“Applying for a Business License”

This post is Part 5 in the series titled Navigating the Application Process in the Medical Cannabis Industry, where Mora Mota Group looks to share some of the keys to success as a small business startup look to emerge within this industry.

Knowing the type of Medical Cannabusiness you want to own and where you want to open up shop is the first step, obtaining the license to effectively operate in the Medical Cannabis Industry is a entirely unique challenge.

 

Researching the trends in this Industry and growing an understanding of where the market is heading is a great step towards operating within this budding industry. Building a team with in-depth knowledge of the plant, having the financial backing to push your idea forward, and properly zoned real estate can effectively direct your venture on the right path.

Nevertheless, increasing demand for operating licenses are attracting investors toward emerging Medical and Recreational Cannabis markets, increasing the competition from higher quality applicants from mature markets. While this reality hinges on the State-specific framework leading the application process, small businesses should be aware and realize the real impact from outside influence.

It takes in-depth understanding of the market, market competitors, products and trends that have developed over the last few years. In this post, Mora Mota Group will outline the major requirements involved when applying for a Medical Cannabis License and the essential details that can help your application stand out.

 

License Types

As State Legislators implement their own frameworks for legal Cannabis in their particular State, Applicants must be aware of the different types of licenses available to them. Additionally, Applicants need to be concerned with any bottlenecks imposed by the State if they develop strict regulations for licensed operators.

The most common license types available to applicants include Cultivator, Processor, Wholesaler, Testing Lab, Secured Transport, and Dispensary. What is important to realize are the specific limits imposed within the State you operate in as staying compliant with regulations is necessary to staying in business.

 

Nuanced Regulations

As a business owner, be ready to play a key role in planning for the nuances involved with your operation and State-specific regulations. If you are operating a cultivation facility, do you have a limit on the canopy size or are there limits on the amount of plants you may produce at a given time? As a Dispensary Owner, are your patients allowed to purchase unlimited medicine or is there a monthly allowance that is strictly State regulated?

In one emerging market, Legislators have considered restricting private labs from testing their Medical Cannabis for the first year, putting a strain on cultivators and processors to seek testing facilities from public institutions. This may worry potential licensees as Cannabis maintains its Schedule I classification, believing this scenario may compromise funding from the Federal Government.

States that have implemented Cannabis laws in the past, but have recently amended laws to increase market access for patients are trying to balance the interests of new applicants looking to operate within the States, while appeasing those entities that currently exist.

It’s also important to identify the number of licenses a State will issue, and when the State decides to increase, or suspend, additional licenses to would-be entities. Additionally, there may be application fees involved with registration and licensing that can grow to over six-figures, increasing the cost associated with obtaining a Medical Cannabis license.

 

Application Overview

As each State implements their own laws regulating Medical Cannabis, there are pertinent details that every business must provide. The common application requirements for obtaining a license in the Medical Cannabis Industry include:

  • Business Details: Includes the Business name, physical and mailing address, SOS #, EIN #;
     

  • Operating Plan: Includes the business, marketing, and financial plans that will guide the venture;
     

  • Land Use Compatibility Statement: Applicants must receive approval by the local jurisdiction to use the land indicated in their application;
     

  • Proof of Right to Occupy: Applicants must provide a statement from the owner of real property as proof to demonstrate the landowner has acknowledged and permit the Medical Cannabis-related business conducted on the property; and
     

  • Other Documents: May Include incorporating documents, proprietary rights, insurance, shipping contracts and/or partnership agreements.

 

Details Regarding your Business

Whether the State you’re applying in has implemented a merit-based application process, or choose their Licensees by Lottery draw, every detail in your application will be examined and considered by the Regulators in charge of reviewing your application.

  • Researching the Market

Evaluating and creating a plan to understand your respective State’s market will require comprehensive research; by analyzing the specific demographics, age groups, and cultural nuances that make your market unique. Your Team can efficiently focus its efforts on catering their products to the direct consumer through a strategic effort rather than merely assuming the product will sell itself.

  • Owners, Partners and Managers

The Founding members of a Medical Cannabis entity you choose to be presented on the application will demonstrate the ways in which the business can succeed in a particular market. While not all names listed on an application will ultimately lead the Company toward success, having the wherewithal to produce a comprehensive, adequate application when competing for a license. It is necessary to instill the confidence of the regulators that this venture has the capacity to operate in the Medical Cannabis Industry once they receive their license to operate.

  • Site Planning

Choosing the location of your venture’s site is significant because you must plan your entire business around the place you put on your application; additionally, you may want to expand your operations to accommodate a larger facility as your entity becomes more valuable. Other significant concerns business owners should be aware of are site security and surveillance of operations including transportation of regulated inventory, handling of cash transactions, and the ability for law enforcement to access to the premises on an ongoing basis.

  • Employee Safety

All businesses are required to comply with their State’s regulations regarding employee rights, and Medical Cannabis companies are no different. Licensees must stay up to date with laws concerning occupational safety and health of all workers, despite thin guidelines on how to protect worker safety. Cultivators should be aware of the amount of fertilizers they use and how long their employees are exposed to the high intensity discharge lights, while an edible producer should take precaution with kitchen hazards in general.

While each licensed entity will have their own unique safety issues, employers should be aware of the hazards involved with their venture and how to combat the threat for the safety of their employees. Establishing a detailed health and safety program for your unique business will enhance your credibility for regulators and improve your chances at obtaining a license.

  • Standard Operating Procedures

One solution to alleviate the previous concerns is to include a detailed standard operating procedures (SOPs) that outlines the process of your business. SOPs are designed to follow start to finish by an experienced employee, and help to streamline operations and improve efficiency. Implementing comprehensive procedures for employees to follow helps improve output quality as employees carryout routine operations, and decreasing the chance for miscommunication between employees that lead to violations of industry regulations.

  • Regulatory Compliance

Along with the risk of operating in an Industry that involves a Schedule I Federally Illegal drug, a major concern Licensees face are the strict regulations imposed by the regulating body within their State. To alleviate this concern, Medical Cannabis companies must practice strict records management to effectively secure their patient’s data, and may be required to maintain records for a minimum time-frame. Entities must also be aware of the zoning requirements of their local jurisdictions and the limits on Cannabis-related use in zones imposed by the local zoning codes. Additionally, any regulation that cap canopy size, plant count or other limits on the ability to produce should be made aware to all employees to mitigate the potential of regulatory violations.

 

Conclusion

By providing the Regulators in charge with approving applications with a comprehensive, fully-functioning business proposal and application, you reassure them that the entity under review has properly allocated resources, personnel, and strategy to operate efficiently. Having an experienced consultant like Mora Mota Group to help navigate the application process can greatly increase your chances of obtaining a license in order to operate in the burgeoning Medical Cannabis Industry.

Check back next week to the Final Part on Navigating the Licensing process in the Medical Cannabis Industry as Mora Mota Group provides more advice for small business startups in the Medical Cannabis Industry.

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