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How to Open and Manage a Cannabis Dispensary in California

Since the early days of legalization, California has been a pioneer in the cannabis industry. Today, the California cannabis market is one of the largest and home to a wide range of successful entrepreneurs and smart consumers. However, as consumer behavior changes rapidly, most regular cannabis consumers in California prefer to order their cannabis products online, with over 50% of consumers purchasing cannabis exclusively through delivery.

If you want to open a dispensary in California or start a cannabis delivery business, one of your main sources of information will be the Bureau of Cannabis Control. Established as the state regulatory body for commercial medical and recreational cannabis, the government agency is responsible for administering California cannabis dispensary regulations.

California Dispensary Regulations

Not only should you be familiar with how to obtain a license to sell marijuana in California, but you should also be familiar with Top Dispensary Regulations and Cannabis Lawslike:

  • Purchasing, transporting and using cannabis is only permitted for people verified to be over 21 years old.
  • There are two types of cannabis retail sales permitted in California: retail in-store and online for pickup or delivery.
  • Dispensaries can sell up to 28.5 grams of cannabis and 6 cannabis plants (immature) per customer.

Other regulatory details, such as tax rate, reporting requirements and more, are imperative to your dispensary’s ability to stay in business.

Keep reading to learn more about how to start a dispensary in California or grow an e-commerce cannabis business, including a summary of licensing procedures, what to look for in a cannabis point-of-sale system, and more.

How to Open a Dispensary in California

Most would-be dispensary owners spend at least 6-12 months preparing to open and launch their cannabis retail business. This includes obtaining a license, having their business plan in place, and developing strategies for effective compliance. Long before you welcome your first customers, you should expect to invest your time, effort, and money in setting yourself up for success.

A) Research your city and county’s processes

Be aware that before you can receive a California dispensary license, you will need to obtain approval from the local jurisdiction (city/town/county) in which your dispensary will be located. There are discrepancies between various jurisdictions, which makes careful research vitally important.

B) Apply for one or more cannabis retail licenses in California

You will then choose one of two types of dispensary licenses in California, with applications being accepted on a rolling basis.

  • Adult Retail (License A): allows the commercial sale of marijuana for recreational purposes
  • Medicinal Retail (M-License): Allows the commercial sale of medical marijuana

Each dispensary location must have its own license, although only one dispensary can hold both an A license and an M license.

CA dispensary licenses are further categorized by type of retail business:

  • A retailer (type 10) that conducts retail sales from a storefront, including on-site and delivery sales
  • A retailer (Type 9) that does not have a storefront and only provides delivery (from a licensed establishment not open to the public)
  • A micro business (Type 12) that engages in three of the following four activities: Retail, Cultivation on land less than 10,000 square feet, Distribution, or Manufacturing.
  • Other types of CA dispensary licenses include those for distributors, transport-only distributors, test labs, and event organizers.

Determination how much does it cost to open a dispensary in California will largely depend on the type, scope and size of your business.

C) Develop a business plan and prepare for day-to-day operations, marketing, etc.

With a dispensary license in hand, you’ll be ready to take the next step in launching your business: planning day-to-day operations, implementing compliance measures, developing marketing strategies, and more.

You should remember that California has measures in place to promote social equality in dispensary ownership and employment opportunities. If you qualify for relevant program measures, consider applying for a grant or other benefits.

How to Run a Dispensary Business in California

Your job isn’t done once you’ve received an approved license. At this point, your next steps can determine whether your dispensary is successful or not. Here are some key tips for opening and operating a CA dispensary.

1. Understand state compliance

There are strict requirements for dispensary reporting via METRC, security, advertising and even opening hours. Violating any of these rules can subject your dispensary to steep fines or even closure. Every aspect of your business plan should be created with compliance in mind. In addition, all dispensary staff must be trained in existing and future regulations.

For example, some of the California state cannabis laws your dispensary will need to follow include:

  • Verification of the age and identity documents of all customers
  • Application of current purchase limits
  • Implement cannabis taxes, where appropriate
  • Adhere to reporting track and trace requirements

2. Prioritize inventory management

Per California cannabis regulations, dispensaries must perform a full inventory reconciliation every 14 days. Investing in a high-quality inventory management and cannabis point-of-sale system will simplify this task and reduce the risk of human error. Ideally, your POS system should provide a full report of available inventory, along with the ability to adjust, sync, and report all data as needed.

The Cova Cannabis Inventory Management System does just that, and also offers effortless integration with the state’s CCTT-Metrc system. Since our system marks all inventory in accordance with Metrc, reporting is fully automated.

3. Use a cannabis POS system with 100% uptime

Track and trace reports are part of the core regulations for CA dispensaries, outlining how state regulators monitor and trace all cannabis plants, products, and sales to consumers. In California, the officially selected tracking system is Metrc. Retailers must submit reports daily, providing accurate data on the day’s sales, returns and disposals.

As such, your cannabis retail POS system should provide full compliance functionality and Metrc integration. The best dispensary POS systems take an innovative approach to automating as many compliance-related features as possible. For example, Cova POS software provides automatic features such as:

  • Purchase limit calculations and app alerts
  • Limitation of sales during legal opening hours
  • Identity Verification
  • 100% uptime and real-time reporting
  • CA-compliant receipts and other printed documents
  • Tax return

4. Choose your dispensary equipment

Avoid limiting the potential of your selected POS system by ensuring that you select dispensary hardware that is fully compatible with the software. Your dispensary will need basic items such as screens, tablets, scales, drawers and scanners, so invest in quality products that deliver on performance.

5. Choose e-commerce and delivery software

Cannabis delivery in California and online ordering is permitted for retail storefronts and delivery retailers only. It’s a smart way to keep up with the competition, but offering these services requires some preparation. Consider all the pros and cons before deciding how to set up a E-commerce site and choice of a delivery solution. Seamless integration with your cannabis POS system is crucial – you should also select software equipped with the data collection, documentation and reporting features needed for effortless compliance.

6. Stand out from the crowd and understand your customer

Of course, future business owners should never underestimate the power of distinguishing themselves from the competition and getting to know their customers. The CA cannabis consumer tends to be extremely knowledgeable, so tailor your branding, products and services accordingly.

Use a data-driven cannabis retail POS system like Cova to analyze key performance points, like product top sellers, high traffic times, etc. With this information, you will be able to take action that will allow you to stay ahead of competing dispensaries and secure loyal customers.

Partner with Cova to grow your California dispensary

The California cannabis market can provide many opportunities for future dispensary owners, but proper preparation and a successful launch are crucial. If you want to start your own dispensary in California or launch a cannabis e-commerce and delivery business, our suite of cannabis technology software solutions can be an exceptional asset to your business.

For more information on how our software serves to the unique needs of growth-minded dispensary owners, request your free cannabis POS software demo today.


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