Overview of licensing types

A broad range of license types play an important role in a functioning cannabis market. As states and municipalities continue to implement medical and adult-use cannabis policies, the availability and accessibility of licenses will greatly facilitate the transition from an illicit to an above-ground market and ensure opportunities for a wide array of individuals, businesses, and communities. 

Below are examples of the types of cannabis licenses that should be made available, their function in the market, and an overview of their economic impact.

Retailer/dispensary

Retailer/Dispensary are the consumer-facing businesses of the industry that sell cannabis and cannabis products directly to consumers. The extent that retailers are free to conduct delivery, run promotions, and advertise their products is subject to the individual state and local laws for which the business resides in.

Retail non-storefront/delivery

Retail Non-Storefront/Delivery provides for operators to sell cannabis and cannabis products to consumers via delivery, without a consumer-facing retail store. Non-storefront delivery licensees are subjected to the same standards and regulations as traditional retailers; however, they do not allow consumer access or purchases on site.

Cultivation

Cultivation authorizes a licensee to grow cannabis for commercial purposes. Cultivators engage in the growing, trimming, drying, and curing of the cannabis plant. Cannabis can be grown indoors, outdoors, or in a greenhouse, with indoor cultivation being the most common. Some states break down their cultivation licenses by size (specialty, small, medium, large) and type (indoor, outdoor, mixed-light etc.), whereas some states have one all-encompassing cultivation license. Offering a wide range of cultivation licenses promotes a diverse community of cultivators and helps ensure that growers have legitimate access to the legal market.

Distribution

Distribution certifies the holder to transport cannabis and cannabis products between licensees along the supply chain, from cultivation to the final point-of-sale. The scope of a distribution license varies from state to state. Some states allow distributors to facilitate cannabis testing and enforce packaging and labeling compliance, whereas other states only allow distributors to serve as merely a transportation service.

Manufacturing/processing

Manufacturing/Processing–Cannabis manufacturers take the flower and trimmings of the cannabis plant and manufacture them into finished products like cannabis oils, edibles, and concentrates. Manufacturers are also responsible for packaging and labeling cannabis products in accordance with their state’s laws. Note: “Manufacturers” and “processors” are often used interchangeably and the verbiage depends on the individual state.

Laboratory testing

Laboratory Testing license grants a facility to test cannabis and cannabis products for a variety of substances, including cannabinoids, pesticides, and residual solvents. The purpose of cannabis laboratory testing is to ensure that all cannabis products meet state safety and public health requirements,  which enables businesses to foster a sense of transparency and trust with their consumers. There is a great deal of variance in testing requirements among states with legal cannabis, and there is a great need for standardization.

Microbusiness

Microbusiness validates business owners to vertically integrate. A single microbusiness may engage in every step of the process, from cultivation to the final point of sale, or a microbusiness may only participate in a few processes, such as cultivation, manufacturing, and distribution.

Event organizer license

Event Organizer License allows an individual or a company to host cannabis events, typically with onsite consumption and sales. Examples of cannabis events include music festivals, trade shows, and educational forums.

Social consumption

Social Consumption  provides for the onsite consumption of cannabis at a licensed facility. Consumption lounges are an access issue, and many states currently deny medical and adult-use consumers a safe place to legally consume cannabis. Designated spaces for consumption offer a solution for individuals who face the dilemma of being prohibited by their landlord to consume in their respective dwelling and not being able to consume in public or in a vehicle. This is especially pertinent for those who live in federally subsidized public housing who face eviction if they are caught with cannabis. As long as cannabis is still considered a Schedule 1 drug at the federal level, social consumption lounges provide an interim solution for those who are unable to consume their legally-purchased cannabis without risking eviction or a possible citation.

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