How to open a Dispensary in California

Over 20 years ago in 1996, California became the first state to legalize the medical use of marijuana, and since then, many other states have followed in their footsteps. Surprisingly, it wasn’t until the election of 2016 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, 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 marijuana dispensary in California is very similar to any other, with a few slight variations. Below is an in-depth look at the information needed to get a successful cannabis business up and running in the Golden State.

What kind of marijuana business can you open in California?

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

What kind of marijuana business can you open in California
What kind of marijuana business can you open in California – Image powered by
  • Retail marijuana stores
  • Marijuana product manufacturers
  • Marijuana cultivators
  • Marijuana testing facilities
  • Marijuana distributors
  • Marijuana extraction services

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

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    California’s medical marijuana program – the first in the country – was signed into law in 1995 by then-governor Jerry Brown and launched in 1996. Two decades later, a recreational marijuana program was approved, and Jerry Brown is again the state’s Governor.

    When was cannabis made legal
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    The Medical Marijuana Regulation and Safety Act (MCRSA) was the framework for the state’s licensing program, covering all aspects of the market from seed to sale spelling out rules and regulations for growers, manufacturers, distributors, dispensaries, and testing labs. The recreational market, scheduled to launch on January 1st, 2018 continues to expand on that framework.

    California’s marijuana market

    California’s marijuana market is doing excellently, as seen with its current value of nearly $845 million annually, with over 2,800 dispensaries operating in the state at the moment. It is expected to reach a whopping $1 billion by 2020.

    Owner requirements

    California’s law allows counties and cities to set separate rules for growers and sellers. They’re allowed to ban them outright if they choose. So you’ll need to check with local laws to see if you can acquire the necessary licenses to operate and learn what it will take to comply with the rules.

    License requirements

    According to official documents released by the state of California, the initial licensing process will go through the following 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.
    License requirements
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    Applicants will then need to undergo a criminal background check by the California City Police Department as part of the 1st stage. Resources on this are limited so no more than six applicants per day will be processed. Therefore, you’ll probably want to make an appointment. Please note that there is a $78 fee per background check, payable on-site.

    Regarding location, 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.

    After stage 3 and before stage 4, top qualified applicants will have to participate in a public meeting with members of the community that will be held in the California City Council Chambers. 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 the size and scope of your operation. However, standard fees involved in the four-stage application process are:

    Financial requirements to open weed dispensary
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    • 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 around how long it will take to get your California cannabis business up and running, but expect the process to take at least a year. You will need that time to get finances in order, acquire the necessary licenses, source your suppliers and find employees.

    How much does a marijuana dispensary in California make

    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.

    Links to consulting companies that can help open a marijuana dispensary in California
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    Looking to start a marijuana dispensary in California? The companies below provide a wide range of services from helping with state licensing requirements and applications to running and stocking your business.

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