A breakdown of California’s Microbusiness license.
By Penny Alexander.
Now that the Bureau of Cannabis Control has released their regulations for commercial cannabis businesses, we have a great look into one of the most sought after, but misunderstood license designations- Type 12 Microbusinesses. According to the Bureau of Cannabis Controls emergency regulations,, in order to hold a microbusiness license a licensee must engage in at least three of the four following commercial cannabis activities: cultivation (limited to 10,00 sq ft), manufacturing (level 1, Type 6), distribution (distribution or distribution transport), and retail sales (retail type 10, delivery type 9). A microbusiness license allows commercial cannabis business owners to structure their business to better vertically integrate.. While other states like Colorado allow for vertical integration in all commercial cannabis businesses, California has limited some designations making vertical integration more challenging. While the microbusiness license designation allows for a some flexibility from the previously released regulations under MCRSA, it is still heavily regulated from each administrative agency.
The retail sales designation can be either Type 10 retail sales from a physical location or Type 9 retail non storefront. A retail non store front must still be located in a brick and mortar licensed building but is not required to be open to the public. A type 9 delivery only license despite not being open to the public, will still be required to meet the localities zoning ordinance.
The distribution designation can also be one of two license types, distribution or distribution transport. A distributor is responsible for transporting cannabis goods, arranging for testing of cannabis goods, and conducting quality assurance review of cannabis goods to ensure they comply with all packaging and labeling requirements. Whereas a distributor transport allows a licensee to transport cannabis goods between licensed cultivators, manufacturers, and distributors. An operator looking to obtain a license to self-distribute will apply as a regular distribution and must meet all guidelines set forth by the BCC, such as premise requirements. Only a distribution licensee may transport cannabis goods to a licensed retailer and no other license designation may engage in any other distributor activities.
For those looking to engage in cultivation with their microbusiness they will be required to also meet all applicable requirements form the California Dept. of Food and Agriculture. The CDFA is limiting total canopy space for microbusinesses to 10,000 square feet. The CDFA is responsible for issuing all cultivation licenses for medical and recreational cannabis and will be working with the BCC to issue licenses for microbusiness.
CA Department of Food and Agriculture: Find Emergency Regulations Here.
To apply for state licensing to engage in cultivation with a microbusiness license you must meet the following criteria from the state:
- Evidence of enrollment with the applicable Regional Water Quality Control Board or State
Water Resources Control Board for water quality protection programs or written verification
from the appropriate Board that enrollment is not necessary.
- Evidence that the applicant has conducted a hazardous materials record search of the
EnviroStor database for the proposed premises
- identification of all power sources for cultivation
activities, including but not limited to: illumination, heating, cooling, and ventilation
- A premises diagram pursuant to section 5006 of this division, that shall also include: All roads and water crossings on the property, proposing to use a diversion from a waterbody, groundwater well, or rain
catchment system as a water source for cultivation, and sources of water used.
- A proposed cultivation plan
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For those who choose to include manufacturing in their microbusiness license they will be limited to a level 1 Type 6 non volatile manufacturing license. Including the Type N infusion designation and the Type P packaging designation. The Type N license is for those infusing products such as edibles, topicals, or any other infused product. The Type P license designation can be likened to a white label producer. They repackage pre manufactured products within their own packaging. The Type P and the Type N cannot manufacture any product and must obtain their product from a licensed distributor if they will not be manufacturing their own product. The Type 6 non volatile manufacturing allows any solvent used in the extraction process that is not a volatile solvent. Nonvolatile solvents include carbon dioxide and ethanol
The state has issued their applications for temporary licenses. A temporary license is a conditional license that allows a business to engage in commercial cannabis activity for a period of 120 days. The Bureau has stated it will only issue a temporary license if the applicant has valid license, permit, or other authorization issued by the local jurisdiction. The state began issuing temporary licenses by January 1st, 2018.