Retail Marijuana Licensing
ComplianceOctober 06, 2022

How to obtain a retail marijuana store or dispensary license

Marijuana businesses are heavily regulated at both the state and local levels. If you intend to operate a retail marijuana business or dispensary, you will likely need to obtain two marijuana business licenses — one state-issued and one locally issued.

Here is an overview of what you need to do when applying for your dispensary or retail marijuana store licenses, as well as other licenses and permits you might need for your cannabis business.

Check the application window for state licensing

Many states limit the number of cannabis business licenses they issue and may only accept applications during a certain period of time. Check with your state to see what the application window is to obtain a retail dispensary license.

Research state requirements for marijuana dispensary licensing

State agencies responsible for regulating cannabis licensing have strict requirements for standard operating procedures, training employees, and how facilities are set up. It’s important to understand these requirements and any other eligibility criteria before you apply for a marijuana dispensary license.

For example:

  • New Jersey: To be eligible to submit a cannabis business application in New Jersey, applicants must be registered to do business in the state and have both federal and state taxpayer identification numbers.
  • Colorado: All applicants must demonstrate at least two years of Colorado residency and pass criminal and credit background checks. Learn more in: How to get a commercial grow or retail marijuana license in Colorado.
  • New York: The first round of adult-use retail marijuana licenses are reserved for individuals disproportionately impacted by the war on drugs (“justice-involved” individuals). Qualifying criteria in New York stipulates that the business (or 30% of the applicant if it is an entity) must be owned by a New York resident with qualifying business experience and who is “justice-involved.” Justice involved in New York is defined as the following:
    • A New York resident convicted of a marijuana-related offense in the state before March 31, 2021
    • An individual with a parent, legal guardian, child, spouse, or dependent who was a New York resident convicted of a marijuana-related offense in the state before March 31, 2021
    • A dependent of an individual who was a New York resident convicted of a marijuana-related offense before March 31, 2021.

Understanding local zoning and licensing requirements for dispensaries

Many cities have their own rules and license and permit processes for cannabis businesses.

Be sure you set up your business in an area that allows commercial cannabis activity. For instance, zoning ordinances generally prohibit cannabis facilities near schools.

Cities may also restrict certain types of cannabis businesses or prohibit cannabis businesses to operate within their jurisdiction.

Local governments work closely with state agencies in regulating cannabis businesses. In some states, the licensure process can begin at the local level. For example, in Boston, you must go through several steps — including having an approved Conditional Use Permit — before you can begin the process of obtaining the state-issued cannabis license.

Frequently asked questions about licensing for retail marijuana stores or dispensaries

What licenses, permits, and registrations are required for a retail cannabis dispensary?

If you operate a retail cannabis dispensary, you may need to obtain the following licenses, permits, and registrations:

  • Secretary of State registration: Register with the Secretary of State when forming your business or if you are an out-of-state business.
  • Employee Identification Number (EIN): Issued by the IRS, an EIN is also known as a Federal Tax Identification Number and is used to identify a business entity.
  • State sales tax permit
  • Doing Business As (DBA) registration: If you plan to operate under a name that is different from your legal business entity name, you are required to file a DBA (doing business as) with either the state or local jurisdiction. A DBA is also referred to as an “assumed name”, “fictitious business name” or “trade name”.
  • State-issued cannabis business license
  • City-issued cannabis business permit
  • General business license: A general business license (sometimes called a privilege license) may be required from each city and/or county in which your business will be operating.
  • Zoning permit: Your business may need to provide a proof of zoning from the local municipality allowing a cannabis retail dispensary business.
  • Certificate of occupancy: A certificate of occupancy states a legal use and/or type of permitted occupancy of a building
  • Alarm permit: Many cities, police departments, and fire departments require alarm system users to obtain an alarm permit.

Who is eligible to sell retail marijuana?

Different jurisdictions have different eligibility requirements, but most tend to agree that applicants must be, and employ, persons of at least 21 years of age with no history of felony convictions (except for states that have social equity conditions).

States may also have a residency requirement. In Alaska, all persons with a direct or indirect financial interest must be Alaska residents.

What is the dispensary license application process?

When you apply for a license to sell recreational marijuana you can expect to undergo background checks, state inspections of your facilities, and an audit of your business plan. Typical attachments to the application may include a Certificate of Good Standing from the Secretary of State, floor plans of the marijuana facility, a tax bond, and Articles of Incorporation or a Partnership Agreement if applicable.

How much does a dispensary license cost?

After background check , fingerprinting, inspections, application, and other fees, the cost of the state license will likely be around several thousand dollars. For example:

  • California: $1,000 (application fee), $2,500 - $96,000 (license fees based on gross annual revenue)
  • Colorado: $5,000 (application fee), $2,440 (retail marijuana store license fee)
  • New Mexico: $2,500 (annual license fee for cannabis retailer license)

License/permit fees at the local level can also vary. For example:

  • San Francisco: A city cannabis permit application costs $2,000, plus $3,000 for each cannabis activity.
  • Denver (all retail license types): $5,000 (non-social equity licensees) and $2,500 (social equity licensees).
  • Albuquerque (cannabis retail location): Cannabis Retail Location Approval has no fee (as of Sept 2022). Permit fees have not yet been determined for cannabis establishments selling pre-packaged edible cannabis products.

Do employees need to be licensed to work in a cannabis retail store or dispensary?

Employees must usually be at least 21 years old and pass a background/criminal check. (Felony convictions may disqualify them, such as recent drug offenses or violent crimes.)

Some states require that any employee who works for a cannabis-related business be licensed or registered. For example:

  • Colorado: Any person who possesses, cultivates, manufactures, tests, dispenses, sells, serves, transports, or delivers Regulated Marijuana, who is authorized to input data into a Regulated Marijuana Business’s Inventory Tracking System or point-of-sale system, or who has unescorted access in the Restricted Access Area or Limited Access Area must hold an Employee License.
  • Nevada: All employees, contractors, volunteers, owners, officers, and board members of a cannabis business must always carry a current cannabis registered agent card while at a facility.
  • California: Employees are not required to obtain a special license to work in the industry. However, some cities may require special work permits for employees to work in cannabis establishments.

CT Corporation can help

Outsourcing business registration and license research, applications, management, and renewals can help you take the pressure off internal resources. By working with a full-service management provider who specializes in the efficient processing of business licenses you can free up your time to focus on starting and growing your retail marijuana store or dispensary while ensuring you keep up with changing compliance requirements.

For more information on CT Corporation services and how we can streamline your business licensing, please contact us.

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