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Essential steps to starting a cannabusiness

If you're looking to start a cannabis business in California, there are a multitude of regulations you need to meet before you're good to go. Here is a handy checklist to go over before you get started; be sure to contact CCA to make sure all boxes are checked before opening for business.


Choose your entity type

There are several business types you'll need to choose from before starting your business. Will it be a partnership, an LLC, a corporation? Your entity type will affect how your business is taxed, your personal liability, and more. Also, you'll have to think of a business name. 

Register with the Secretary of State

Sole proprietorships don't need to register with the Secretary of State, but other business entities definitely do, including corporations, LLCs, limited partnerships and limited liability partnerships. General partnerships are not required to register, but may do so if desired.

Register a fictitious business name (if necessary)

Some businesses will choose to operate under a different name other than its legal name. In some cases, it may be a requirement to use a different name in order to obtain business permits and licenses. Check with the county clerk or recorder where the business will be located.

Obtain city and/or county licence or permit

Cannabis businesses will need to secure a city and/or county license before they can apply for a state license. 

Obtain a seller's permit and cannabis tax permit

Register with the California Department of Tax and Fee Administration (CDTFA) for a seller's permit, which is a requirement for those who have a cannabis-related business. Distributors must also register with the CDTFA for a cannabis tax permit, which will allow these businesses to report and pay the two new cannabis taxes.

Obtain state license

Apply for a license with the appropriate agency. Testing labs, distributors, retailers and microbusinesses must apply with the Bureau of Cannabis Control. Cultivators must apply for a licence through the CalCannabis Cultivation Licensing Program, and manufacturers must apply through the Manufactured Cannabis Safety Branch of the California Department of Public Health. 

Satisfy employer responsibilities

If you intend to have employees, you'll have to register your business as an employer and receive a federal Employer Identification Number (EIN) from the IRS. You'll have to learn about (and put into practice) payroll taxes, wage withholding requirements, worker's compensation insurance and unemployment insurance, among other requirements. 

CCA can help

While this list isn't completely exhaustive, it's a good start for those who are interested in starting a cannabis-based business in California. Contact CCA today to help you work through these regulations and requirements — we'll be there every step of the way to make sure you meet and exceed all local and state regulations. 

Monica Beyer