cannabis distribution license

5 min read

How to Get a Cannabis Distribution License

September 7, 2022

The legalization of cannabis in some states has created the basis for many to go into the industry and develop the direction. Cannabis distribution has become one of the most attractive sectors of the industry due to its advantage as an essential income source throughout the states. So, the demand for licenses for cannabis distribution has increased accordingly. 

We are on hand to guide you through obtaining a Cannabis Distribution License. Follow the info below to understand better how the cannabis distribution network is structured. 

Before applying for a cannabis distribution license, you must first determine the location and facility of your business. Your intent city may not even be accepting applications at this time, or it might limit the number of licenses available. 

It would also be best for you to determine if the property you‘ve chosen is applicable to the cannabis business. All US cities have local zoning laws that determine where you can open marijuana-related offices. Most local towns will also require a good business plan and a source of capital. So, before you begin the process of applying, do accurate research taking into consideration all the listed details above. You will then need to get your Local License before applying for a State License. 

Responsibilities of a Cannabis Distribution License Holder

The advantage of the Cannabis Distribution License compared to other types of licenses is that it doesn’t limit your duties and you may take part in the following business activities:

Transportation

The primary responsibility of cannabis distribution licensees is transporting cannabis or cannabis products from one location to another. Distributors are the only license types that can transport between licensees.

Type-11 distributors are licensees who can deliver to a retailer and may subcontract to another Type-11 distributor. Type-13 distributors may transport between licenses or transport immature plants to a dispensary.

Distributors may handle a lot of cash as many sales are COD (cash on delivery).

Quality Assurance 

You must ensure proper packaging and labeling of the cannabis products before sale to retail, delivery, or micro-businesses. Also, ensure the products meet all the quality requirements the corresponding state authority sets before you distribute them. 

There is a specific procedure when the cannabis products are ready to be tested. You will have to hold the prepared product sample for testing in a separate location. A corresponding agent comes to the facility and takes the samples for testing. If ready-batches pass the test, it means you may sell them then.

Hence, you will have to verify you can perform quality assurance when applying for the cannabis distribution license. 

Purchase of Cannabis 

Under a Cannabis distributor license, you will be authorized to purchase cannabis flower or cannabis products from other growers, premises, or companies and ensure a sufficient supply for distributing the products to the corresponding facilities. 

The cannabis products you can purchase for distribution vary from state to state. Most states allow license holders to distribute more than one product line. Each state operates under specific regulations, some with strict rules concerning recreational marijuana. States with strict regulations charge more for cultivating, distributing, and selling cannabis or cannabis products.

Storage, Tracking, and Transportation to Retailers

When you purchase cannabis products as a distributor, you must arrange storage before conveying them to retailers. You will have to track the procedures that involve dispatching the products to the destinations to reduce the risks of losses in the stock.  

Every transaction you make based on the cannabis distribution license is recorded or tracked through the cannabis distribution software. So, you will have to be accurate while recording the transactions to shun the headaches of missing such records. As a cannabis distributor, you may sell the cannabis products to other licensed retailers, which can be both delivery and storefront retailers, according to the license type you own. 

Where to Submit the Application for a Cannabis Distribution License

The authorized bodies in the states that ensure the issuance of the Cannabis Distribution License vary according to the state. These state organizations can be the Secretary of State’s office, the Department of Taxation, and the Bureau of Cannabis Control. So if you choose a specific state/city for your business activities as a distributor, you should find out first which state bodies accept the applications for the cannabis distribution license. 

In the state of California, for example, the Bureau of Cannabis Control(BCC) is the body that grants cannabis distribution licenses. There are different license types of distribution in the state:

A cannabis distributor transport license (Type 11) – Transports cannabis and cannabis products between cultivation, manufacturing, or distribution premises, moves finished cannabis goods to retail facilities, provides storage services to other licensees, and arranges for testing of cannabis goods.

A cannabis distributor transport only license (Type 13) – the license considers transporting cannabis products between licensees, though it may only transport immature cannabis plants and seeds to licensed retailers. It means that Type 13 licensees may only transport the products that the licensee has manufactured or cultivated. 

Distributor License Fees

Fees are specific to the license type you are applying for. Most prices are defined based on your business’s gross annual revenue. Here are the fees introduced down for your consideration:

Type 11 license fees:

Gross annual revenue  Application fee License fee
Less than or equal to $1,000,000 $1,000 $1,500
$1,000,001 to $2,500,000 $1,000 $6,000
$2,500,001 to $5,000,000 $1,000 $11,250
$5,000,001 to $10,000,000 $1,000 $22,500
$10,000,001 to $20,000,000 $1,000 $45,000
$20,000,001 to $30,000,000 $1,000 $75,000
$30,000,001 to $50,000,000 $1,000 $120,000
$50,000,001 to $70,000,000 $1,000 $180,000

 

Type 13 license fees:

If you transport only goods you cultivate or manufacture, you can obtain the license considering the down listed fees. 

Gross annual revenue  Application fee License fee
Less than or equal to $1,000 $1,000 $200
$1,001 to $3,000 $1,000 $500
More than $3,000 $1,000 $1,000

 

Note: All employees in the cannabis distribution department must be licensed as well under the federal law. Drivers, marketers, and other members of the distribution department are required to own a corresponding  license.

Conclusion 

Getting a cannabis distribution license is challenging and complex, so obtaining it takes time and effort. We hope our guidelines will give you a clearer impression of how to start the licensing process before you decide to appeal to a legal consultancy in this regard.