Whether you intend to cultivate, process, test, distribute or retail cannabis in the U.S., you will need a cannabis business license to do so.
The process to apply for a cannabis license varies from state to state but the legal hurdles can be significant everywhere and there are some common requirements in all states that have legalized adult-use cannabis:
- Strict regulatory compliance requirements and background checks
- Financial, environmental, and social expectations
- Considerable planning and preparation before a business opens
- A range of supporting documentation for each application
Some aspiring cannabis business entrepreneurs are unprepared for the amount of work that goes into a license application. The financial risks can be high when entering the cannabis industry and mistakes can be costly.
With the help of a cannabis license lawyer, you can ease your way to a smooth license application process with a favorable result.
What cannabis licenses are available?
Each state has its own governing body to regulate the cannabis industry and issue licenses. Because cannabis remains a Schedule I controlled substance at the federal level, all players in the emerging cannabis industry must proceed carefully according to state laws.
The issuance of cannabis licenses is closely regulated. To set up and operate in any area of the industry in any area of the country, a business needs the appropriate type of license. The license names vary from state to state but, depending on the local laws, the main types of licenses available are:
- Cannabis producer license
- Cannabis manufacturer license
- Cannabis courier license
- Cannabis research/testing laboratory license
- Cannabis retailer or dispensary license
- Cannabis consumption area license
- Cannabis microbusiness licenses
What are the potential hurdles to getting a cannabis license?
When adult-use cannabis is legalized in a state, cannabis business owners there usually picture a day when they can openly grow, manufacture, distribute, and sell their products.
However, the legal framework for the cannabis industry is often slow to form and business owners must often be patient in states that have only recently legalized it.
Fortunately, because adult-use cannabis was first legalized in 2014, we’ve had a decade of experience to get accustomed to the types of hurdles that business owners, entrepreneurs, investors, and other industry aspirants have when setting up a business.
A maze of hurdles must usually be navigated before you can get a cannabis business license and operate legally:
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- Determine license availability and requirements
- Decide on company structure and organization
- Prepare a business plan
- Assemble the right supporting documentation
- Complete and submit the application form
You’ll then need to be patient and await approval before getting started. The following challenges generally apply regardless of your state:
Limited supply
There is often only a limited availability of cannabis licenses, depending on whether you want to grow, distribute, test, process or retail the product. There may also be narrow application windows for licenses in some states.
The cannabis industry is competitive and the regulators will sift through a high volume of applications for licenses. Only the best applications will be awarded a license.
The expense
The costs involved in starting up in the cannabis industry are significant and you will need to secure and demonstrate adequate funding to regulators.
Because bank loans may be off the table as cannabis remains a federally controlled substance, you may need to seek alternative funding sources to finance your business.
Municipal land use and zoning laws
It’s not only state licensing laws that can be challenging. The municipal land use approval and local permitting system can be even more difficult to navigate.
It’s essential to be across local land use and zoning laws specific to the location you choose for your business.
Is a lawyer required to get a cannabis license?
There is no legal requirement to hire a lawyer to get a cannabis business license but you will be expected to submit a complete application, demonstrate compliance with all requirements, and provide sufficient supporting documentation.
Cannabis businesses can suffer from a lack of business/legal planning, poor financial or accounting practices, a lack of compliance with the local regulations or a lack of preparation about leasing and property ownership—or simple business disputes within the company or with external parties.
This can all be prevented with the right business and legal guidance and support from an experienced cannabis business lawyer.
How can a cannabis license lawyer help?
Previously, finding a seasoned cannabis lawyer who is ready for the types of issues that entrepreneurs encounter when applying for a cannabis business license was challenging.
Nowadays, it’s a little easier as we’ve seen the common challenges that have arisen over the past decade. Your lawyer can help with:
Legal guidance when preparing your application
Identifying any “red flags” and advising you on what the licensing authority will want to see is a key part of a successful license application.
Land use approvals
Your lawyer can also help with obtaining the appropriate land use and zoning approvals to avoid legal disputes with landowners or problems with the local municipality.
Notarizing documents
Your lawyer can notarize any affidavits and other supporting documentation that needs to be submitted with the license application.
Securing financing
Your cannabis business lawyer may be able to help you secure the financing you need. How you intend to fund your business is an important element of a license application. The costs of setting up are high and include some licenses that run into the tens of thousands of dollars in some states.
State licensing authorities do not want to see a slew of businesses closing down through a lack of funds.
The pitfalls of trying to start a cannabis business may start with getting a license but they persist beyond this.
Businesses that follow state laws are generally not at risk of federal prosecution but there are a range of other risks to be navigated, with stringent compliance requirements to be met, potential legal disputes to resolve, and more.
Trusted legal guidance can de-risk your business and be an important component of your business’s success story.
For informed advice about obtaining a cannabis license anywhere in the U.S., call 866-329-0729 for a consultation at Cannabis Law Solutions.
How will our cannabis and psychedelic business services help you
Cannabis & psychedelics business entity formation
Whether you are looking to form a limited liability company (LLC) or a corporation, our experienced business lawyers can discuss the pros and cons of both and help you incorporate your business with the optimal structure to achieve your goals.
Cannabis & psychedelics business licenses
If you want to run a cannabis or psychedelics business, you will need a valid business license issued by your state authority as well as local permits. Eligibility criteria are likely to be stringent and we can help you navigate the often-complex license application process.
Cannabis & psychedelics corporate documentation
Whether you need to prepare for a license application, transfer of business ownership, change of corporate structure, transfer business location or another business process, we can help you identify and draft the documentation you need to operate legally in your state.
Cannabis & psychedelics administrative law
State authorities watch licensed and unlicensed cannabis and psychedelics businesses closely. If you violate regulations, you could face an administrative penalty. Our attorneys can provide representation or help you prepare for an administrative hearing, settlement conference or appeal.
Cannabis & psychedelics disputes and litigation
Whether you have a dispute with another business, a legal issue with one of your partners or a licensing or administrative issue, you may need legal assistance to help resolve it. We are adept at alternative dispute resolution methods as well as civil litigation.
Cannabis & psychedelics regulatory compliance
As the cannabis and psychedelics industries emerge in states around the U.S., they are more heavily regulated than most other industries. We can help your business navigate the red tape and plan to stay on the right side of the regulatory authorities in whichever state you are based.
