Starting a Dispensary in California

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Over 20 years ago back in 1996, California became the first state to legalize medical cannabis. Since then, many other states have followed in their footsteps. Cannabis is now legal for medical use in 29 states. Now, 9 states, and Washington DC allow cannabis to be sold for recreational use. Surprisingly, it wasn’t until the 2016 election that California finally voted to regulate recreational adult use as well. All the specific laws and regulations are still being established for the January 2018 launch of retail sales in California, but to streamline the process the state will be combining recreational and medical marijuana licensing.

Aside from making arrangements with cultivators and other vendors, opening a cannabis dispensary in California is very similar to any other state, with a few slight variations. Below is an closer look at the information needed to get a successful cannabis business up and running in the Golden State.

What Kind of Cannabis Business Can I Open?


What kind of marijuana business can you open in California

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Thanks to the regulations voted into law on November 8, 2016, you can now also open pretty much any kind of cannabis business you desire. This includes but is not limited to:

  • Retail cannabis stores (dispensaries)
  • Cannabis product manufacturers
  • Cannabis cultivators
  • Cannabis testing facilities
  • Cannabis distributors
  • Cannabis extraction services

Currently, new regulations give regulators until January 1, 2018, to begin issuing  licenses. So far, the state has not indicated when they will open the application period to all.

Legalization in California

California’s medical  program was signed into law in 1995 by then-governor Jerry Brown and launched in 1996. Two decades later in 2016, voters decided to legalize recreational cannabis.

The Medical Marijuana Regulation and Safety Act (MCRSA) was the framework for the state’s licensing program. The MCRSA covers all parts of the market from seed to sale, regulations for growers, manufacturers, distributors, dispensaries, and testing labs. The recreational market, scheduled to launch on January 1st, 2018 continues to expand on the framework of California’s medical program.

California’s Cannabis Market

California’s cannabis market is doing very well, as seen with its current value of nearly $845 million annually, with over 2,800 dispensaries operating in the state. It is expected to reach an overwhelming 1 billion by 2020.

Owner’s Requirements

California law allows counties and cities to set separate rules for growers and sellers. They’re allowed to ban them outright if they choose, as the cities of Fresno, Riverside, and Bakersfield have done. Check with local laws to see if you can acquire the necessary licenses to operate. Always make sure you are compliant with local laws.

License Requirements

The initial licensing process goes through four stages:

  • Stage 1: Preliminary determination of eligibility
    Cost: $3,258.00
  • Stage 2: Initial ranking.
    Cost: $701.00
  • Stage 3: Second ranking.
    Cost: $1,790.00
  • Stage 4: Public Meeting and City Council Final Selection.

Applicants are subjected criminal background check by a local police department as part of the 1st stage. Only 6 applicants are processed per day, so making an appointment would be wise. There is a 78 dollar fee that is paid on-site by the applicant.

Applicants are required to submit a “Zoning Verification Letter” to the Planning Division in the City Hall. The documentation can be obtained by the applicant’s local Public Works Department. The review takes approximately two weeks and costs $250.

Between stages 3 and 4, top qualified applicants will participate in a public meeting with members of the community that will be held in a City Council chamber. Important evaluation criteria for approval are:

  • Proposed location
  • Adequate business planning, including budgets and proof of capitalization
  • Safety plans
  • Community and Environmental Benefits
  • Employment Standards

Financial Requirements

The costs for starting a business in California can get quite high, depending on many factors including the type of business. However, standard fees involved in the four-stage application process are:

  • Stage 1: Preliminary determination of eligibility
    Cost: $3,258.00
  • Stage 2: Initial ranking.
    Cost: $701.00
  • Stage 3: Second ranking.
    Cost: $1,790.00
  • Stage 4: Public Meeting and City Council Final Selection.
    Cost: $1,937.00


There is no standard length of time that it will take to get your business up and running, but you can expect the process to take at least a year. This ensures that you have adequate time to get finances in order, acquire the necessary licenses, source your suppliers and find employees.

What is My Expected Profit?

Cannabis dispensaries in California can earn well over $1 million annually. Harborside Medical dispensary, located in San Jose, California reportedly processes over $20 million in annual sales.

Consulting Companies

Links to consulting companies that can help open a marijuana dispensary in California

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The companies below provide a wide range of services from helping with state licensing requirements and applications to running and stocking your business.


1 Comment

  1. I have about 24k and was looking to start up a cannabis store in Inland Empire area. Do you suspect that’s enough to start?

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