A Guide on How to Open a Dispensary in California

February 16, 2022

As a Californian business enthusiast, it won’t be news to you that opening a dispensary can be extremely lucrative. However, keep in mind that these businesses are governed by rules that you have to follow, and the best way to begin is by studying exactly what has to be done to open a dispensary in California. You could visit the next guide if you want to dig deeper into all the steps on how to open a dispensary and succeed.

How do you open a dispensary in California?

To open a dispensary in California, you'll need a license from the California Bureau of Cannabis Control. California has licensed over 10,000 cannabis enterprises, including cultivators, manufacturers, merchants, distributors, microbusinesses, and testing labs.

To receive a license, you must first complete an application, which you can find here. But before you do that, make sure you're familiar with the protocols and what you'll need to do to ensure a smooth registration and licensing process. Keep reading to learn more about how to open a dispensary in California.

What licences do I need to open a dispensary in California?

Before you can legally sell marijuana in California, you'll need to get a retail license from the state. You must also finish some cannabis dispensary training to be eligible for dispensary ownership.

There are two types of retailer licenses available. A Type 9 retailer does not have a physical location. It sells and delivers marijuana products to customers. The company also has a licensed facility, although it is not open to the general public. A dispensary that dispenses cannabis to customers over the counter is classified as a Type 10 store.

how to open a dispensary in California

The state of California requires a $5,000 bond, and your retail site must be at least 600 feet away from a school. You'll need permission from the local jurisdiction (city or town) where the retail enterprise is located before you can receive a license. How to get a dispensary license in California.

To get a dispensary license in California, you will need the following:

  • Documented business strategy
  • A spacious facility 
  • Application package to be submitted to the licensing commission

The first step in obtaining a dispensary license is to make your business strategy available. Your ability to demonstrate that you have the knowledge and resources to run a successful cannabis business will determine whether or not you are granted a license. Your business strategy should be flexible and have the elements necessary to be profitable while adhering to tight restrictions.

Long before you apply for your license, you should establish a business plan. Following the preparation of your business objectives, it's time to look for a facility that complies with California’s cannabis regulations. According to the law, a dispensary cannot be located near schools, parks, churches, daycares, or other places where children may be present.

Because of these laws and regulations, acquiring land and securing a Conditional Use Permit may be difficult. However, you must obtain it because it is one of the factors that will be taken into account when you submit your application.

What are the steps to getting a dispensary license in California?

The next important step for getting a dispensary license is to prepare an application package that contains the following:

  • How you will be carrying out your operations
  • How you plan on managing cannabis odor
  • Your safety and security tips
  • How you will be relating with the community and your tracking and tracing techniques
  • Measures your dispensary will follow to remain compliant

how to open a dispensary in california

You can submit your application package to the cannabis licensing authority once you're assured that all of these components are present.

You must first persuade local officials that your business is useful to the community and a valuable asset to the city to receive a dispensary license.  The authorities will offer you a cannabis license to operate a dispensary in California only if your application meets the requirements.

How do you keep your dispensary compliant in California?

The approval of the state and local government is just the start. To stay in compliance, you'll have to keep track of your inventory and double-check your operational procedures on an ongoing basis.

To keep your dispensary compliant in California you’ll need to:

  • Avoid the diversion or transfer of legal cannabis products to the black market, regardless of how lucrative the earnings appear to be.
  • Ensure that all your employees undergo cannabis dispensing training and possess a valid license.
  • Install a strong reporting system so that your dispensary can provide the state with relevant information during frequent inspections of your licensee-reporting data or an on-site inspection.
  • Implement standard operating procedures (SOPs) to help your dispensaries maintain efficiency, consistency of performance and avoid miscommunication or failure to meet compliance goals.
  • Make sure the tools you give your staff have built-in action plans, so they know what to do next when a problem emerges.
  • Implement a robust data analytics and reporting system to help you determine when a dispensary has reached individual sales limits. [Such a system can also give operational warnings based on the sales metrics you select.
  • Create a schedule that allows your store managers to not only prepare for inspections at any time but foster a compliance-conscious culture throughout the company.
  • Establish internal standards, safety measures, and protocols that help create a safe work environment and build a well-trained team that can be trusted to represent your brand.
  • Provide all employees with proper ID badges and restrict access to certain parts of your facility.
  • Install security guards on-site with 24-hour video surveillance of all cannabis product sections and point-of-sale areas.
  • Install safes with limited access for storing merchandise and money.
  • Install a security system with commercial-grade locks to keep all cannabis goods safe.

Once your company is up and operating, state and municipal inspectors will come by regularly to do physical inspections. They will want to make sure you're following the standard operating procedures (SOPs) you agreed to in your application, in addition to checking for compliance with normal norms and regulations.

How to open a dispensary in california

What are the dispensary laws in California?

According to California cannabis law, you must be at least 21 years old and can only possess up to eight (8) grams of concentrated marijuana or one (1) ounce of dried marijuana. Other California cannabis rules include:

  • You must get a state and municipal license if you want to sell marijuana in California.
  • Cannabis and marijuana must be smoked or consumed in private, with the permission of the property owner.
  • Avoid smoking marijuana in any public place like schools, markets, churches, etc.
  • Growers must cultivate marijuana indoors unless local regulations allow for outdoor cultivation.
  • If you produce more than six marijuana plants in California, you've committed a crime.

Who can your dispensary sell to in California?

Adults who are 21 years old with a legal ID—a driver's license or passport will suffice—can purchase cannabis at your dispensary. People who have a doctor-issued medical marijuana card must also be 18 years old. And adults who are not residents of the United States and have a valid driver's license or state or federal identification card.

What is the California dispensary market size and opportunity?

Over 33,700 new jobs have been created across the country as a result of the increasing size of the cannabis business. This is a 15% rise from 2019, according to cannabis sector employment data.  The marijuana market isn't going to stop growing anytime soon, with a revenue share of 62.9%.  By 2025, the marijuana market is anticipated to be worth $82.9 billion.

Because of the increase in legal sales, marijuana legalization will have a tenfold economic impact. Because tax revenues are likely to rise, there will be lots of investment opportunities as well as employment creation.

With all that in mind, you could visit the next helpful articles to know how much a dispensary owner makes and how much does it cost to open a dispensary.

Understanding Metrc in California.

METRC—an acronym for Marijuana Enforcement Tracking Reporting & Compliance— is a cloud-based online reporting system used by licensed cannabis enterprises to track and report supply chain operations. 

Metrc is now California's track-and-trace system for ‘seed-to-sale’ retail cannabis activities.  Because your Metrc account is the state's single source of truth, you'll want to take advantage of all available features and capabilities to verify that your Metrc inventory data is correct. 

California's Metrc implementation is known as CCTT-Metrc. The major goal of metrics is to figure out where cannabis plants and goods are going in the California cannabis sector and to keep marijuana grown lawfully from being sold to minors or trafficked over state lines.

A metric system is made up of the following elements:

  • A web-based program
  • Web-based services
  • A site inspection mobile application 
  • A mobile application for industry-wide use

You must first receive METRC accreditation to gain access to METRC. Submit an annual license application and complete the required training. After receiving yearly license approval, contact Metrc Support to confirm the annual license and training completion.

This includes learning their vocabulary and workflow, as well as taking a 40-question multiple-choice exam. Once you've been certified, you can apply for access to specific API endpoints that your company requires.

What software do I need to manage my dispensary in California?

The software you need to manage your dispensary in California includes: POS, workforce management, security, integrated payroll software, and a Customer Relationship Management System.

how to open a dispensary in california

1 - Customer relationship management system.

CRM software maintains a track record of contacts, sales, the productivity of agents, and other operations. It helps you monitor all exchanges between your organization and customers and improves profitability.

2 - Integrated payroll system. 

A software solution that integrates payroll functions for optimal efficiency is known as an integrated payroll system. You can use your payroll software to track employee pay, calculate deductions, and make direct donations to the IRS. These systems may be used to manage employee hours, calculate salaries, calculate taxes and deductions, generate pay stubs, and much more.

3 -Security system.

With the use of commercial-grade security equipment, proactive cannabis business owners are taking steps to protect their enterprises. To stay in compliance with the regulations, most states in the United States require cannabis retailers to have rigorous security measures in place. Security for cannabis includes:

  • Security systems
  • Employee training
  • Security processed
  • Physical guards

4 - POS.

A dispensary POS system is software that allows your dispensary to make and track legal cannabis sales transactions. A customer pays for goods or services at the point of sale (POS), which is an important component of a point of purchase. Your point-of-sale system can also be in charge of inventory management and regulatory compliance.

By monitoring customer check-in, refusing transactions after closing time, or when the daily sales cap has been surpassed, a cannabis POS system can help with compliance.

5 - Workforce management software.

Workforce management software is a type of technology that a dispensary owner can use to increase the efficiency and productivity of his or her employees. It is critical to have workforce management software that matches the right individual to the correct task and allows management to track employee behavior. A labor-management plan typically includes scheduling, forecasting, skills management, timekeeping and attendance, intraday management, and employee empowerment.

What else do I need to know?

Although operating a marijuana shop can be incredibly lucrative, the abundance of rules and restrictions can be daunting. A local California cannabis business lawyer who will be on top of the facts can help you. They can help steer you through the procedure and offer legal guidance as needed.

These are some things to bear in mind:

  • It is unlawful, even if you travel to another state where cannabis is legal, to move cannabis across state lines.
  • The passing of the Cannabis Use Act in 1996 made California the first state to allow medicinal use of cannabis plants.  
  • It's critical to understand DCC legislation if you own, work for, or wish to establish a cannabis business.
  • In California, recreational marijuana became legal on January 1, 2018, although it is still regulated by the state government.
  • Marijuana can be purchased by individuals aged 21 and above from any state-licensed dispensary, regardless of their patient status.
  • According to the BCC, all cannabis harvested for commercial, medical, or adult use must be tested to ensure that it meets specific quality and safety standards.
  • Adults without a valid qualifying physician's referral can only grow six plants, regardless of maturity level, whereas medicinal marijuana users can grow up to six mature plants or 12 immature plants.

Now that you know how to open a dispensary in California, it's important you also create a means for your employees to receive ongoing training. It will help keep your new business compliant and build up your employees’ professional status and job satisfaction.

Bear in mind, learning how to open a dispensary in California does not mean you can start making money immediately after you launch into the market. Marketing is another skill you will also spend time mastering if you want to stand out in the competition. You must incorporate several marketing techniques to create awareness and attract buyers.

Finally, always remember to renew your license even before it expires to avoid the government's cannabis disciplinary sanctioning. 

If you want to learn more about growing, scaling, succeeding and how to open a dispensary in California, download our free guide below! 

how to open a dispensary in california

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February 2022


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