BUILD A DISTRIBUTION BUSINESS IN THE WORLD’S LARGEST CANNABIS MARKET
Cannabis distribution is a rapidly growing California industry that’s ripe with opportunity. A relatively low barrier to entry, compared to other cannabis industries such as dispensaries, attracts many entrepreneurs to consider cannabis distribution.
Compared to other types of cannabis businesses, there’s less to build out, lower overhead, and licenses are somewhat simpler to acquire. Currently, California is the largest cannabis market in the world, with US revenue projections exceeding $41B by 2025. With such a market share, it’s no surprise that cannabis distribution is a growth market for the state.
However, California’s regulatory and licensing process is rigorous, so much so that the California Secretary of State recommends those considering embarking on the distribution license process seek professional, legal assistance.
$7.7B
California Market in 2022
42%
Revenue Growth from 2020-2021
83,607
Cannabis Jobs in California in 2022
How we can help
Business
Strategy
Alignment of goals, resources, and stakeholders to develop a strategy and execution plan for moving forward successfully.
Property Acquisition
Identify and acquire suitable and permittable properties for your cannabis business.
Compliance & Renewals
Maintain compliance with state and local agencies and navigate annual renewals.
How BeGreenLegal Helps Clients Get a Cannabis Distribution License
Although distribution licenses are easier to obtain than those for cultivation or retail, licensing is a complex, involved process.
Prospects are required to secure licenses and permits at the local and state level, and must comply with local zoning ordinances. Additionally, licensees may need to register with the IRS, if their business will have employees. As the California cannabis industry is new, laws and regulations change, seemingly monthly, and it will be your responsibility to stay apprised of any new or changed requirements.
Don’t let this discourage you! Our team at BeGreenLegal has developed a proven process for getting you licensed and on the path to owning a profitable cannabis business.
Read on to learn more about our framework for guiding clients through the distribution licensing process.
Strategize and develop a clear vision plan
Distributors have the exclusive rights to sell to licensed dispensaries, but there’s a lot more to running a distribution business than just delivering cannabis–it requires a full-fledged service-based business model.
We typically see three types of cannabis distributors:
A simple courier who delivers products but doesn’t develop meaningful connections with their retailers or build a brand;
A wholesale brand driver who may choose to niche down or offer a board menu of options. For example: “A distributor of only holistic, organic, high-end cannabis products”;
A vertically-integrated business occupying several links of the supply chain, such as cultivation, retail and manufacturing.
For complete details of what a Cannabis Distributor can, and cannot do, click here for the California Bureau of Cannabis Control’s Distributor fact sheet.
During our initial meeting, you’ll meet with the BeGreenLegal team to discuss your goals and impetus for starting a cannabis business. We’ll ask you about your long-term vision and will ascertain if you have a realistic understanding of the potential challenges. You have to be committed to the customer service and support that’s required to connect cultivation to retail.
At BeGreenLegal, we’ll determine if you have the commitment, capabilities and resources to be successful. If you make it past our strict standards, chances are you’ll succeed.
Next, our team will help you develop realistic goals and an effective game plan that includes:
- Developing a business framework
- Determining a scheduling plan
- Demonstrating financial stability
- Standardizing procedures
- Preparing a work plan
This will serve as a master checklist as you build a profitable business with well-organized, measurable goals.
Creating a vision and securing a team of experts to assist with implementation is just the first step. BeGreenLegal will be at your side as you tackle the next tasks.
“In Order to Be Successful, You Will Likely Have To:
- Develop and train a motivated sales team
- Provide a consistent inventory of respected, well-received products
- Establish a well-connected B2B platform, including digital customer support
- Develop marketing that drives customers to your retail partners.
Acquiring the right property for your facility
Finding the proper location for your distribution base is not the same as leasing a property for a gym or restaurant. Most local jurisdictions have strict measures addressing cannabis businesses; zoning restrictions can be one of the biggest hurdles for potential owners. Securing property that isn’t properly zoned for your cannabis business can be an expensive, time consuming mistake.
While cultivation and retail companies have the most zoning and local restrictions, distribution businesses have some latitude in compliance requirements. Unlike retail, where store location is incredibly important for sales, your distribution business doesn’t have to be located in a high-traffic area, and unlike cultivation, distribution centers do not have indoor-outdoor grow-site requirements and limitations.
With that said, there are still many laws and ordinances with which you will need to comply. Every city and county can limit cannabis development based on zoning or permitting caps. “Green-zones” are also affected by proximity to schools, parks, churches, daycares and drug treatment facilities.
Property Acquisition Process
Getting into the right property is a crucial step for any cannabis operation
Find Suitable Cities & Counties
Determine Permittable Zones
Find a Property
Renovate & Permit
Our team at BeGreenLegal will help identify viable locations, including land parcels and existing buildings through an impartial discovery analysis.
We provide a site analysis of the potential locations, including:
- Topography, if construction is required
- Boundaries for Setbacks
- Walkways
- Trees, Landscaping & Parking to code
Additional location issues to consider include ease of access to utilities, proximity to essential resources, and employee commute time. Lastly, some locations may be subject to an “over concentration” issue should there be too many cannabis businesses in the area you’re considering. BeGreenLegal can advise you on this before you spend valuable time and resources.
Need assistance finding a suitable property for your new distribution business? Get a property search analysis today.
Property Acquisition Process
Getting into the right property is a crucial step for any cannabis operation
- Find Suitable Cities & Counties
- Determine Permittable Zones
- Find a Property
- Renovate & Permit
Navigating the hurdles of local officials
Before submitting an application package to the CBCC, applicants must secure local approvals, licenses, and conditional use permits. Don’t assume that local authorities will be less rigorous than state officials, as local regulations may be more stringent than at the state level. And, as each jurisdiction sets their own application requirements and restrictions, it’s important that you fully understand what will be required in the locations you’re considering for your business.
As each community has its own unique set of policies and procedures for granting local permits, knowledge of and experience with local jurisdictional requirements and processes will save you a large amount of time and money.
You will be asked to provide detailed information, typically including:
Parcel & Property Information, including ownership
Business Ownership and control
Business Plans, including security, premises, personnel, odor and waste plans
Financial: owner’s assets and business forecasts.
Having a trusted advisor such as BeGreenLegal assist you in developing application packages will ensure the best chance of approval at the initial level. Then, your application will be reviewed by city management and staff as well as commissions and committees before it is sent for final approval by the planning commission and/or the city council.
Meetings of planning commissions and city council’s are usually open to the public, and applications on the approval docket can be commented upon by the public, as well as commissioners, staff, and elected officials. A prepared, well-spoken testimony by the applicant, or their representative such as BeGreen legal, is advised, as is knowledge as to any potential local concerns regarding your application.
Be advised you may have to enter into substantial contractual agreements with your host jurisdiction, potentially requiring extensive building upgrades, extreme ongoing monitoring and scrutiny by local officials, and perhaps even limits to your operational plans.
It is imperative to use professionals who have gone through this process on behalf of not only cannabis businesses but also traditional developers as there are several complex steps involved. BeGreenLegal’s staff has tremendous experience on both fronts and will save you time, money and frustration over the course of your application process.
Contact Us Today to Get Started!
Getting a green light from state officials
Multiple agencies will be engaged by the CBCC in the approval of your application, including the Secretary of State and the Department of Justice.
As there are countless ways in which your application could be stalled, flagged for further review, or even denied, it is vital you are diligent in your application development. Displaying a solid business plan, resources, and financial acumen is key.
When applications are denied, we find it’s usually due to disorganized and/or incomplete submittal packages.The biggest challenges we see with those operations that have been denied state licenses is a lackluster set of Standard Operating Procedures (SOPs) from which to draw out the answers to the state’s questionnaires and insufficient premise diagrams and workflow descriptions.
The BCC staff needs to fully understand how your operation will operate within state regulations and you must demonstrate that you can fulfill this responsibility. Working with BeGreenLegal you can be assured that your representative will put together an application package that is complete and professional.
Maintain permits and licenses
All licenses are issued with an agreement that you’ll continuously monitor and meticulously track your inventory, sales, employees, etc.
State officials will regularly inspect your business, and they’ll hold you accountable to the operating procedures you submitted with your application. Our team keeps this in mind when we help you create a winning business strategy. We’ll make sure you don’t overcommit to complicated procedures that you’ll end up regretting later–plus, we’ll keep you notified about changes to laws and compliance issues.
Regulations change often, and sometimes license holders are not informed directly but it’s your responsibility to stay in compliance at all times.
Don’t just deliver, build a brand
Distributors can do more than transport cannabis goods between licensees. In addition, licensees may sell branded merchandise such as clothing or accessories with the name or logo of a state-licensed commercial cannabis business. There are a number of limitations and requirements in this realm and licensee’s will want to ensure they understand the specifics of the laws so they don’t put their license in jeopardy. BeGreenLegal is here to help and advise.
Thanks to a low barrier to entry, there’s an overload of new distributors flooding the market every year, and most of them deliver poor customer service and lack a competitive mindset. This means that it’s easy to stand out with stellar customer service and well-executed branding.
Did You Know?
- Brands created from curated cannabis flowers can be the intellectual property of the distributor. In other words, a licensed distributor may take a cultivator’s raw flower, package it, brand it, market it, and sell it as their own.
- These products can be packaged in jars, bags or pre-rolled (prior to regulatory compliance testing). You can even partner with a manufacturer and turn the flower into extracts, vape cartridges and edibles.
Your next steps
Are you ready to take a step forward and explore opportunities within the cannabis industry?
Start a distribution business to vertically integrate your other cannabis businesses, or use it as an entry point into the marijuana industry. Either way, BeGreenLegal should be your first contact as you embark on this new business venture.
Our discovery packages are designed to help you get started whether you just want solid insights to make more informed decisions or require a more complete analysis to share with your partners.
After participating in our thorough discovery process, our experts will help you identify your best fit in the market based on your goals, assets, skillset and location. We’ll help you determine the next steps and put you on the path towards a fully-licensed, profitable business. Contact us today to get started