California is one of the most well-developed cannabis markets in the United States. The state was an early adopter of medical marijuana, allowing its usage in 1996. Then, California took the next step and legalized cannabis use recreationally in 2016 under “Proposition 64”. This early adoption of medical marijuana helped pave the way for the rest of the country to progress in the cannabis space.
Reports from November 2021 state that up to 90% of all cannabis sales remain “underground”, or outside of dispensaries licensed by the Department of Cannabis Control (DCC). Even though the illegal cannabis market is large, licensed recreational dispensaries continue to grow and rake in substantial gains in California.
The 2021 fiscal year saw the cannabis industry bring in a total of $5.2 billion in taxable sales. This accumulated around $1.3 billion in total tax dollars from legal marijuana. The Californian cannabis industry is continuing to grow each quarter, making it more critical than ever to familiarize ourselves with the laws and regulations of the State.
Due to this, we at Custom Cones USA have taken a deep dive into the legalization process, Californian cannabis laws, and all the things you need to know to take the plunge into Golden State’s recreational landscape.
The Legalization Process
As mentioned previously, California was the first state to legalize medical marijuana on November 5th, 1996 under the “Proposition 215: Compassionate Use Act”. With the early adoption of medical-use cannabis, it was only a matter of time until recreational weed was allowed within the State.
The first step in legalization was the passing of the "Medical Cannabis Regulation and Safety Act," in 2016. The act comprised seven different bills, which ultimately helped regulate the cultivation, transportation, and use of medical cannabis. This helped pave the way for regulating recreational licenses in the future.
What followed was the 2016 “Proposition 64: Adult-use Act” which permitted adults 21 and above to purchase marijuana within State lines. However, it included that certain counties and jurisdictions can create their laws allowing or disallowing certain aspects of the cannabis business.
The first legal cannabis sales were made on January 1st, 2018 by dispensaries that were granted cannabis licenses by the DCC.
California Cannabis Business Laws & FAQs
Who can legally sell cannabis in California?
Businesses that hold one of two cannabis retail licenses are permitted to sell cannabis in California. The Type 9: non-storefront retailer allows delivery services within the state, while the Type 10: storefront retailer allows retail spaces for patrons to visit.
What cannabis licenses are available within California?
In total 17 different licenses are available via the DCC within California. Some of these licenses have other sub-licenses that differentiate from each other. These include:
- Type 1 - Type 4: Cultivation licenses allow the production of cannabis via growth. These licenses are split by types of lights and production methods, along with the number of plants and size of the growth sites.
- Type 6: Manufacturer 1 licenses are for manufacturers that produce medicinal marijuana products using nonvolatile solvents.
- Type 7: Manufacturer 2 licenses are for manufacturers that produce medicinal marijuana products using volatile solvents.
- Type N: Infusion of Products licenses allow manufacturers to create marijuana products via infusion, along with creating packaging and labels for cannabis products.
- Type 8: Testing licenses allow testing facilities that will host quality assurance checks of medical and recreational marijuana
- Type 9: Non-storefront Retailer licenses allow delivery services for non-storefront retailers.
- Type 10: Storefront retailer licenses allow physical locations to sell cannabis products
- Type P: Packaging and labeling licenses allow manufacturers only to package and label cannabis products
- Type S: Shared-Facility licenses allow multiple type S license holders to use the same working space and rotate on a schedule in said space
- Type 11: Distributor licenses allow distributors to transport marijuana in between the cultivation, manufacturing, and distribution processes. Type 11 license holders can also arrange cannabis testing and offer storage services.
- Type 12: Microbusiness licenses allow businesses to do at least the three following actions: cultivation, manufacturing, distribution, and retail.
- Type 13: Transport-only Distributor licenses allow distributors to transport cannabis between the cultivation, manufacturing, and distribution process with no other functions.
- Event Licenses: both an event-organizer license for the holder and a temporary cannabis event license for the event itself.
How can I apply for a California cannabis license?
To apply for any cannabis license you need to be prepared. To gather all necessary materials and information, visit the official DCC website.
- Complete all local permitting processes. As mentioned prior, different counties have different rulings in terms of cannabis. Make sure that the county you plan to open a business in allows the service you want to partake in, and complete any preliminary requirements posed by the county.
- Learn about State regulations for cannabis businesses. The DCC has several specific requirements that would be better read directly from the source. These regulations include standard operating procedures, how to train employees, and a plethora of other important information.
- Gather all needed documents. The DCC website lists over 30 different documents needed BEFORE applying for any license. This includes premises reports, landowner approval forms, state employer numbers, and more.
- Create a licensing system account. There are three different licensing systems in California, so make sure you pick the right one for your license.
- Complete your application. Fill in all fields in the application. These fields include personal information, the business owner’s financial information, and much more. This is where using the checklist will come in handy.
- Pay for your application. Each license has a different application fee. The application will not be submitted until the application fee is paid.
- Watch your email. Anything else needed by the DCC that wasn’t mentioned in the application will be sent to you via email.
- Pay your license fee: If accepted, you will receive an email with how to pay your license fee. You can pay via the DCC website, credit card, check, or bank money order. All license fees are different, so you need to check how much it is for your license.
- Post your license. Once received, keep your license in a visible space of your operation.
What is the annual fee for a California State cannabis sales license?
The total annual fee is dependent on the operation size and services. Cannabis sales license holders can typically expect to pay between $4000 to $72,000 annually to renew their license.
What is the Cannabis Appellations Program?
The Cannabis Appellations Program (CAP) is to help clarify the region of cultivation for specific cannabis products. This helps build the validity and name branding of said regions, similar to how wine is appellated. It also pushes cultivators in the same region to work together to build that region’s brand. To join this program, one needs to pay a $14,250 proposition fee, along with a $2,850 petition fee.
How does California tax cannabis?
California has a unique tax system set up around the cannabis industry. Cultivators, distributors, retailers, and manufacturers all have specific taxes that need to be adhered to. The most pricey tax comes to cultivators, which comes in around $9.65/oz. of flowers, $2.87/oz. leaves cultivation tax, and a $1.35/oz fresh cannabis plant tax.
Consumers are taxed with a 15% excise rate and an 8% state sales tax.
Cannabis Companies in California
Although the underground cannabis market is still number one in California, these companies have been setting themselves apart from the rest and have solidified themselves as the top players in California.
Most popular for their live resins and incredible 100% 510 vape cartridges, Cannabiotix has paved a way for themselves in the California market. Offering all things cannabis, they boast a wide range of flowers, not just concentrates, that patrons can partake in.
Raw Garden handles every aspect of the cannabis process. Cultivation, manufacturing, and eventually retailing. This in-house approach guarantees quality for all of their cannabis. They are known for their concentrates, vape pens, cannabis PAX pods, and refined live resin diamonds.
Offering nearly every cannabis product under the sun, Stiiizy’s wide selection has helped push itself ahead of the competition. With constant innovations thanks to their in-house science team they have created their top-shelf vaping series that you have to try.
California Cannabis Packaging Laws
The “Emerald Triangle” is a small region in northern california that is known for being the largest cannabis producing region in the United States. The climate paired with the volatile landscape make for the perfect conditions for growing and producing cannabis.
With this in mind many cannabis companies are emerging across the country and are naturally choosing to sell their precious product in the great state of California. It is important for your brand to understand that since cannabis is not federally regulated that leaves all the legalities regarding production, packaging and sale of any cannabis based product left to the regulation of the state government in which you are doing business in.
Just like other states with legal medical and recreational cannabis - understanding the rules and regulations surrounding the packaging and labeling requirements in California state are vital to the overall success of your cannabis venture. Lucky for you, Custom Cones USA are the experts at all things packaging and labeling - offering you not only a one-stop-shop for all things pre-roll but also a one-stop-shop for all the knowledge you may need to acquire to ensure the success of your pre-roll brand!
California is known for their ever-changing rules for cannabis packaging and therefore keeping up with these changes can be rather difficult and can pose a risk to the sustainability of your brand. Your pre-roll brand should make sure to always check back with your states specific department that handles cannabis regulation in order to stay up-to-date with any changes that may occur. That being said, one should always ensure to understand the basics when it comes to cannabis packaging and understand the few basic rules that one should adopt or avoid when launching your pre-roll brand.
- Not attractive to minors:
- Child resistant
- Tamper evident
- Resealable if product is for multiple use
Now that you have a general understanding about what to stray away from on your package, lets see some of the basics when it comes to the label that you include on your pre-roll packaging:
- Label is not attractive to minors
- Make health any sort of health claims
- Contain the word “organic”
- Mention a county in California unless the cannabis was 100% grown and sourced from that county
Keeping in mind the last point about your product being resealable, if you are doing a pre-roll multipack, you are going to want to make sure that the package is resalable in some sort of fashion.
Like many other states, California mentioned “not be attractive to minors” in reference to cannabis packaging - what this means is that when designing your packaging and labels you want to stray from imagery that would typically be associated with minors or young people. Think bright colors and cartoons. Yes, this would mean you probably should stray away from any sort of cartoon imagery of a character consuming cannabis (or allude to it) just to be on the safe side.
You also are going to want to include a unique identifier that is placed on the label when packaging your pre-roll product.
On a state by state basis they may require you to print a specific series of statements that mention the intended use of the product is - California is no different. Be sure to include, in bold, the following statement
Check out some of our best selling packaging options below!
California and weed go together in the public mind like peanut butter and jelly. The state has a long history with cannabis, which is apparent with its early adoption of medical marijuana. They have continued this push towards a cannabis-rich world with the legalization of recreational use in 2018.
The state has a plethora of different cannabis licenses available which allows businesses to focus on their specific branding goals. All applications are open at the time of writing, which indicates that the market for cannabis in California will continue to grow.
Approximately $400 million of the $1.3 billion made in cannabis tax was allocated to assist child care and prevention services for children in low-income or high-risk situations. This use of tax dollars has pushed many consumers to support the tax, helping lead to more sales in the legal market.
As of January 2022, there are a total of 866 dispensaries in California, and this will only continue to grow as more people want a slice of the pie. As companies like Cannabiotix, Raw Garden, and Stiiizy have set themselves apart, newer companies will continue to push to get on top of the market.
Do you think that the legal marijuana market can catch up to the 90% illegal market? What will it take to balance out the cannabis landscape in California?