Business

What you need to Know about Cannabis Compliance in California

California is one of the few states in the U.S with a booming cannabis industry. As a result, most Cannabis companies have come up to take advantage of the thriving cannabis market. The Bureau of Cannabis Control plays a critical role in regulation the cannabis market in Californian by issuing both temporary and annual licenses. However, the agency recently announced that it will no longer be issuing the temporary 120-day licenses.

Cannabis companies have been warned that temporary licenses will not be renewed. According to the statement that was issued by the Bureau of Cannabis Control, a 90-day extension will only be granted to companies that will apply for annual licenses after the expiry of their temporary permits. Until now, most operators are still not sure about the compliance requirements.

Why the Temporary License Extensions are Necessary

Although the Bureau of Cannabis Control has plans to completely get rid of California temporary license, a 90- day extension for temporary license holders was necessary to avoid supply disruption. The majority of Cannabis companies in California have temporary permits and any drastic policy changes would disrupt the market.

Despite the extension, most operators are yet to apply for the annual licenses because of high application fees and the fact the cannabis business is still illegal in most cities and counties. It does not make any economic sense to get an expensive license and then fail to sell your product in most of the cities. Also, the new tax structure that is characterized by high taxes and intense bureaucracy has made many operators to consider the black-market.

Requirements for an Annual License

The Cannabis market in California is in the process of being regulated, and the proposed changes come with a new compliance structure. After the January 1, 2018 deadline that as issued by the Bureau of Cannabis Control, all operators are expected to have an annual state license and local authorization in order to operate legally. Fingerprint documentation is the first requirement when it comes to applying for a state license. In this case, anyone that holds more than 20% stake in a company dealing in Cannabis is classified as an “owner” that is expected to provide fingerprint documentation.

There are quite a number of Live Scan locations where applicants can submit their fingerprint documentation to the Department of Justice in California. Apart from fingerprint documentation, there are other requirements that annual license applicants must include in their application and these include;

  • Security procedures
  • Inventory control procedures
  • Diagrams of business premises
  • Evidence of right to occupy premises
  • A labor peace agreement
  • Business formation documents
  • Product quality control procedures

It is important for operators to understand that getting a license is only one aspect of the entire compliance process. For a cannabis business to operate legally in California, one has to meet other internal compliance requirements in order to get state approval. In this case, cannabis companies must be ready to go through a very thorough compliance process.