Over the past decade, cannabis manufacturing has emerged as an important and crucial element of the cannabis industry as consumers shift from raw flower and pre-rolls to more sophisticated products like edibles, vape cartridges, tinctures, ointments, lotions, hash, and rosin.
A manufacturing operation’s propensity to ignite or explode if solvents are handled incorrectly makes it harder to secure approval for it. Local building and fire inspectors, in particular, enforce tight guidelines for building design and equipment installation.
What Does A Manufacturing License Allow?
According to statute and regulation, a licensee with a manufacturing license may compound marijuana to produce marijuana products, marijuana concentrates, or marijuana extracts, as well as package, repackage, label, or relabel marijuana goods.
Can A Manufacturer Have Other Marijuana Licenses?
Yes. However, a single licensee is only permitted to hold a maximum of two licenses across several categories. This is an effort by the government to restrict big businesses from taking over the growing, delivery, and retail sides of the cannabis industry. Additionally, if you manufacture cannabis, you may own the following licenses:
- A cultivator’s license
- A dispensary license
How Many Types Of Processing Licenses Are There?
There are 2 types of processing licenses:
You can grow all kinds of cannabis if you have a license for micro-processing. Cannabis, however, cannot be grown synthetically, such as through recombinant bacteria or chemical reactions. You are only allowed to keep 600 kg, or its equivalent, of dried cannabis in your possession annually. If the only cannabis you possess was cultivated on your own property with a micro-cultivation permit, then this rule does not apply to you.
Standard Processing Licence
Any type of cannabis may be produced with a standard processing permit, and there are no restrictions on cannabis possession.
Can You Sell With A Processing License?
No. Unfortunately, there are restrictions on what you can sell.
What Must Your Application Include?
Your application must include the following in addition to meeting the requirements for a social equity applicant:
- A detailed operational plan
- A business plan; and
- A detailed diversity plan.
Is It Free To Apply?
No, the standard license application fee is $5,000, and a micro license application fee is $1,000.
Definition Of A Standard License And A Micro License
The ability to establish a business to cultivate, process, or distribute cannabis and cannabis-related goods in the United States is provided by both standard and micro licenses. The amount of cannabis that a business can cultivate or process is restricted by law, and micro licenses are meant for smaller businesses. Similarly, small dispensaries may start delivering cannabis and cannabis-related products to patients and customers.
In addition to the requirements listed here, manufacturers are subject to the general licensee requirements:
- Processor licenses are tier-based on the volume of concentrate produced each month.
- Businesses classified as Tier 1 manufacturers are those that do not produce concentrate but instead engage in other permissible manufacturing-related activities.
- Processors are allowed to buy marijuana from businesses with licenses and sell the goods they create to other businesses with licenses.
- Manufacturers are permitted to transport their own goods between authorized sites.
- Manufacturers are not permitted to sell directly to customers for medical or adult usage. Only authorized dispensaries are allowed to sell to customers.
Additional Application Requirements
- Licensee must meet all general license application requirements
- Applications must be submitted through the authorized portals.
- New manufacturers are free to begin at any level they choose, but they can only move up or down at renewal.
- All marijuana business applicants must prove they are situated in a region where their operation is permitted.
- Applications must pay a processing fee of 20% of the license payments, which is non-refundable no matter what the outcome of the application is.
Costs To Start A Cannabis Manufacturing Business
You can use the basic categories of costs for a manufacturing marijuana license to determine whether this is the right business venture for you:
- State cannabis license fee $1,000 (may vary)
- State cannabis annual fees can vary between $1,000 – $75,000
- Land Use Permits and Business Licenses may vary between $5,000 – $30,000
- Environmental assessment – $0 – $20,000
- Building Permits – $500 – $10,000
You will require the following items depending on your license type:
- Business Entity Formation
- Business & Operations Plan
- Background Check
- Site/Facilities Plans
- Standard Operating Procedures
- Closed-Loop System Certification Security Plan
- Odor Control Plan
- Building Permit
- Land Use Permit
- Business License
- Seller’s Permit Bond