Embroker Team March 27, 2023 7 min read

How to Get the Right Cannabis Licenses for Your Business

Man using magnifying glass to look at document detailing how to get cannabis license

For those with a bit of money, a dream, and an entrepreneurial spirit, the U.S. business world holds plenty of opportunity. But if you want to stake your claim in the cannabis business, you’re going to need something more: a strong stomach for navigating complex regulations to comply with strict, intricate, and ever-changing rules that can feel like angels dancing on the head of a pin. In other words, genuine commitment to the details. And it all starts with knowing how to get cannabis licenses for your business. 

Given cannabis’s unusual legal status – prohibited on the Federal level with varying degrees of legality by state – the steps to take your business from concept to commerce are unlike any other American industry. That means every aspect of your application will be scrutinized not just by one bureaucrat sitting behind a desk, but by multi-person state agencies comprised of local zoning committees, economic impact panels, and even environmental-use assessors.

This article offers information on cannabis business licensing for key industries including industrial hemp cultivation, dispensaries, delivery services, edibles manufacturing, and medical marijuana. You’ll also learn why getting the right insurance for your cannabis business is essential for creating a winning application, and which state agencies manage the process so you can begin your journey in the cannabis business.

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What Licenses are Needed to Start a Cannabis Business

To begin the application process for a cannabis business license, first decide which area of the cannabis industry you want to go into. Why? The kind of licenses you need depend on the type of business you’re operating. For example, cannabis dispensaries with a storefront need a retailer business license, whereas delivery-only outfits typically only need a license for delivery, transport, or courier, depending on the state. 

So, what aspect of the cannabis excites you? Do you want to get into cultivating cannabis or industrial hemp as a grower? Do you want to manufacture products like resins, gummies, or THC-infused sour cream and onion potato chips? Do you want to sell cannabis directly to consumers through a dispensary? Do you want to sell medical cannabis? Defining your proposed business will help you determine the industry-specific needs for your cannabis license application. 

How to Get a License for Industrial Hemp Cultivation 

Business boxes piled on top of one another to represent how to get cannabis license for hemp cultivation

The licensing requirements to cultivate non-psychoactive industrial hemp are totally different than those for THC-containing cannabis plants. The main difference, obviously, is that cultivating industrial hemp is legal under the Federal government (as long as the plants contain less than 0.3% concentration dry weight of THC) and are governed by the U.S. Department of Agriculture.

To start the process of getting licensed to grow industrial hemp in your state, first contact your local state department of agriculture. They’ll give you all the information and contacts you need to comply with licensing requirements in your local jurisdiction. Keep in mind, many states may require you to have completed some professional training in hemp production as a prerequisite for applying for a license. Local colleges – especially those with horticulture or agriculture programs – are a great place to start for getting certified to grow hemp. 

Insider tip: Industrial hemp cultivation is governed by the U.S. Department of Agriculture. Contact your state’s agriculture department to start the licensing process. The Federal government site Farmers.gov also offers a wealth of resources for the process of getting licensed to cultivate industrial hemp in every state.

How to Get a License for a Cannabis Dispensary 

Here’s where the fun starts. Remember, selling cannabis is still a Federal crime. Even if recreational or medical marijuana is legal in your state, complying with state laws is no guarantee against Federal prosecution. That said, applying for a cannabis dispensary license is a very legal, highly regulated process on the local and state level. And each state cannabis licensing department is set up differently. California, for example, has three separate licensing boards: the Bureau of Cannabis Control, the Manufactured Cannabis Safety Branch, and CalCannabis Cultivation Licensing. Colorado, on the other hand, has two types of applications: medical marijuana business license and retail marijuana business license. Licensing is just one of the costs of starting a dispensary business too.

Insider tip: Start at your state’s government website to find the agencies that manage cannabis. For some states, it’s the Department of Health, for some it’s the Pharmaceutical Board, and some states, such as New Mexico, use a special state licensing body dedicated to cannabis businesses (although New Mexico’s medical cannabis program is run by its Department of Health). This FindLaw chart offers a really handy overview of each state’s cannabis business license procedures.

How to Get a License to Manufacture Cannabis-Infused Products

So you’re ready to sell your magic brownies and you want to do it legally? A license to manufacture cannabis-infused products, including edibles like gummies, tinctures, and capsules, differs from other cannabis licenses because anything that is consumed must comply with local and state food-safety standards. Often, it’s the Department of Health that inspects the manufacturing facility or commercial kitchen for compliance with these safety rules.

Labeling for cannabis-infused edible products also must be in compliance with consumer-protection rules set forth by the state (remember, there’s no FDA label requirements for the package contents, so states set their own rules about what must display on the wrapper). While many people become interested in using cannabis as an ingredient through culinary training, there are specific certifications in creating cannabis-infused products. Not a bad idea to either get certified yourself or hire someone who’s undergone such a training program. 

Not all states allow the sale of edibles; some allow certain edibles such as therapeutic tinctures but not say, infused chocolate bars. In states with legal adult-use recreational cannabis, typically you’ll need a manufacturing license to open an edibles business.

Insider tip: Manufacturers of cannabis products are subject to rules of their local municipality, so check the website of the city or county you want to open a business in. Your state’s government will be useful in determining how edibles are regulated and licensed, too. Among the licenses you’ll need for manufacturing are: a building permit; lab-grade rooms; safety and operating equipment; procedures for disposal of waste and more. In the meantime, consider taking a professional training course in cannabis edibles.

How to Get a License for Cannabis Delivery Services

Not all states where cannabis sales are legal allow delivery directly to customers. However, many states with legal medical cannabis do allow delivery to medical marijuana patients. All states with legal cannabis need to transport their products from the cultivators to wherever they’re going to be sold – intrastate, only, of course. Because of these different rules, states typically differentiate the types of licenses needed for cannabis transport and delivery. These include:

  • Delivery services with a brick-and-mortar storefront.
  • Online-only delivery businesses.
  • Courier services (such as Eaze, Emjay, and Bud.com), which are third-party delivery services – sort of like UberEats but for weed.
  • Transporters, which are part of the cannabis supply chain, and are licensed to distribute cannabis within state boundaries.

To get a license for any kind of cannabis delivery service, you first have to prove to state regulators that you can accurately track and report all the activities of your business. This involves purchasing special technology called seed-to-sale software, which literally follows the lifecycle of plants from their roots in the ground to the cash register.

Programs designed specifically for cannabis delivery, including Canix, Onfleet, and Webjoint integrate these logistics wholistically to ensure you’re always in legal compliance. Cannabis delivery software also includes components such as GPS monitoring, streamlined route-planning, security, and driver management.

Insider tip: Before investing in a cannabis compliance software system, find out if your state mandates a specific program. Many states, including California, Colorado, and Oregon require cannabis businesses use a platform called Metrc.

How to Get Cannabis Licenses for Medical Use

Woman using tablet in workplace next to stethoscope, researching how to get cannabis license for medical use

In most states with legalized medical cannabis, the Department of Health regulates patients, businesses, and healthcare practitioners. But states differ: Virginia uses the Board of Pharmacy; Colorado uses the Department of Revenue; Connecticut uses the Department of Consumer Protection. Some states use a combination of authorities. And some use a government-funded agency with an advisory panel comprised of medical professionals who are knowledgeable about treating patients with cannabis. The Marijuana Policy Project offers a list of state-by-state medical cannabis regulatory agencies.

Insider tip: As more states legalize medical marijuana, the competition for licenses is heating up. Research the best state in which to start a cannabis business in the U.S. to guide your decision.

How to Create a Winning Cannabis Business Plan to Ease the Licensing Process

States limit the number of licenses they award to cannabis businesses. They also limit the number of licenses that can be held by a single company. And applying for cannabis licenses is expensive. That’s why it’s essential to create an airtight business plan that dots all the i’s and crosses all the t’s (legally speaking) and stands out from other candidates.

Make sure you’re in compliance with local, county, regional, and state regulations and can hit the ground running once you receive your license. Assemble a team of business partners and investors that are knowledgeable, reputable (no arrest records), and experienced. Register your business so you can begin paying taxes. Demonstrating that you understand what you’re doing – and have the right partners in place – will give you a leg up in the application process.

Insider tip:  Perform a risk-management assessment and procure the right insurance for your cannabis business from a broker who knows the industry.

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