5 Main Challenges to Acquiring A Commercial Cannabis License

Commercial Cannabis License

Having assisted clients through the entire cannabis permit process from start to finish on several occasions, I’ve picked up on the main challenges to succeeding, and finally receiving that cannabis permit. Although every city or county is unique, these are the common challenges a business will face regardless of where they apply.

1. Availability of Permits- The reality is that despite the fervor and attention that the legal cannabis industry receives, the legalization process in California has unfolded at a fairly slow pace. As of this writing, there only a handful of municipalities accepting cannabis business applications for new businesses. In most cities, licenses are capped in order to prevent a market saturation of cannabis businesses. In most cases when a city offers permits for commercial cannabis businesses, there are far more qualified applicants submitting applications, than there are permits available to be awarded. This scarcity between permits sought and permits awarded is why the availability of permits, or lack thereof is perhaps the single greatest challenge to acquiring a cannabis license.

2. Availability of Eligible Property- In every city that offers permits for commercial cannabis, also requires that these businesses be located in eligible zones within the city. This has commonly been referred to as “green zones”. Most green zones within city limits are located in areas that are either zoned for commercial or industrial use, and always require a buffer between schools, day care centers, and other sensitive uses. While determining whether a building is located in a “green zone” is a relatively straight forward process, locating and acquiring one of these buildings at a competitive price can be extremely challenging. Due to the excitement and fervor that has come with the growth of this new industry, prices for eligible real estate have risen substantially. Even when a suitable building is found, it is often at a price that is far from ideal and if purchased, may render an operation to be unprofitable. That being said, finding eligible property is challenging but possible, and is required in order to submit an application for commercial cannabis permit.

3. Money/Capital- Availability of capital is a major factor preventing many businesses and individuals from successfully acquiring a cannabis license. Like any business venture, a cannabis business has its own unique risks and rewards. There is simply no full-proof way to acquire a cannabis license. Capital must be put at risk to require a cannabis license. Cities usually require an application fee of ten to fifteen thousand dollars. This money is non-refundable and does not guarantee a permit. Furthermore, a property must be acquired prior to the submission of an application. The costs of acquiring a property can range from $0, if the building was already owned or occupied, to millions, if the building was purchased in-full. On average, the cost of getting into an eligible cannabis building is about twenty-five to fifty thousand dollars. Additional components of the application, such as site plans and security plans, will further add to the cost acquiring a license.

4. Qualifications of Applicants’ Team- Assuming an open permit has been identified, and an eligible building is acquired, and adequate funds are available, the next challenge to overcome is convincing the city or deciding body that you have human resources necessary to successfully operate a cannabis business. This is done by showing that you have proven expertise on your team in the following categories.

I. Management
II. Security
III. Legal
IV. Operations

Furthermore, each main member of the team will need to be prepared to answer and explain the contents of their application to the city. This isn’t a major challenge, but a poor interview has the potential to sink an application that otherwise may have been approved. Bottom line, it is important to put together a strong team, with demonstrated and relevant experience in the legal cannabis industry.

5. Application Quality- Applications for cannabis licenses are nearly always evaluated and assigned points based on the quality and completeness of the submittal. Having seen hundreds of applications from a wide spectrum of sources, I can say that all submittals are not created equal. Putting together a quality application packet and business plan takes a lot of work. In order to collect the maximum number of points on your application, and increase the likelihood of being awarded a permit, it is crucial to work with an experienced consultant with a track record of success in acquiring cannabis permits.

At the offices of MJ Legal, we have the experience and track-record to help you overcome these challenges. Whether its finding the right city, assistance with real estate or representation through the municipal and state licensing process, MJ Legal is here to assist.

Please Contact us today!

Leave a Reply

Your email address will not be published. Required fields are marked *