The Cannabis Industry is expanding at an extremely fast rate, which means hundreds or thousands of cannabis licenses are being awarded. And as more states are creating laws that allow businesses to legally produce and sell cannabis products, applying for a cannabis license can get confusing.

What is a cannabis license?

A cannabis license is a legal document issued by the corresponding state department which signifies that a business is legally allowed to deliver, sell, process, or grow cannabis (depending on the type of license) in accordance with the state law from a specified location to the consumers who are allowed to buy them. 

Now, as the cannabis industry is heavily regulated, obtaining a cannabis license in this industry is particularly complicated: The requirements vary from state to state, and not only that, they change depending on what type of cannabis license you want to pursue (delivery, retail, processing, cultivation) and -sometimes- which city or county you’re planning to operate in.

The other thing you have to take into account is that, as this industry is fairly new, the regulations and laws are always changing. So, it’s easy to underestimate how complex and detailed the cannabis licensing process is for businesses. 

But usually, the states only award a few cannabis licenses in the first round, and only after several years, they allow for more businesses to enter the game. What this means -other than a big hurdle of the regulations- is that you must get it right the first time.

Top Five Things to Know About Cannabis Licenses

1. Cannabis licenses can be in competitive (‘limited”) or open (“unlimited”) market states.
2. Cannabis licenses can be awarded at both state and local levels – depending on the state.
3. Application becomes a condition of cannabis licenses.
4. Cannabis license applications can be -and usually are- hundreds of pages long.
5. Cannabis licenses are very profitable and may bring generational wealth.

As the cannabis industry is one of the fastest-growing ones in the entire U.S, managing to obtain an early cannabis license is an incredibly attractive economic decision. You might just be earning millions of dollars in this industry if you play your cards correctly.

However, applications are assessed in great detail. States won’t grant licenses to everybody. Regulators will carefully evaluate all aspects of your business plan, your team, and your ability to create an outstanding case for your cannabis license.

That’s when having an expert team on the matter really helps. You should never begin your cannabis licensing process without the proper guidance of a cannabis consultant. 

However, there are some key steps you can take to improve the chances of you obtaining your cannabis license:

How to Get a Cannabis License

The last few years have been tremendously important for the development of the cannabis industry. And one thing that has been evident is that cannabis license holders that don’t have a solid business plan and funding are unlikely to succeed. 

As we mentioned before, with all the changes that this industry goes through, entrepreneurs have to be extremely well prepared.

You need to comply with your state’s laws and regulations, as well as municipal ordinances while also knowing how to manage your business correctly.

To do this, you can spend a lot of time reading and trying to create a solid plan to -maybe- keep your business afloat. Or you can contact an expert in the field who has already managed to keep businesses in good standing.

You should research your state’s laws in order to see if you’re ready to jump into action, and then start preparing your plan.

Create and raise a budget

There’s a statement that needs to be on your mind and it’s going to shock some people: you can’t create a business without any money.

Now, that’s obviously the case in any industry. But with cannabis, this statement gets even more important. You may be thinking that you shouldn’t be worrying about employees or partners so early down the line. But in reality you may need to bring partners, key employees, and investors in order to get a cannabis license.

And we have some bad news: there’s not one bank or financial institution that’s going to lay a finger on your company once you mention the fact that you’re a cannabis company.

However, there are other ways. Our team can help you build a custom pitch deck, a fundraising suite, and a custom -application ready- business plan in order to start raising money legally and use it towards your cannabis license application.

The budget you need to have to apply for a cannabis license can go anywhere from a couple hundred thousand dollars to, in some cases, at least a million dollars. It is quite steep, but the results are worthwhile and in this industry in which you probably only have one chance at submitting an application, you need to aim high if you want to succeed.

Secure your location

Many states require that cannabis business license applicants already have their location secured for their businesses. That means you need to find a property that meets the licensing requirements in your state, get approval from the landlord and owner (if you’re leasing) to use the property for a cannabis business, and get approval from the municipality where the property is located to use it for cannabis business operations.

Requirements will vary depending on your state and municipality, and you also have to be aware that some municipalities may charge a fee, require special permits, or put additional taxes on cannabis businesses. It’s essential that you have these things in mind when you’re looking for a location in order to apply for your cannabis license.

Contact a professional to write your cannabis license application

The most important part of getting your cannabis license is making the application. You may have everything you need to have in order to obtain the license, but if you don’t know how to properly prepare the cannabis license application, you probably won’t make the cut.

You need to show the application reviewers that you’ve done your due diligence. You need to be honest and very precise.

Bottom-line is, you could be required to provide a lot of information, so don’t rush the process. It takes a lot of time to produce a high-quality application. In fact, some cannabis businesses submit applications that are hundreds or thousands of pages long. This isn’t something you should do mindlessly.

The application process is usually a competition. Your cannabis license application needs to stand out from the rest and show reviewers that your business is ready and able to support the state’s cannabis program better than any other applicant.

Our team has worked with dozens of cannabis companies over the years, from mom-and-pops to major players. From California to Florida, New Jersey to Colorado, and all states in between where some form of cannabis or hemp is legal, we have helped individuals achieve their business goals. As a result, today we are well versed in the cannabis laws of every state in America.

We have put together a short survey for new clients to better help us gain an understanding of your company and business goals.

If you decide to move through this process by your own, we also offer our cannabis mastermind course, so that you can get a deeper understanding of how the cannabis industry works.

How To Get A Cannabis License in South Dakota

Updated September, 2021

South Dakota has recently gone one step closer to legalizing medical marijuana. On September 13, 2021, the legislative panel in charge of establishing the rules that would govern South Dakota’s new medical marijuana legislation approved a number of proposed regulations and returned others for further study, in a critical administrative step toward the new statewide program’s launch.

The South Dakota Legislature’s Rules Review Committee gave “the green light to most of the 124 pages of proposed regulations for medical cannabis in South Dakota from the state Department of Health” on Monday.

Other proposed measures, on the other hand, were rejected by the committee. According to the Associated Press, the panel members rejected one proposal “that would have limited the amount of high-potency marijuana that patients could possess, required medical practitioners to write a recommendation for patients who wanted to grow more than three cannabis plants, and defined a list of conditions that would qualify for a medical marijuana recommendation.”

Medical Marijuana Program

On Election Day 2020, voters passed Measure 26, clearing the path for South Dakota to establish a medical marijuana program.

Measure 26 allows for a variety of medical cannabis licenses.

• Medical Cultivation license – an entity that purchases, owns, cultivates, distributes, transfers, transports, furnishes, or sells cannabis and related materials to a medical cannabis facility in accordance with the provisions of the Act.
• Medical Dispensary license – a person or business registered with the department under the Act who obtains, keeps, stores, distributes, transmits, transports, sells, furnishes, or dispenses cannabis, cannabis products, paraphernalia, or associated supplies to cardholders
• Medical Manufacturing license – an entity that gets, owns, manufactures, distributes, transmits, transports, furnishes, or sells cannabis goods to a medical cannabis dispensary in compliance with the act

Recreational Marijuana Program

Measure 26 also established a recreational marijuana program. The Department of Revenue is in charge of regulating and licensing businesses in the state that cultivate, produce, test, transport, deliver, and sell marijuana. The department is in charge of accepting and issuing the following licenses:

• Cultivator/Manufacturer.
• Testing.
• Distributors/Transport.
• Retail

Furthermore, while determining the proper number of licenses to issue, the department must consider the following factors:

• They must issue enough licenses to significantly diminish illegal marijuana cultivation and sale throughout the state; and
• They must, if necessary, limit the number of licenses given in order to avoid an excessive concentration of licenses in any one municipality.

Local governments may adopt rules or restrictions limiting the time, place, method, and number of licenses operating within their jurisdiction, including outright prohibition of marijuana businesses.

However, there’s no clear date when the recreational program will be available, as there is a lawsuit pending.

Gov. Kristi Noem has led the battle against legal marijuana, sponsoring a lawsuit specifically targeting recreational cannabis. The case is currently being considered by the state’s Supreme Court.

South Dakota Cannabis License Applications

On September 13, 2021 the Legislature’s Interim Rules Review Committee approved the Department of Health’s proposed administrative rules to establish a medical cannabis program in South Dakota. The legislature approved 143 of 149 proposed rules.

According to the newest administrative rules, you will need to prepare the following:

• Written procedures for implementing corrective action and preventive action, as described in the administrative rules.
• Proper lighting, sufficient for observers to see and cameras to record any activity within ten feet of the gate or entry. A motion detection lightning system may be employed to light required areas in low-light conditions.
• Commercial grade locks intended for facilities requiring high levels of physical security, are required on all perimeter entry doors. All windows must be in good condition and lockable.
• All medical cannabis establishment must permanently fix security cameras, at each exterior door and gate, at each door separating non-public areas of a dispensary from areas in which sales to patients and designated caregivers are made and in sufficient number to allow the viewing, in its entirety, of any area where cannabis plants, products or waste are cultivated, manufactured, stored, destroyed, or prepared for transfer, sale, or testing. The system must meet a series of requirements established in the administrative rules.
• A medical cannabis establishment must maintain an alarm system.
• All agents from the establishment must have identification badges.
• All agents must receive at minimum two hours of training in record-keeping.
• The storage of a medical cannabis establishment must comply with specific requirements established in the administrative rules.

Further, each type of license has their own set of specific requirements that you must comply with.

It’s a good idea to employ a consulting business to help you get licensure. To apply for a license, it is not as simple as paying a fee and describing your business plans. The application can take hundreds of pages. The operation is generally lengthy and complex.

You may also encounter legal and financial jargon that you are unfamiliar with. Working with a firm that has a proven track record of obtaining cannabis licenses can help you stand out.

RELATED: Ohio Marijuana Dispensary License Application

Securing Capital

Cannabis laws differ from state to state, but one thing is constant across borders: cannabis is illegal at the federal level. It is classed as a Schedule I substance and is a prohibited drug. This means that traditional lending institutions, such as banks, are not allowed to work with you. This will continue until the federal government decriminalizes or legalizes marijuana. Hemp was removed from the Schedule I Substances list with the passing of The Farm Bill in 2018.

So, in the meanwhile, your options are private investors and bootstrapping. Given that dispensaries cost approximately $150,000 to run on the low end and $2 million on the high end, few cannabis entrepreneurs are bootstrapping. Private investors are probably your best bet.

Staffing Cannabis

As a dispensary owner, one of the most essential drivers for a positive client experience is correctly staffing your establishment. Keep in mind that South Dakota is legalizing two cannabis programs at the same time. As a result, you will have many clients who have never tried cannabis before. Your staff will be responsible for educating customers and recommending goods to both new and seasoned cannabis users. When recruiting budtenders, make sure you have a robust training program in place.

Sourcing Product

Finding suppliers is one of the most important tasks in starting a dispensary in South Dakota. Your items are what will attract customers to you; you will not prosper if you offer substandard quality.

Compliance Considerations

Municipal governments and jurisdictions will need to develop their own zoning rules for dispensaries and growing operations and you must comply with them.

Further, as mentioned above, in South Dakota dispensaries need to invest in high-quality cameras, inventory management, quality control, health and safety measures, cash controls, and more.

RELATED: How to open a dispensary in Ohio