Are you prepared to apply for a cannabis business license?

The marijuana industry is appealing to many entrepreneurs as it offers a largely unexploited market with a huge customer base. But in order to be one of the few entrepreneurs to enter this exploding market, you need to be granted a cannabis business license. However, before applying for the license, there are a number of things you need to consider to make sure you are well-prepared. We discuss these factors in detail below:

Laws governing the specific cannabis business

Understanding the law under which your business operates within is of topmost importance. Each state has different regulations and licensing requirements. Depending on each state, for example, the license will allow you to cultivate. Manufacture and/or distribute(vertical integration) while other states may have separate licenses for each of the services. Passion for the industry is not enough to win a license, as the industry is getting a lot more competitive.

Are you prepared to apply for a cannabis business license?

You can have the best idea, a well-written business plan, and a great team. But if you fail to meet state regulations, you’re out of business before you ever got in because you’ll be denied a license. We recommend that you meet all state regulations as well as federal regulations (where applicable). Generally, federal regulations don’t apply to the industry yet. But by exceeding FDA, OSHA and USDA standards, you’ll be effectively future-proofing your business in case regulations are modified or altered at the federal level.

Capital needed to start a cannabis business

An application fee is usually a few thousand dollars and the annual licensing fee can be upwards of $100,000 in some states. Some states also require that the applicant have at least $1 million in their accounts to show the capability of actually starting the business if awarded the license. Another element to consider here is that most states require applicants to list their intended business address on the application.

Cannabis Legalization Spurs Massive Interest in Marijuana Retail

Meaning you have to secure space and pay rent well before a license is awarded and the business becomes operational. You will also need to partner with a consultant or someone who has prior experience in the industry. An attorney and any other professional as may be required. These experts will need to be paid and therefore their fees should be included in your calculation of the initial capital.

Specific Products and/or Services that your business will provide

There are many potential products and services that can be offered within the cannabis industry ranging from the dispensary and grow operations to processing and final distribution. Take your time to attentively develop your contributions. Ask yourself how unique your contributions are and how you will make sure you stand out amongst your competitors. Start off with a few products or services and invest time and finances making sure that you give the best you can possibly offer. This will help you create a good foundation for your business as you concentrate on only a few products or services thus easy to offer the very best.


Without customers, you are not in business. Knowing who your customers are provoking thoughts on how to plan your marketing strategies. A market survey can be conducted to ascertain the viability of the market you wish to venture into. The survey should take into account factors such as the demographics, level of income and potential customers in your state. Will you be serving end consumers or selling directly to other businesses? What are your customer demographics? Are they recreational cannabis users or medical patients? Is the market likely to expand? This knowledge will help in forecasting the future as you will be able to know your ideal customers. So that you can tailor your business to meet their needs.

Real Estate

Carry out due diligence on the building you intend to use for your business. Not limiting yourself to size or space that would allow for expansion. As well as mortgage and title of the property. Real estate is a big component of the licensing process and could easily lead to you being denied the license or getting stuck with a small space that limits you in case you want to expand. You can consider having a lease with an option to purchase later to help minimize your immediate cash needs.

Lengthy Process

Application for a cannabis license usually requires a lot of detailed information. This, therefore, means that you have to start gathering information as early as possible to enable. You to put together a successful application. If possible check what other states require and keep in touch with all the talk surrounding the potential rules and requirements. You will also need to plan ahead on how the final document is to be delivered based on your state requirements. Consider hiring staff on a temporary or need basis as the process may take a little too long hence. You can easily run into a financial crunch.


In summary, getting a license is one of the most challenging early steps in doing business in the growing cannabis industry. The most important thing is to understand the complex and often confusing, regulations of the state licensing board. At this point, teaming up with a reputable cannabis business consultant is invaluable to help you evaluate your business structure, refine your business plan, select qualifying real estate. Navigate capital requirements, and create a winning cannabis business license application.

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