In November 2016, voters approved Proposition 64, or the Adult Use of Marijuana Act, which legalized cannabis for adult use in the state. Decades before that, California became the first state to allow medical cannabis use when voters passed the Compassionate Use Act in 1996. Today, cannabis is legal in California for both medicinal and adult use.

California’s Department of Cannabis Control (DCC) is responsible for licensing and regulating cannabis businesses. DCC regulates the growing of cannabis plants; manufacture of cannabis products; transportation and tracking of cannabis goods throughout the state; sale of cannabis goods; events where cannabis is sold or used; and labeling of goods sold at retail. DCC has several divisions that help cannabis operators get licensed, stay in compliance, and learn about new regulations. These divisions include Administration, Compliance, Enforcement, Equity and Inclusion, Government Affairs, Information Technology Services, Laboratory Services, Legal Affairs, Licensing, Policy and Research, and Public Affairs. There is also a Cannabis Advisory Committee which makes recommendations to DCC about regulations and licensing.

DCC issues licenses based on the type of cannabis activity that your business will perform. As such, if you want to do more than one activity, you may need more than one license. You must have a valid DCC license before performing any commercial cannabis activity, including growing cannabis (cultivation), transporting cannabis (distribution), making cannabis products (manufacturing), testing cannabis or cannabis products (testing laboratory), selling cannabis (retail), or holding an event where cannabis will be sold (event organizers). Each license type has a different application fee.

California offers several different types of adult-use cannabis licenses, which include all of the following:

• Cultivation Licenses – Cultivation license types are based on the type of production; and lighting used, and the number of plants grown or the size of the canopy. The canopy is the area where mature (flowering) plants are grown. There are specialty cottage, specialty, small, medium, large, nursery, and processor cultivation licenses available. Specialty cottage, specialty, small, medium, and large cultivation licenses are further broken down by type based on whether they are indoor, outdoor, or mixed-light and based on size. Outdoor licenses (i.e., specialty cottage outdoor, specialty outdoor, small outdoor, medium outdoor, or large outdoor) are for cultivators who grow cannabis outside without using any artificial lighting on mature plants. Indoor licenses (i.e., specialty cottage indoor, specialty indoor, small indoor, medium indoor, or large indoor) are for cultivators who grow cannabis in a permanent structure using at least 25 watts of artificial light per square foot. Mixed-light licenses (i.e., specialty cottage mixed-light tier 1 and 2, etc.) are for cultivators who grow cannabis in a greenhouse, hoop-house, glasshouse, conservatory, hothouse, or other similar structure; and mixed-light licenses have two tiers based on the amount of artificial light used. Meanwhile, nursery cultivation licenses are for cultivators that only grow clones, immature plants, seeds, or other types of cannabis used for propagation; and processor cultivation licenses are for cultivators that only trim, sift, cure, dry, grade, package, or label cannabis.
• Manufacturing Licenses – Manufacturing license types are based on the activities performed; the chemicals used for extraction and post-processing, if any; and whether the manufacturer works in a shared-use facility. The manufacturing license types are as follows: Type 7 (volatile solvent manufacturing); Type 6 (non-volatile solvent manufacturing or mechanical extraction); Type N (infusion of products); Type P (packaging and labeling); and Type S (manufacturers who work in a shared-use facility). There is some overlap in the activities permitted by the various manufacturing licensees. For instance, Type N manufacturers can make cannabis products through infusion AND package and label cannabis; whereas Type P manufacturers can only package and label cannabis products.
• Distribution Licenses – There are two distributor license types available. Type 11 distributors can move cannabis and cannabis products between cultivation, manufacturing, or distribution premises; move finished cannabis goods to retail premises; provide storage services to other licensees; and arrange for testing of cannabis goods. Type 13 (transport-only) distributors can move cannabis and cannabis products between cultivation, manufacturing, or distribution premises. Reduced fees are available if you only want to transport the goods you cultivate or manufacture yourself.
• Testing Laboratory Licenses – The Type 8 license is for laboratories that test cannabis goods prior to sale at a retailer. Testing laboratories must obtain and maintain ISO/IEC 17025 accreditation. However, you can use an interim testing license while you work on your accreditation.
• Retail Licenses – There are also two retail licenses available. Type 9 or non-storefront retailers (delivery only) sell cannabis goods to customers only through delivery. Type 10 or storefront retailers have a physical location where cannabis goods are sold. Storefront retailers can also deliver cannabis goods.
• Event Licenses – There are two types of cannabis event licenses: the event organizer license, which is for the person hosting cannabis events, and the temporary cannabis event license, which is for the event itself. Cannabis events can only be held by a person with an event organizer license.
• Microbusiness Licenses – The Type 12 license is for businesses that do at least three of the following activities at one location: cultivation–up to 10,000 total square feet; manufacturing–use of non-volatile solvents, mechanical extraction, or infusion; distribution or distribution transport-only; or retail–storefront or non-storefront.

It is important to note that many California cities and counties have rules and require local permitting for cannabis businesses, and some do not allow cannabis businesses at all. You must make sure you set up your business in an area that allows commercial cannabis activity and complete any permitting requirements the city or county requires before you apply for a state cannabis license.