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Cannabis is a $2 billion per year industry in California, and it’s set to grow even more in the coming years. And most of that growth stems from the marijuana plants cultivated throughout the state. Before planting your crop, however, you will need to obtain the approval of your local government and a large marijuana cultivator license from the state.
The laws and regulations surrounding the cultivation of cannabis are very complex. If you want to minimize your risk and stay on the right side of the law, you should enlist the help of a seasoned California marijuana business lawyer.
Call McElfresh Law at (858) 756-7107 to start building your cannabis business today.
Free consultation for criminal defense cases only. Cannabis business consultation requires a fee.
California recently passed two pieces of legislation that will govern the state’s cannabis industry. The Medical Cannabis Regulation and Safety Act (MCRSA) concerns medical marijuana, while the Adult Use of Marijuana Act (AUMA) concerns recreational marijuana.
Both acts charge the California Department of Food and Agriculture with developing a regulatory scheme and licensing process for cultivators.
The following licenses (each valid for one year) are available:
Also known as specialty outdoor, this license is for the outdoor cultivation of up to 5,000 square feet or 50 plants on non-contiguous plants, all without artificial lighting.
The specialty indoor license is for the indoor cultivation of up to 5,000 square feet of plants using exclusively artificial light at one location.
The specialty mixed-light license is for growers who use a combination of natural and artificial lighting to cultivate up to 5,000 square feet of canopy area on one premise.
The specialty cottage license applies for the mixed-light cultivation of up to 2,500 canopy area, up to 25 mature plants outdoors, or up to 500 square feet canopy for indoor cultivation – in each case at a single location.
The small outdoor license is for growers who will use no artificial lighting on one location that contains between 5,001 and 10,000 square feet of canopy.
The small indoor license is for the cultivation of between 5,001 and 10,000 square feet of the canopy using only artificial lighting at a single location.
The small mixed-light license is for grow operations that use both natural and artificial lighting on 5,001 to 10,000 square feet of canopy area on one premise.
If you’re a cultivator seeking to grow a larger crop, you would apply for one of the following licenses:
The outdoor license is for cultivators growing 10,001 square feet to one acre of canopy in one location without the use of artificial light. There will be a limited number of these licenses available.
The indoor license is for growers using only artificial light on 10,001 to 22,000 square feet of canopy at one location. There will be a limited number of these licenses available.
The mixed-light license is for operations that use both natural and artificial light on one premise that holds 10,001 to 22,000 square feet of canopy area. Again, the department will limit the number of these licenses available.
The nursery license does not specify any limits on the number of plants or canopy area. If you hold this license, you may transport live plants.
For cultivators who want to grow more than half an acre indoors or an acre outdoors. Created by AUMA, this license type will not be available until 2023
If you are a grower, you may hold multiple cultivation licenses for your different crops. When it comes to holding other types of licenses, however, there are important restrictions:
Small cultivators that hold Type 1, 1A, 1B, 2, 2A, or 2B licenses may also obtain a Type 6 or 7 manufacturer’s license.
There is a Type P – processing license that allows for drying, curing, and processing of cannabis as a standalone use license regulated by the California Department of Food and Agriculture.
CalCannabis Cultivation Licensing is a division of the California Department of Agriculture and is responsible for distributing cultivation licenses.
To obtain a cultivation license in California, you must fill out an application online at the California Cannabis Portal. Here you will be provided with a link to the application, training videos, and other resources for your application.
You can prepare by making sure you have:
The cost of a cultivation license to grow cannabis depends on the type. CalCannabis Cultivation Licensing provides a breakdown of the cost for each type of cultivation license.
On the low end, a small outdoor license application fee is $535, and the license and renewal fees are $4,820. On the higher end, an application fee for a medium indoor license is $8,655 with license and renewal fees totaling $77,905.
You must obtain a Motor Carrier Permit. This document is issued by the DMV’s Registration Operations Division and verifies that you meet the requirements to operate motor vehicles on California’s highways. It enables you to transport goods for hire and is evidence you registered your CA# with the DMV.
The regulations applying to cultivators are still being developed, but this is what we know so far:
In addition to the taxes that may be levied on cultivators by the local government, the state will collect a $9.25 per ounce cultivator’s tax.
Your plants or buds must have unique identifiers so that the government can track their progression through the stream of commerce.
Only nurseries are allowed to transport live plants without a Type 12 transporter license. Otherwise, growers will need to hire transporters to take the crop to the distributor
Before the crop reaches a retailer or manufacturer, the cannabis must pass through a distributor, who will also have the product sampled by a testing lab – the cost of which will be passed on to the grower.
If your farm employs more than 20 people, then you must reach a labor peace agreement with the relevant union.
The Departments of Fish and Wildlife and the State Water Board will issue regulations regarding the steps that marijuana growers need to take to prevent damage to California’s waterways.
The Departments of Food and Agriculture and Pesticide Regulation will release a list of approved pesticides.
Federal law permitting, the Department of Food and Agriculture will issue the requirements for a cannabis crop to be certified organic by 2020.
Like wine, cannabis may eventually be certified as coming from a distinct geographical area. In any event, growers are not allowed to misrepresent the provenance of their crop.
If you hold a license under AUMA or MCRSA and your grow operation doesn’t violate state or local law, neither the local nor state authorities can arrest, prosecute, or take other adverse legal action against you.
In the eyes of the federal authorities, however, cannabis remains an illegal drug. You may face an investigation, raid, asset forfeiture, or criminal prosecution under the following circumstances:
According to most indications, the federal government will continue its policy of not interfering with state-licensed medical marijuana businesses.
According to a 2013 Department of Justice memo, the federal authorities may enforce federal drug laws against medical marijuana operations that allegedly have connections to the illegal drug trade, damage the environment, have unsafe practices, or use violence or firearms.
The only way to ensure you will not attract the attention of the federal authorities is to ensure you grow crops intended only for medical use, and that you run a legitimate, safe, and environmentally friendly operation.
If you intend to obtain a state cannabis cultivator license, you need a skilled and experienced California marijuana business lawyer by your side. At McElfresh Law, we have built our reputation on our ability to help San Diego marijuana businesses thrive in a hostile regulatory and legal environment. Call Jessica McElfresh today at (858) 756-7107 for a consultation.
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