California Marijuana Manufacturing License

Does California Require a Marijuana Manufacturing License to Make Cannabis Products?

Per the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), businesses that manufacture cannabis-derived products in the state are required to obtain cannabis manufacturer licenses to carry out their operations legally in California. According to Section 19300.5(ae) of the California Business and Professions Code, "manufacturing” is defined as raw cannabis that has undergone a process whereby the raw agricultural product has been transformed into a concentrate, an edible product, or a topical product. Therefore, if your business involves the production of marijuana candies, cookies, creams, ointments, or concentrates such as shatter hash or wax, you will need a manufacturing license.

Cannabis manufacturers in California can only manufacture, prepare, package, or label cannabis products manufactured at their licensed premises. California defines "cannabis products" to include packaged cannabis, pre-rolls, and products that do not contain cannabis, but are otherwise identical to the cannabis-containing product and are intended for use as samples.

Per Title 4 of the California Code of Regulations, every person who manufactures cannabis products must obtain and maintain a valid manufacturer license from the Department for each separate premises at which manufacturing operations will be conducted. No person may manufacture cannabis products without a valid license from the Department of Cannabis Control. California cannabis manufacturing licenses are non transferable.

Does California Require Licensed Cannabis Manufacturers to Have Cultivation Licenses?

California does not require cannabis manufacturers to hold a cultivation license. However, manufacturing licensees are permitted to have two licenses in separate categories. If you are a cannabis manufacturer, you can also hold a cultivator’s license (specialty, specialty cottage, and small cultivation) and a dispensary license.

Per Section 17117 of the DCC Regulations, cannabis manufacturers in California may only use cannabinoid concentrates and extracts manufactured or processed from cannabis obtained from licensed cannabis cultivators. Cannabis manufacturers without cultivation licenses are not permitted to grow their own cannabis in California.

How Does California Classify Marijuana Manufacturing Licenses?

In California, cannabis manufacturing licenses are classified by:

• The activities performed
• The chemicals used for extraction and post-processing
• Whether the manufacturer works in a shared-use facility

Based on this classification, manufacturers are permitted to use volatile and non-volatile solvents for the extraction or post-processing of cannabis. Commonly used non-volatile solvents include ethanol, carbon dioxide, cooking oils, and butter. These chemicals do not produce flammable gas or vapor. Contrarily, violent solvents are chemicals that produce flammable gas or vapor. Commonly used volatile solvents in cannabis product manufacturing in California are butane, hexane, propane, and heptane.

Manufacturers can also use mechanical extraction methods in the manufacturing process. Mechanical extraction methods utilize pressure, heat, or cold to extract cannabinoids. Examples include dry ice and rosin presses.

Some cannabis manufacturer license types permit the manufacture of cannabis products through infusion, while the scope of a license may limit permitted activities to packaging and labeling cannabis products. A manufacturing license may also limit permitted activities to shared-use facilities. Shared-use facilities are locations where several authorized cannabis manufacturers use space and equipment regularly.

What are the Different Types of Cannabis Manufacturing Licenses in California?

There are 5 types of cannabis manufacturing licenses in California:

• Type 7: Persons who hold this license may:
  • Use volatile solvents for extraction or post-processing (refinement) of cannabis extract
  • Use non-volatile solvents for extraction or post-processing
  • Use mechanical methods for extraction
  • Make cannabis products through infusion
  • Package and label cannabis products
• Type 6: Persons who hold this license may manufacture cannabis using non-volatile solvents or perform extraction using mechanical methods. Type 6 license permits the licensee to conduct the activities of a Type N or P license.
• Type N: This license permits the holders to manufacture cannabis products through infusion. Type N licensees may also conduct Type P activities.
• Type P: This license permits the holders to only package and label cannabis products. A Type P can only carry out Type P activities.
• Type S: Type S holders are for manufacturers operating on registered shared-use facilities. The shared-use manufacturing facility must be approved before Type S license applicants may submit their cannabis license applications. Type S manufacturers are permitted to extract cannabis using butter or cooking oils, make cannabis products through infusion, and package and label cannabis.

A licensee holding a Type 7, 6, or N classification may register all or a portion of their manufacturing premises as a shared-use facility.

Does California Require a Separate License to Manufacture Edibles?

California does not require a separate license to manufacture marijuana edibles. Persons interested in manufacturing edibles only need to obtain one of the regular cannabis manufacturing license types. For instance, obtaining a Type N manufacturing license authorizes the licensee to manufacture cannabis production through infusion. Through a Type N license, the manufacturer can also legally package and label the manufactured cannabis products.

Who Can Hold a Marijuana Manufacturing License in California?

In California, no individual holding an office or employment with any agency of the State of California or any of its political subdivisions may have a cannabis manufacturing license if such person's responsibilities are linked to the enforcement of the MAUCRSA. Additionally, such individuals may not be employed by an agency tasked with enforcing or regulating the state of California's criminal laws banning or regulating the sale, use, possession, transportation, distribution, testing, manufacture, or cultivation of cannabis or cannabis products.

These groups include those employed as peace officers by the State of California Department of Justice, district attorneys, city or county attorneys, sheriffs, and municipal police departments. California citizens who fall into these categories are not permitted to have a direct or indirect ownership stake in any company that will be run or managed under a cannabis license.

Per Section 17114 of the California Department of Cannabis Control Code of Regulations, the following persons are also prohibited from obtaining a cannabis manufacturing license in California:

• An individual with a conviction for a serious felony, as described in Penal Code Section 1192.7
• An individual with a conviction for a violent crime, as defined in Penal Code Section 667.5
• An individual with a Conviction on a felony charge of embezzlement, deceit, or fraud.
• A felony conviction for drug trafficking according to Health and Safety Code sections 11370.4 or 11379.8.
• A felony conviction for employing, hiring, or using a minor to transport, carry, sell, give away, prepare for sale, or peddle any controlled substance to a minor; or for selling, offering to sell, providing, intending to furnish, administering, or delivering any controlled substance to a minor.
• A violation of sections 111455, 11450, 111445, 111440, 111305, 111300, 111295, 110775, 110770, 110765, 110760, 110630, 110625, or 110620 of the Health and Safety Code (Sherman Food, Drug, and Cosmetic Law) that resulted in a license suspension or revocation, administrative penalty, civil proceeding, or criminal conviction.
• A violation of Chapter 4 of Part 6 of Division 104 of the Health and Safety Code (sections 111950 through 112130) that led to the suspension or revocation of a license, an administrative penalty, a civil action, or a criminal conviction.
• Conviction under Penal Code sections 382 or 383

Note that no one under the age of 21 can legally hold a cannabis manufacturing license in California. The state also prohibits licensees from employing or retaining individuals under 21 years of age.

How to Get a Cannabis Manufacturing License in California

Before submitting an application to the State of California, cannabis manufacturing license applicants must first obtain clearances from local communities where the proposed businesses will be located. You may also need to obtain permission from cities and counties, the major land-use regulatory bodies, for land use and zoning permits and business licenses. To guarantee the safety of employees and neighboring tenants or properties, you may also be required to show proof of compliance with fire and building codes. Additionally, the municipality government will assess if the cannabis manufacturing business has a detrimental impact on the surrounding environment.

Similarly, many counties and cities have passed local ordinances establishing social equity programs to help applicants who may have been disadvantaged by the War on Drugs. The support offered to persons in these categories includes direct financial support, faster application processes, help with operating their cannabis manufacturing business, and assistance during the licensing process. Some of the equity ordinances approved by local jurisdictions in California are:

• County of Humboldt
• City of Coachella
• City of Rio Dell
• City of Long Beach
• City of Los Angeles
• City of Oakland
• City of Sacramento
• City and County of San Francisco
• City of San Jose

You may contact your county or city government to inquire about any equity programs that may be offered to applicants for cannabis manufacturing licenses. Before applying, verify that your cannabis facility will be authorized for operations in the proposed municipality.

In California, a cannabis manufacturing facility's planned location cannot be within a 600-foot radius of the perimeter of a kindergarten or any grade 1–12 school, a childcare center, or a youth center. The facility must also comply with any distance restrictions stipulated in the ordinance of the municipality where the facility will be located as specified in Section 26054 of the California business and profession code.

Besides local ordinances, the California Department of Cannabis Control also has specific requirements for standard operating procedures, employee training, and how cannabis manufacturing facilities must be established and operated. Ensure that you understand and meet these rules. You may also use some of the resources available on the DCC website to help create the required documents needed to complete the licensing process. Some of these resources are:

• Application Checklist
• Guide to required documents
• A commercial cannabis license bond
• Property owner’s consent
• Labor peace agreement statement

To complete your application process online, visit the DCC licensing portal and create an account on the portal. Complete the required fields on the licensing system and upload any required documents. The required documents are as follows:

• Live Scan forms: This is required for each person who qualifies as an owner. This is a criminal background check administered by the California Department of Justice. You may complete the BCIA 8016 form required for the fingerprinting process from the California Department of Public Health website and upload the completed document.
• Property owner's statement: This is a written declaration that recognizes and consents to cannabis manufacturing on the site. It includes the following:
  • Identification of the property's physical location
  • Signature of the property owner or representative of the property owner
  • The owner's or agent's name, address, and telephone number
• Diagram of manufacturing facilities: This design must:
  • be accurate in terms of size and include the following information: boundaries, dimensions, entrances, exits, internal partitions, walls, rooms, windows, and doors.
  • show location of commercial cannabis activities such as extraction, infusion, packaging and labeling, and transportation (loading and unloading of cannabis and cannabis products)
  • show places with restricted access, areas utilized for video surveillance monitoring and storage devices, and placements of security cameras
  • show disposal locations for cannabis waste.

If the proposed premises include just a part of the property, the diagram must specify the location of the proposed premises, explain the use of the remainder of the property, and demonstrate the following:

• Entrances and barriers under the applicant's exclusive control
• The property's proposed common/shared spaces, which include entryways, lobbies, restrooms, corridors, and break rooms.

Note that the premises must be contiguous and can only be occupied by one licensee.

• Surety bond: A bond certificate in the amount of $5,000, made payable to the State of California. The surety bond form is available on the CDPH website.
• Business formation documents: Copies of all documents submitted in connection with the formation of the company, including operating agreements, bylaws, articles of incorporation, partnership agreements, and statements of false business name. If the business is held in trust, the trustee authority certificate must be provided.
• CEQA Documentation: Compliance with the California Environmental Quality Act, or exemption from it (CEQA). This may be shown via the use of a municipal license or permit (if the city or county has enacted a law), a Notice of Exemption or Notice of Determination, or an applicant-prepared CEQA-compliant environmental document.
• Local authorization: The license, permit, or other permission demonstrating that the applicant's establishment conforms with all applicable local cannabis regulations. While this is an optional attachment, providing it reduces the amount of time needed to evaluate your application. The local office has ten days to reply if you submit an application for a municipal license, permit, or other permission to run a cannabis manufacturing company. If no local permission is attached, the local office has up to 60 days to reply.
• Labor Peace Agreement: This is applicable to businesses having a payroll of at least twenty workers. This document must include a copy of the page of the labor peace agreement that bears the union representative's and applicant's signatures.
• Closed-Loop System Certification: This is necessary for cannabis manufacturing methods that involve the use of carbon dioxide, volatile solvents, chlorofluorocarbon, hydrocarbon, or another fluorinated gas for extraction.
  • Documentation demonstrating that the extraction system has been authorized for usage by the fire department of the local jurisdiction.
  • Each extraction system is certified by a California-licensed engineer after an examination of the equipment as installed on the premises, which includes the following:
    • Confirmation that the unit was manufactured commercially, is safe to use with the specified solvent, and was constructed in accordance with acknowledged and widely known good engineering standards.
    • The extraction unit's serial number
    • The engineer's signature and seal
• Certificate of status: This is only required for foreign companies. This document is issued by the California Secretary of State and certifies that companies incorporated outside of the State of California can legally operate within the state.
• Inventory control plan: This document details the plan to track all cannabis and cannabis products at the licensed premises.
• Transportation process: This document details how cannabis and cannabis products will be transported into and out of the cannabis manufacturing facility.
• Quality control program: This document must be comprehensive, demonstrating plans to prevent cannabis products from being contaminated or misbranded, and must cover all aspects of operations, including the following: grounds, building, cannabis product components, utensils and equipment, personnel, manufacturing processes and procedures.
• Security plan: This document details the plan to prevent unauthorized access, protect the physical safety of employees and protect against theft or loss of cannabis and cannabis products.
• Waste management plan: This document identifies if the establishment generates hazardous waste and how it will be handled and disposed of.

Note that the DCC licensing system allows you to store your progress during the online application process, so you are not required to complete the application procedure in a single session. You will be required to sign and submit your application when you have completed it.

Upon the completion of your license application, you will be prompted on the portal to pay the applicable licensing application fee. The DCC will not process your application until the application fee has been paid. You will receive an email from the DCC licensing team if any section of your application is missing or inaccurate. You will be notified of any corrections or additional information that is necessary. In addition, you will be given a deadline to submit your response. Providing the missing or incomplete information promptly will assist the DCC in completing your application as early as possible.

The DCC will not process an incomplete application. Applications will be deemed complete only if all required information has been submitted. If an applicant does not provide the necessary information within 180 days of receiving the notification, the application is deemed abandoned. Application fees are non-refundable for abandoned applications. After abandoning an application, an applicant may resubmit at any time. However, a new application will be needed, along with an application fee.

Upon the approval of your application by the DCC, you will also receive an email from the DCC advising on how to pay your licensing fee. The fee can be paid through the licensing system using a bank account, cheque, money order, or credit card. Payment can also be made in cash at the DCC office by scheduling an appointment and visiting in person. Note that cash payments are not accepted without scheduled appointments for security reasons. Your license will be issued upon completing the licensing fee payment.

If an application is rejected, the DCC will inform the applicant in writing of the decision and the applicant's entitlement to an administrative hearing to challenge the refusal. Within 30 calendar days after delivery of the notice of rejection, the applicant may seek a hearing by submitting a written petition with the DCC. If a request for a hearing is not submitted within 30 days, the applicant waives the right to a hearing.

A license to manufacture cannabis is only valid for one year. You can download the license certificate from the licensing system when your license has been approved. It is advised that you display your license certificate at the entrance to your cannabis manufacturing establishment.

How Much Does a Cannabis Manufacturing License Cost in California?

Cannabis manufacturing license fees in California are classified into a tiered structure using an appraisal of the gross annual revenues generated by the cannabis businesses. License and application fees are:

Type 7, 6, N and P licenses

Type S licenses

The gross annual revenue of a licensed premises is calculated using the gross annual sales of cannabis products and, if applicable, the gross annual revenue from manufacturing, labeling, packaging, or handling cannabis products for other licensees in the 12 months preceding the application date. Gross annual income is determined for a new license application based on gross sales and revenue anticipated during the first 12 months after licensing.

The Department of Cannabis Control does not recommend any additional fee for a Type 7, 6, or N licensee to register a shared-use facility.

Cannabis manufacturing licenses are renewable every year. The license fee corresponding with the licensing tier category identified by a licensee based on the expected gross revenue over the next 12-month period will be the renewal fee.