How to Get a License to Sell CBD Products: Navigating Legal Requirements

When Colorado legalized recreational weed in 2012, a new wave swept all over North America, and now, the entirety of Canada and multiple states in the United States allow cannabis usage. 

After the legalization, a lot of businesses and cannabis dispensaries have sprung up very fast. In this article, we will discuss the Legality and licensing procedure to start a cannabis dispensary. Learn, How to get the license to sell CBD products.

The Legality

The 2018 farm bill removed hemp from the CSA (Controlled Substances Act). This change allowed for the legal farming and shipping of weed. To date, the FDA has approved only one product that has CBD as a key ingredient. That is Epidiolex.

According to this research conducted in 2021, the North American cannabis market is expected to grow bigger than $61.2 billion by 2027. People with chronic pain, depression, seizures, and joint pain are the biggest consumers of CBD products.

Even though the market demand is pretty big, the FDA repeatedly refuses to review and approve of hemp and marijuana-derived products. This is where state laws come in. Many states abide by laws provided by the FDCA, but not word to word. This has created a weird amalgamation of contradicting state law and federal law.

Outline of Federal and State Regulations Surrounding License to Sell CBD Products

CBD derived from hemp is legal in most states because it contains trace amounts of THC. However, the cannabidiol extracted from marijuana plants is strictly forbidden in most states. Any dispensary is bound by federal law to keep THC amounts less than 0.3%.

Outline of Federal and State Regulations Surrounding

In some states, there are limits on the volume of THC you can carry. Edibles concentrates, and dabs often contain enough THC to make you high (because not all of them are for medicinal purposes). All the while, other states don’t bother with so much regulation. For example, California requires the packaging to be child-resistant and opaque. Alaska abides by the same rule.

But in New York, CBD isn’t allowed for use in food and beverages by the FDA.

Whether you are a weed enthusiast or an entrepreneur, in order to start selling weed, you would first need to obtain a standard license. Let’s learn about the process.

The Licensing Process

With any marketing license, you’d need to have your credentials in order. Cannabis laws vary from state to state. Remember that cannabis only became legal in most of the states after the 2018 farm bill. The canna industry is still considered high risk, yet entrepreneurs dip their toes into it. And this is the typical roadmap they follow in order to get by–

  • Research: Go to the official website of your province. They usually have checklists and the process of applying for opening a dispensary. Raise the initial capital you’re going to invest because you’ll have to spend a lot on additional fees. Consult a lawyer if you can and draft a solid business plan.
  • Licensing Costs: Study deeply alongside your attorney to get as much info as you can on licensing. Look up the “must haves” and the “red flags”. Avoid anything that would get you instantly dismissed. 
  • Obtain a Physical Store: Many states try to limit the licensing procedure for the growing number of dispensaries. Others only accept new stores under specific rules. A quick search should reveal whether your state’s cannabis regulatory agencies even approve of a retail license. Once you’ve made sure you are allowed to do business in an area, try to find the zoning code. The zoning code will guide you to areas safe for the commercialization of weed. And the last step is to get your landlord on the same page as you.
  • Put Together Your Documents: Business registration documents, education, qualifications, proof of residency, and criminal background checks; make sure everything is clear before applying.
  • Complete All the Application Forms: Identify all the do’s and don’ts. Not meeting the state’s specific requirements might result in disapproval or even conviction. Be open and honest about your business. Complete all the forms with the documents you’ve gathered, such as your tax number or anything related to your business infrastructure.
  • Financing: The primary source of funding for small businesses usually comes from banks. But banks are never going to lend you money for your cannabis business. You might need to put in the work and make some personal investments. Or, you can bring in investors or sponsors. And remember, since you are a dispensary, you might need to pay more professional fees than most businesses. This also includes advertising and marketing expenses.

State-Specific Considerations

CBD sales regulations aren’t similar in every state. We can gain insight by looking at a few examples:

State-Specific Considerations

California

California is pretty liberal with CBD licensing since they’ve had legal cannabis for more than 25 years. Retailers don’t even need to have an authorized license to sell cannabis products.

The only requirement, however, is to buy raw materials from state-licensed farmers. California Department of Public Health hands out the license. There are a few limitations, though–

  • “Inhalers” or vapes containing CBD are strictly forbidden.
  • All items must be shelf-stable and pre-packaged.
  • The products that you sell must be approved by the IHEO (Industrial Hemp Enrollment and Oversight).

New York

The Empire state requires companies to have a hemp retail license through the New York Business Express website. You can’t apply for the license without the following:

  • Accurate description of the hemp products you will sell.
  • Information on the manufacturer and distributor.
  • Certificate from the New York Department of Taxation and Finance to collect sales tax.
  • Attestation of intent to comply with NYS hemp program rules.
  • $300 hemp retail license fee for each location or $25 per month (not more than 3 months) for a temporary permit.

Texas

The Department of State Health Services regulates cannabis laws in Texas. Stores can only sell out-of-state products. No homegrown hemp products are permitted.

Even that doesn’t stop retailers from getting into business, as most people support cannabis legalization in Texas. So, there are two types of permits:

DSHS Hemp Retail Registration

Only the retailers who sell items coming from outside the state without any alterations can register with the DSHS. The registration fee is $155 per year per location.

DSHS Consumable Hemp Product License

Any retailer that repackages wholesale cannabis items needs this license. Obtaining this is more tiresome than regular licenses. To attain this, you will need:

  • A completed FBI authorization form
  • Your landlord’s letter describing intricate details of your enterprise
  • A GIS and a legal description of the property for the exact location of the business
  • Fingerprints submitted to the public safety department in Texas
  • A license fee of $258 per year

Maintaining Your License

Once you’ve been permitted to sell CBD items, it is important to keep up to date with the ever-changing laws of cannabis regulation so that you can avoid legal issues.

  • License Renewal: Begin renewal at least a month before expiration. Depending on state laws and the type of permit you want, there will be different requirements. So be prepared.
  • Ongoing Updates: To keep your CBD license valid, you will have to stay compliant with state laws. Check your state websites frequently, buy newsletters related to this topic, and take part in relevant seminars.
  • Marketing Strategies: A good marketing strategy aims to attain brand recognition. Invest in a marketing team if you can. Try Integrating shipping reductions or custom packaging in your business structure. This boosts customer engagement.
  • Ensure Product Quality: show your customers that the ingredients and the method you’re using are safe. Upload lab testing results on your website. Set a high standard for your products. This will help you stand out from competitors and build customer trust.

FAQs:

What are the common reasons for the denial of a CBD license?

There are a myriad of reasons your CBD permit might get denied. Tax evasion, failure to meet eligibility requirements, inaccurate documents, having a criminal record, lack of training or education, misinformation regarding the product(s), etc., are widespread.

How much does it cost to obtain a license to sell CBD products?

It depends on the state and the size you are going to be selling. Click here to get a detailed outline.

How long does the licensing process take?

Depending on the state, the licensing process might take a few weeks to several months. For example, in Florida, you’ll need 10 days, and they will send you an email to let you know that you have been approved. In Ohio, the application process is not available all year round. It has a specific timeframe. Anyone over 21 years old can enjoy recreational marijuana in Ohio.

Can I sell CBD products online with the same license?

The short answer is yes. A standard business license will do if you are trying to sell products online. Additionally, you will need to incorporate age-detection tools into your website.

Conclusion

If you ship CBD items nationally, it’s best to adhere to state laws. Compliance is in your best interest. And when you are sourcing CBD, avoid companies that use marijuana-derived components or hemp seeds. High-quality CBD will have less than 0.3% THC. Check the pricing and learn how to read a COA. All in all, understanding the rules and regulations surrounding hemp products will help you plan a successful business model.

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Nazmul Nahid

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