Business License Necessities for a Cannabis Business

Be aware of some licensing basics before starting a cannabis business.

FREMONT, CA: The cannabis industry is greatly regulated, and licensing for cannabis businesses is extremely complicated. Compliance needs differ from state to state and alter depending on the business type and which city or county you work in.

To handle legally, you must fulfill all essential cannabis business licenses, registration, and other requirements. Be aware of some licensing basics before starting a cannabis business.

Basic legal terms

Regardless of the business, basic requirements are.

• Business formation: Integrating your business or forming an LLC with the state is significant because it protects your private assets from potential debts and liabilities arising from your business.

• Tax ID number: Your federal tax identification number, also termed an employer identification number (EIN). The IRS utilizes this number to recognize your business for anything allied with taxes.

• General business license: A general business license, revived annually, lets you operate legally in your city or county. (Note: This license does not authorize you to function in a cannabis business.)

• DBA filing: Your DBA (Doing Business As) lets you perform business using a name different from the one in your incorporation papers.

• Sales tax permit: This is for online and offline retailers of physical or digital products or services. If you have to gather state and local sales taxes, you need this license.

• Other permits: Various businesses require varying permits. Businesses may also require permits for signage, zoning, and land application.

How cannabis licensing differs based on the business category

As a cannabis business, you’ll be controlled according to various factors. One of them is the business category—whether you’re cultivating, marketing, manufacturing, or investing. Here are a few illustrations of how licensing differs according to business category.

• Cultivation: Growing cannabis is heavily regulated. An operation like this will require a significant initial investment, a strong site plan review, and practical and confirmed horticultural knowledge.

• Retail: As a retailer, some states may need you to provide adequate products and build security. They may also restrict the amount of product marketed to one individual and limitations on your pricing.

• Edibles: When producing edibles, some states need that you cook and manage your product in a commercial kitchen. You may need to produce the cannabis butter and oils that are utilized in your product on-site as well.

• Investors: If you’re thinking about investing in cannabis stocks, make sure you learn where the industry is at the moment. The dynamics of the marijuana industry are fastly changing. Those who like to invest in cannabis businesses must follow specific regulatory and statutory provisions.