FREQUENTLY ASKED QUESTIONS
Q. Is Cannabis legal in my state?
A. Twenty-nine (29) states and the District of Columbia have legalized cannabis for medical use and 8 of those have legalized cannabis for medical and adult/recreational use.
The (29) states where cannabis is currently legal for medical use include: Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Illinois, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, Vermont, and the state of Washington.
The (8) states where cannabis is currently legal for medical and adult recreational use are: Alaska, California, Colorado, Nevada, Maine, Massachusetts, Oregon, and Washington.
It is also legal to possess less than 2 oz. of cannabis for personal use in the District of Columbia.
Q. In which California cities can I open a cannabis business?
A. Until 2018, licenses to operate cannabis businesses are regulated on the local level. That means one may only operate a cannabis business a) in cities where the municipality allows it, b) where one has filed an application and c) the city has approved the application.
Q. How much money do I need to start a cannabis business?
A. Startup capital requirements for any business depend on the type and scale of your business. The same is true for cannabis businesses. A dispensary will have a different business plan, real estate type, and equipment, staffing, and marketing requirements than a cultivation operation. It is safe to say that one will need to have access to hundreds of thousands of dollars to succeed in any segment of the cannabis industry.
Q. Do I need a Business Plan?
A. Definitely. There are (at least) three principal reasons to write a business plan very early in your business development process:
1) For your own use. Writing a business plan allows you to put all your opportunities/strategies/processes/competition, etc. on paper. It won’t eliminate risk or challenges down the road, but it will certainly help you prepare for them. And remember, a business plan is a living document – it can be updated to address new risks and new opportunities.
2) For investors. When seeking additional capital to start or grow your cannabis business, your potential investors will ask to review your business plan, among other documents.
3) For your license/permit applications. A business plan will be a required document by the city / state / agency you’re applying to.
Q. In California, what is the difference between MMRSA and MCRSA?
A. MMRSA stands for the Medical Marijuana Regulation and Safety Act; MCRSA substitutes the word “cannabis” for the word “marijuana”, and is the term used officially today. The Medical Cannabis Regulation and Safety Act (MCRSA), a California state law, went into effect January 1, 2016.
MCRSA consists of three separate bills: AB 243, AB 266, and SB 643 that Governor Jerry Brown signed in 2015. Together, these bills direct state agencies to license and regulate commercial medical cannabis cultivation, manufacturing, distribution, transportation, sales, and testing. It puts California into compliance with the Federal guidelines set forth in the Cole Memo, which specifies how the industry can function without intervention by the Federal government. (source: Los Angeles Cannabis Task Force)
Q. What is AUMA?
A. AUMA is an acronym for California’s “Adult Use of Marijuana Act” aka Proposition 64, however, the complete title of Proposition 64 is “The Control, Regulate and Tax Adult Use of Marijuana Act”. “Adult Use” is also commonly called “recreational use”, which will allow anyone over the age of 21 to cultivate, use and carry certain amounts of cannabis for personal use after 2018. California voters approved Proposition 64 on election day, November 8, 2016.
Q. What are the types of license available under AUMA?
A. The AUMA provides for 19 different types of licenses— (13) for cultivation, (2) for manufacturing, (2) for dispensing, (1) for testing, and (1) for distribution.
Type 1 = Cultivation; Specialty outdoor; Small. Up to 5,000 square ft of canopy, or up to 50 non-contiguous plants
Type 1A = Cultivation; Specialty indoor; Small. Up to 5,000 sq ft
Type 1B = Cultivation; Specialty mixed-light; Small. Using exclusively artificial lighting.
Type 2 = Cultivation; Outdoor; Small. Up to 5,000 sq ft, using a combination of artificial and natural lighting
Type 2A = Cultivation; Indoor; Small. 5,001 -10,000 sq ft.
Type 2B = Cultivation; Mixed-light; Small. 5,001 -10,000 sq ft
Type 3 = Cultivation; Outdoor; Medium. 10,001 sq ft – 1 Acre
Type 3A = Cultivation; Indoor; Medium. 10,001 – 22,000 sq ft
Type 3B = Cultivation; Mixed-light; Medium. 10,001 – 22,000 sq ft
Type 4 = Cultivation; Nursery.
Type 5 = Cultivation; Outdoor; Nursery; Large. Greater than 22,000 sf (not issued until 2023).
Type 5A = Cultivation; Indoor; Large. Greater than 22,000 sf (not issued until 2023).
Type 5B = Cultivation; Mixed-Light; Large. Size to be set. Not issued until 2023).
Type 6 = Manufacturer 1 for products not using volatile solvents.
Type 7 = Manufacturer 2 for products using volatile solvents.
Type 8 = Testing
Type 10 = Retailer
Type 11 = Distributor
Type 12 = Microbusiness.
Q. What pieces of information are commonly requested during the application process?
A. Depending on the type of license, the requirements will vary, however here are some of the items required for one particular application: Business plan, financial forecast, Security Procedures, Cultivation Procedures, Maintenance, Transportation, Diversion Prevention, Software tracking and procedures, Quality Control Procedures, Testing, Waste Disposal, Personnel policies, Accounting and Record keeping, odor management, distance from parks, schools, and places of worship, architectural drawings and schematics, energy requirements, capital requirements, regulatory compliance, standard operating procedures for multiple functions within the business.
Q. Can I complete an application on my own, or should I engage a consultant?
A. There is nothing about a typical cannabis application that would make it impossible for an entrepreneurial group to complete. However, be advised that the shortest application SIVA has completed on behalf of a client was 200 pages; the longest was 6,600 pages (not kidding). It’s also important to note that an application can take 6 months to complete, from the moment you start to assemble your team and resources, to the time you submit. In any case, it’s a massive task that requires expertise, knowledge of city, state and federal regulations, writing ability, attention to detail, architectural drawings, detailed written procedures, and more. SIVA Consulting provides Application Support – click on the link to learn more, or contact SIVA for more information.