Medical Vs. Retail Marijuana Licensing
ComplianceOctober 06, 2022

Medical vs. recreational marijuana licensing

Due to widespread legalization of cannabis use by a growing number of states, the U.S. marijuana industry is booming.

Today, more than 35 states have authorized the use of medical marijuana for various medical conditions (although these vary by jurisdiction).

Recreational marijuana use has also been legalized by states including Colorado, Washington, Connecticut, New Jersey, New Mexico, New York, and Virginia. Other states are set to pass adult-use laws, among them Maryland, Ohio, Pennsylvania, and Rhode Island.

In this article, we explore what makes business licensing for a marijuana dispensary or other business different based on medical vs. recreational requirements.

What is the difference between medical and recreational marijuana?

Technically, there is no difference between the marijuana plant and products used to treat medical conditions or those used for recreational purposes. Scientists have found that the THC concentration of both is similar. The main difference between medical and recreational marijuana is how they are sold.

For example, to purchase medical marijuana through a state’s medical program, a person must have authorization from a healthcare provider and the state’s approval. But recreational marijuana purchases in qualifying states can be made by any person over the age of 21.

These purchases may also be exempt from sales and use tax. For instance, a medical marijuana establishment may be exempt from paying a city’s cannabis business tax.

How do states regulate medical and recreational marijuana products?

Regulations differ based on whether the marijuana is medical, medical and recreational, CBD, or medical CBD.

Medical marijuana

Cannabis is only legal for medical purposes if a person has a qualifying condition, such as cancer, glaucoma, or multiple sclerosis — although qualifying conditions vary by state.

Medical and recreational marijuana

In states where medical and recreational marijuana are legal, there are still major differences in the way that these products are priced, sold, bought, and the laws that business must follow to set up a marijuana business. For instance, the retail marijuana industry is heavily regulated and taxed by both state and local agencies.

Some jurisdictions also have additional business license requirements in addition to state laws or may have outright bans on retail marijuana businesses altogether.


Cannabidiol (CBD) is an active ingredient in cannabis that is derived from the hemp plant. CBD sales are federally legal if the product contains less than 0.3% THC. While some states allow CBD over-the-counter sales, others only permit the sale of CBD if it has no THC.

Still, there remains much confusion surrounding CBD as federal and state laws change and differ. As a result, certain states, such as Ohio, Iowa, and Texas, have raided non-compliant hemp and CBD stores.

Medical CBD

Some states allow the use of medical CBD but restrict its use to those who have a prescription.

For example, in 2015, Georgia authorized the possession of low THC oil to persons with certain medical conditions or their caregivers if they possess a legal THC oil card. Low THC oil is an oil that contains an amount of cannabidiol and not more than 5% by weight of tetrahydrocannabinol (THC), tetrahydrocannabinolic acid (THCA), or a combination of the two which does not contain plant material exhibiting the external morphological features of the plant of the genus Cannabis.

Meanwhile, in Idaho, it is legal to use cannabis extracts high in CBD to treat qualifying conditions only if the CBD contains both zero THC and is derived from one of the five identified parts of the cannabis plant, otherwise it is illegal. These parts include mature stalks; fiber produced from the stalks; oil or cake made from the seeds or the achene of such plant; any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalk; or the sterilized seed of such plant which is incapable of germination.

The marijuana business licensing process

To become a licensed cultivator, dispensary, or any other type of cannabis business in a state can be an expensive process. Moreover, the rules change frequently, making it complicated to stay in legal compliance.

The licensing process involves background checks for owners, employees, and investors. Marijuana dispensary businesses must also conduct significant research into laws and regulations, identify compliant properties, and even grow the marijuana plant themselves.

Read this article for more information on How to obtain a retail marijuana store or dispensary license.

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 medical or recreational marijuana business while ensuring you keep up with changing compliance requirements.

For more information on CT Corporation services and how we can streamline your business licensing, contact a CT Corporation business license specialist.

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