers and cultivators of cannabis. Businesses with a recreational producer license are permitted to sell their finished products to processors, wholesalers, and retailers.
• Recreational marijuana processor license: For companies that purchase product from a recreational producer and process marijuana concentrates, edibles, and extracts. These products can be sold to wholesalers or retailers.
• Recreational marijuana wholesaler license: A licensed marijuana wholesaler can purchase marijuana products from other licensed marijuana businesses and sell marijuana products to other licensed businesses and cannabis dispensaries.
• Recreational marijuana retailer license: A licensed recreational retail location is permitted to sell marijuana products to consumers. Generally, businesses need this type of license to sell recreational marijuana products to the general public.

There can be other licenses, depending on the state. “There’s also a lab license for testing, since you’re required to test for THC, CBD, mold, mildew, water content, and a whole slate of different pesticides,” says Andrew C. DeWeese, a business law attorney with in Portland, Oregon.

“There’s also something known as a research certificate, which is a special license that allows you to perform approved research using cannabis procured from other licensees.”

Sub-Categories Under Producer and Processor Licenses

Many states also have sub-categories under the producer and processor licenses. For production, the license type may depend on the size of the canopy or floor plan in which you’re allowed to grow, and if it’s indoors or out.

“In the micro-tiers, the sizes are much smaller,” DeWeese says. “Those are designed to enable smaller family farms to get into the business. Those micro-tiers also have fewer restrictions on where they can be, and also they can also engage in some limited processing.

“When you apply for your license, and you tell them what your canopy area is going to be, that can’t change until you either renew or you apply for a change. So you can’t be an outdoor grower in the summer and then change,” he adds.

Endorsements for Processing Licenses

For processing licenses, there are often different endorsements you can seek. In Oregon, DeWeese summarizes them as follows:

• Concentrates endorsements, which means you can make cannabis products such as hash or rosin out of cannabis made using only a physical separation process or a non-hydrocarbon-based pressure or high-pressure CO2 extraction process.
• Extract endorsements are for the typical CO2 extract that you see made using subcritical or supercritical CO2 extraction under high pressure, or butane honey oil that people like to dab. It’s purged in a vacuum oven so the butane doesn’t stay in the product. This is a bit harder to get than the other endorsements because of the nature of what you’re making.
• Processor endorsements, which is for the edible endorsement.
• Topical endorsements, which enable you to make products that are for use on the body rather than ingested

Getting a Cannabis License Is a Complicated Process

The license application process is fairly straightforward, DeWeese says, and you may not need a lawyer for it. Actually getting a license, however, is another matter. “The first thing I tell them is, ‘You better be prepared to wait two years or longer because there’s simply so many out there,'” says DeWeese.

“What we’re seeing a lot more is mergers and acquisitions of licenses. It’s hard to get a new license, so if you want to get into the game, you have to buy somebody’s license. That is really a situation where you need a cannabis lawyer because that has to be handled in exactly the right way.”

“The [state agency] really cares about knowing everybody involved in the operation—especially those with a financial interest. If you have somebody who is a silent partner and who’s not disclosed, they’ll take your license away. Most people have partners or get loans or things like that, and those have to be disclosed properly. So that’s something you might need an attorney for.”

How A Cannabis Law Attorney Can Help You

Obtaining a Land Use Compatibility Statement (LUCS) is another important piece that an attorney can help with, along with several other business matters. “Getting a license is one thing, but setting up your business is another, and is extremely important. Even if you don’t have partners, having your corporation set up in the right way to maintain that corporate veil is also vital,” DeWeese says.

“When my clients have found it useful to have an attorney involved is for preventions. The consequences of not following the regulations in practice can be extremely severe.”

DeWeese cites an example in Oregon. “So, for example, one of the requirements is that a marijuana licensee has to have an offsite backup for their video surveillance and they have to have at least 90 days. We’ve seen the OLCC come in and say, ‘Hey, you’ve only got 75 days of backup. So we’re taking your license away.'”

Find Legal Help

Visit the Super Lawyers directory to find a cannabis lawyer in your area who can advise and guide you through all the legalities of obtaining a cannabis license and opening a business.