With the demand for cannabis continuing to skyrocket, cultivators continue to ramp up their supply chains while other businesses eye an entry into cannabis growth-related ventures. The legalization of cannabis in countries like Canada has spurred heightened needs for increased productivity in order to meet the projected demands of consumers.
For all businesses who either operate or are looking to delve into the cannabis sector, obtaining a cultivation license remains one of the most important yet difficult steps in order to legally grow the plant for commercial use.
By planning in advance and understanding the different aspects of applying for a license to grow, this will help business owners avoid any potential pitfalls and ensure that their application process goes as smoothly as possible.
As cannabis is still federally criminalized in the U.S., regulations are often murky at best. While 30 states have legalized medicinal cannabis and another nine have completely removed prohibition for recreational use, developments at the federal level can run counter to regulation by states. Not only that, but each state has different requirements and compliance rules that owners need to be aware of.
It is important to note that before filing with the state, license seekers must first file an application with the county in which they intend to operate in. This can be a difficult proposition for those targeting regions that have conservative or opposing views on cannabis in general.
Some states conduct hearings in which local communities have the floor to present their concerns or support of a controversial business being developed in their neighborhoods. Business documentation regarding financial information as well as for vetting purposes will also need to be filed, and cannabis businesses are heavily scrutinized to determine if they will have a negative impact on the environment through their activities.
Securing the property and facilities for cultivation will need to be completed as well along with the property owner’s understanding that it will be used for cannabis purposes. These grounds must also adhere to various zoning laws, which restrict cannabis businesses from operating in certain spheres. There are also individual laws to ensure a certain amount of distance from public spaces like schools and parks.
States have differing filing periods, deadlines, and documentation requirements, so it is important to understand the steps needed to apply for a particular state. However, that can also be a benefit for those who fail to receive a license in one state as they can simply prepare for another attempt in a different state.
State regulations on vertical integration is another matter that must be understood. Massachusetts, Maine, New Jersey, New Hampshire, and New Mexico are among the states that require license holders to be vertically integrated, which means to own and operate all supply chains such as extraction, research, cultivation, and distribution of cannabis supply.
Some states like Colorado require sellers to cultivate at least 70 percent of cannabis that they sell, while others like Washington issue a trio of separate licenses including dispensary, producer, and cultivator. Still others offer one of these three available licenses, such as Arizona. Finally, there are other states who allow for vertically integrated businesses, but don’t require it.
The original intent of vertical integration was to discourage retailers like dispensaries from purchasing low quality and cheaper cannabis from third party sellers and even the black market, but this effectively eliminates many business owners who lack the resources to finance and oversee a vertically integrated cannabis operation.
A cannabis business can follow all the right steps, but without talented and knowledgeable cannabis industry experts, a venture could fall apart by the seams. The team behind the license application will be on the key considerations when a decision is ultimately handed down.
Having a highly capable cultivation team can be a make it or break it factor, as these experienced growers will be the key to growing, maintaining, and harvesting high quality cannabis to meet the demands of consumers. Cultivators should have verifiable commercial growth experiences on a large scale to ensure that they are the right person for the task.
It is best that every team member have at least a fundamental knowledge of cannabis cultivation, as there may be times when people will have to wear different hats.
Of course, an expert on cannabis permit affairs will be another very important need to address, as the process is very expensive and can be difficult to navigate. It is also essential to have a legal expert in order to comply with all regulations and practices, and they will conduct a final review of application documents to ensure a proper understanding of all legal matters.
Having these skilled and experienced professionals will make a compelling case for how a business will adequately address all facets of a successful cannabis brand supported by industry experts who can paint a clear picture on all business matters.
Developing a business plan
Applying for a license is similar to applying for a new business in that a cannabis business must be able to present a strong revenue plan and in-depth documentation to demonstrate the proper planning and accordance with state regulations. This plan consists of everything from structure, ownership, operating procedures, inventory control, and environmental sustainability among many others.
An effective business plan should be able to display thorough research and understanding of how a product will target a market need in a responsible manner. This plan should be able to convince the board that all business facilities will be operated in a transparent and safe manner in regards to corporate practices as well as being able to build a harmonious relationship with the community.
The rising demand for cannabis cultivation has resulted in the successful development of large scale cultivators who successfully navigated the waters to obtain their licenses. FSD Pharma (CNSX: HUGE, OTCMKTS: FSDDF) is one such cultivation facility in Canada that is poised to become the largest hydroponics cannabis cultivator in the world.
HUGE is a Health Canada ACMPR-licensed producer that will incorporate multiple cannabis ventures for increased operational efficiency and transparency while complying to regulations. They will play a large role in ensuring that the cannabis supply in Canada can meet the demands of the legal cannabis market.
While cannabis business opportunities continue to attract interest, applying for a license is anything but a walk in the park. It involves careful adherence to local and state regulations, and requires a business to disclose documentation to ensure that they will operate in a responsible and environmentally friendly manner that can also establish positive relationships with the local community.
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