How to start a commercial grow operation in California

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Over 20 years ago, the state of California became the first state to legalize the medical use of marijuana. Since then, other states have followed in its footsteps. However, it wasn’t until the election of 2016 that California finally voted to regulate recreational adult use as well. 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 negotiating with vendors and dispensaries, opening a marijuana growing operation in California is just like any other type of business, with a few slight variations. Below is an in-depth look at the information needed to get a successful cannabis growing operation 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 8th, 2016, you can now also open pretty much any kind of cannabis business your heart desires. This includes, but is not limited to:

  • Retail marijuana stores
  • Marijuana product manufacturers
  • Marijuana commercial grow facilities
  • Marijuana testing facilities
  • Marijuana distributors
  • Marijuana extraction services

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Currently, regulators have until January 1st, 2018 to begin issuing these licenses. However, the state has not indicated when they will open the application period to potential entrepreneurs.

Download my free marijuana grow guide and start growing high quality strains

California cannabis history and market

On November 8, 2016, Governor Jerry Brown signed the Medical Marijuana Regulation and Safety Act (MCRSA) into law. MCRSA is composed of three separate bills (AB 266, AB 243 and SB 643) and forms a foundation for future medical marijuana regulations and a statewide licensing program for growing, manufacturing, transporting, testing, distribution, and retail dispensing of medical marijuana. Medical marijuana has been legal in California since 1996.

Cannabis history and market
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California’s marijuana market has jumped to nearly $845 million annually, with over 2,800 marijuana businesses currently operating in the state.

Owner requirements

California’s law allows counties and cities to set rules for growers and sellers. They can 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

If you want to open a growing facility in California, you must go through a demanding application process. According to official documents released by the state of California, the initial licensing process will go through four stages:

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

Applicants will then need to undergo a criminal background check by the California City Police Department as part of the first stage. Resources for this are limited so no more than six applicants per day will be processed. Therefore, it is best to make an appointment. Please note that there is a $78 fee per background check, payable on-site.

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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 your local Public Works Department. The review takes approximately two weeks and costs $250.

There are several tiers of licensing for marijuana growers, depending on the size and type of your growing operation. The options are as follows:

TierSize of Growing OperationLicense Types
Tier 1: Specialty(Up to 5,000 sq. ft. of canopy OR up to 50 mature plants on non-contiguous plots)
  • License 1: Specialty Outdoor.

  • License 1A: Specialty Indoor

  • License 1B: Specialty Mixed-Light.
  • Tier 2: Small(Between 5,001 and 10,000 sq. ft. of canopy)
  • License 2: Small Outdoor.

  • License 2A: Small Indoor.

  • License 2B: Small Mixed-Light.
  • Tier 3(Between 10,001 sq. ft. to one acre of canopy) These licenses are limited in their access to vertical integration.
  • License 3:

  • License 3A: Indoor.

  • License 3B: Mixed Light.

  • License 4: Nursery
  • Financial requirements

    The costs for starting a marijuana growing operation 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
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    Stage 1: Preliminary determination of eligibility$3,258.00
    Stage 2: Initial ranking$701.00
    Stage 3: Second ranking$1,790.00
    Stage 4: Public Meeting and City Council Final Selection$1,937.00


    The time frame varies greatly on how long it takes to get a cannabis growing operation up and running. Potential entrepreneurs can expect it to take more than a year to get the necessary licenses, secure finances and get suppliers and employees lined up.

    How much does a marijuana growing operation in California make?

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    Cannabis growing operations in California can earn well over $1 million annually. For example, Harborside Medical dispensary in San Jose, California reportedly does over $20 million in annual sales.

    Download the Free Harvesting Guide to learn more about when and how to harvest your Marijuana plants.

    Looking to start a marijuana growing operation in California? These consulting companies can help with a wide range of services, ranging from explaining the state licensing requirements to assisting with applications and even running your business.

    Consulting CompanyLink to Services
    California State ,
    Quantum 9 Inc.
    Canna Advisors
    Green Rush Consulting
    Medicine Man Technologies
    Comprehensive Cannabis Consulting

    FAQs About Starting a Commercial Grow Operation in California

    What kind of cannabis businesses can you legally operate in California?

    You can put up retail marijuana stores, marijuana manufacturing and distribution, commercial grow facilities, testing facilities, and marijuana extraction services in California.

    When did California legalize medical marijuana?

    Medical marijuana has been legal in California since 1996.

    How many marijuana businesses are currently operating in the state of California?

    Over 2,800 marijuana businesses are currently operating in the state, which generates nearly $845 million annually.

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    6 comments on “How to start a commercial grow operation in California”

    1. I have lots of acreage for lease to growers of marijauana. Who do I contact? Cheap rent for 14 up to 65 acres in CA Call me at 707 6747161

    2. can you change your site name to cannabis? They may be the same plant but one is a medicine and one is a scheduled drug. You’re subtly pushing the wrong verbiage. anyhow keep up the content. just looking out.

    3. I’m confused by this article. the author used the same prices? For what appears, to me, to be two different topics? Help?!?

    4. Do you know the ongoing price (or wholesale prices) that California based cultivators sell their cannabis to dispensaries and/or medical facilities for?