Things You Need To Know About Distribution Licensure

As you likely know, the Medical Adult-Use Cannabis Regulatory Safety Act launched on Jan. 1, officially implementing a whole new set of cannabis laws. If you haven’t applied for a state business license yet, you shouldn’t waste much more time. But if you feel lost on how to get started, know that you’re not alone—and we’re here to help. In this series of posts we’re focusing on important tips and info you need to know prior to applying for a license. The last two posts outlined what you need to know in terms of the cultivation and manufacturing process, while this one will focus on what you need to know for the distribution application procedure.

 

The Bureau of Cannabis Control is overseen by the Department of Consumer Affairs:

The state department in charge of issuing distribution licenses is the Bureau of Cannabis Control (BCC), a branch of the Department of Consumer Affairs. They’re the lead cannabis agency as they oversee and issue licenses to the majority of the supply chain, including: Retail, testing labs and microbusinesses.

 

Distribution is the third part of the cannabis supply chain:

The supply chain goes as follows: Cultivation à Manufacturing à Distribution à Testing à Retail à Microbusiness. The distribution sector of the supply chain is a part of the BCC umbrella, along with retail, testing and microbusinesses. As explained in our previous posts, CalCannabis is a branch of the California Department of Food and Agriculture, which controls all aspects of cultivation. Lastly, the California Department of Public Health has also added a new department called the Manufactured Cannabis Safety Branch, which oversees all things manufacturing.

 

Follow up with the Bureau:

If you’re not into checking the Bureaus website daily, there are still ways to stay in the know. You can sign up for their email list here. They’ll inform you about when a workshop, lecture or information meeting comes to your area. This is also a good way to stay up-to-date on when they add new information, and forms or applications to the site. You can also reach them via email if you have questions at bcc@dca.ca.gov .

 

Temporary distribution license applications are now being accepted:

Thanks to the Business and Professions Code section 26050.1, the BCC is allowed to issue temporary licenses—and they’re officially accepting applications. A temporary cannabis distribution license is a conditional license that allows a business to engage in commercial cannabis activity for a period of 120 days. After that, applicants can request a 90-day extension. The Bureau can only issue a temporary license if the applicant has a valid license, permit, or other authorization issued by the local jurisdiction. You can download the application form here.

 

What’s needed for the distribution application?

Although the Bureau is now accepting temporary and annual applications, keep in mind that if any of the information you provide is wrong (or if any of your info changes after you submit the form), your application will be put on hold—and the holding period, we’ve heard, can be around 90-days. So it’s worth the extra effort to fill it out carefully. Here’s a quick run down of the info you’ll need:

·         Section A: You’ll be asked to identify if you’re applying for an adult-use or medical distribution license.

o   Then you will be asked to identify if you’re applying as a “distributor,”  a company that purchases, sells, and transports cannabis or cannabis products between licensees; OR if you’re applying as a “transport only-distributor,” a company that solely distributes cannabis or cannabis products between licensees.

o   Business Structure: Section A will also ask you to provide and identify their business organizational structure.

o   Business Contact Information: If an individual, the first and last name of the applicant must be provided. If the applicant is a business entity, then the full legal business name is required. The applicant business name must be identical to the name listed on the business-formation documents submitted to the Bureau. The applicant must provide the physical address of the premises, and the mailing address if it is different. The applicant must also provide the business website address, email address and telephone number.

o   Social Security Numbers / Individual Taxpayer Identification Number / Federal Employer Identification Number: Each applicant must provide a valid United States Social Security Number, an Individual Taxpayer Identification Number, or a Federal Employer Identification Number, before an application can be approved.

·         Section B: This portion of the application will ask you to identify the primary contact person of the business. This should be the point person the licensing authorities can contact for information regarding the business. The applicant must provide the primary contact's name, title, telephone number and email address.

·         Section C: You’ll be asked to identify who the owner(s). An owner, according to the Bureau, is defined as:

o   A person with an aggregate ownership interest of twenty percent or more in the person applying for a license or a licensee, unless the interest is solely a security, lien, encumbrance.

o   The CEO of a nonprofit or other entity.

o   A member of a nonprofit’s board of directors.

o   An individual who will be participating in the direction, control, or management of the commercial cannabis business, including:

o   A partner of a commercial cannabis business organized as a partnership;

o   A member of a limited liability company of a commercial cannabis

            business organized as a limited-liability company;

o   An officer or director of a commercial cannabis business organized as a corporation.

·         Section D: This section requires a diagram of the premises, which must be drawn to scale and clearly identifies each item below:

o   Boundaries of the property. If only a portion of the property is used for the cannabis business, the applicant must label the other areas and explain what they’ll be used for

o   Dimensions, entrances and exits.

o   Interior partitions, walls, rooms, windows, doorways, and common or shared entryways.

o   Break rooms, changing facilities and bathrooms, which must be separate from storage areas.

o   What type of cannabis activity that will be conducted in each area

o   The number and location of all cameras.

o   Proof of Local Compliance: Section D will also ask you to submit a copy of a valid license, permit or other authorization from your local jurisdiction with the application. They will follow up with your city government to confirm your business is in compliance with city laws. If there’s no response within 60-days, the Bureau presumes compliance. If the city responds saying the business is not compliant, the Bureau denies licensure and may respond with disciplinary action.

o   Evidence of Legal Right to Occupy: If the applicant owns the property, a copy of title or deed must be provided. If the applicant does not own the property, a statement from the property owner that the applicant has the legal right to occupy the property to perform commercial cannabis activities and a copy of the applicant's rental agreement must be provided.

·         A full list of requirements for the annual distribution application can be found here.  Please note that the application has a non-refundable $1,000 fee. You can download the official application form here.

 

There are vehicle requirements for distributors:

All vehicles must be man-operated motor vehicle. The distributor must obtain a motor carrier permit. You must provide proof of ownership or valid lease of the vehicle. The year, make, model, license plate number and VIN are also required. Oh, and you’ll also have to provide proof of car insurance. In terms of those operating the vehicles, no one under 21-years-old is allowed in the transport vehicle or trailer. The only people allowed to operate said distribution vehicles are licensees or a company employee.