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Are you wondering how to open a cannabis dispensary in California? This page will keep you updated on the latest news and information about opening a cannabis business in California. This includes helpful insights into what is to come next for the state.
Both medical and recreational marijuana users are now legal in the Golden State. After the passage of the Compassionate Use Act (Proposition 215) in 1996, California became the first state to legalize the use of cannabis for medical purposes. Recreational use was legalized through the approval of the Adult Use of Marijuana Act (Proposition 64) by voters in 2016.
California’s cannabis legislation has seen several notable updates. Senate Bill 51, which aimed at extending provisional licenses for social equity operators until January 1, 2031, was approved by Governor Gavin Newsom, supporting operators in cities such as Los Angeles and San Diego. However, the governor vetoed Assembly Bill 374, which would have allowed marijuana retailers to operate on-site kitchens and host events, and Assembly Bill 1207, which introduced strict new product labeling and packaging restrictions. On September 30th, 2024, Governor Newsom signed Assembly Bill 1775, legalizing cannabis cafes that can serve non-cannabis food, beverages, and sell tickets for live performances, with the law taking effect on January 1st, 2025.
On March 4th, 2025, California officials announced $18.4 million in cannabis tax-funded grants to support equity programs and reduce barriers to entry in the industry. Provided through the GO-Biz Cannabis Equity Grants Program, the funds will help local jurisdictions assist applicants and licensees with technical support, regulatory compliance, and securing startup capital.
On June 2nd, the California State Assembly passed Assembly Bill 564, which would maintain the state’s cannabis excise tax at 15%, blocking a scheduled increase to 19% set for July 1st, 2025. The bill aims to support legal cannabis businesses by avoiding additional financial strain. The bill must still pass the Senate and be signed by the Governor to become law.
These updates reflect ongoing efforts and challenges in California’s cannabis industry as lawmakers and stakeholders navigate complex regulations.
It is anticipated that the value of sales of legal marijuana for recreational use in California will rise to 6.59 billion U.S. dollars by 2025, an increase from the figure of 2.69 billion U.S. dollars in 2016. The most populous state in the United States, California also had the largest cannabis market in 2018, with a total value of 5.6 billion U.S. dollars, including both the illicit and legal markets.
Although marijuana dispensaries are permitted at the state level in California, local governments can choose whether to allow them in their communities. In some areas, it is strictly forbidden for any business to engage in the sale of cannabis. Check with the local authorities to ensure that it is not against the law to operate a marijuana dispensary in your community before you take any action toward opening one.
While 44% of jurisdictions in the state permit some form of cannabis enterprise, 56% do not allow any form of cannabis enterprise. In addition, 61% do not permit any form of retail cannabis enterprise.
Discover which types of cannabis companies are legal in your area here.
The Compassionate Use Act, also known as Proposition 215, was approved by voters in California in 1996. Patients and their caregivers were granted permission under Proposition 215 to possess and cultivate cannabis for medical purposes. It was the first ballot initiative in the history of the United States to legalize medical marijuana at the state level. The mandate and rollout of Proposition 215 in 2003 were clarified thanks to Senate Bill 420, which is notable for its number.
Check out this page for more information about California’s medicinal marijuana program, including how to apply and the list of qualifying conditions. As of the end of the fiscal year 2022–23, there are 108,020 medical marijuana patients in the state.
Users of medicinal cannabis are subject to a different set of regulations than adult users. Medical marijuana patients are allowed more cannabis in their possession, can cultivate more plants at home if their doctor advises it, and can buy more marijuana per day if their doctor approves it.
There are different rules for medicinal users and adult users. Medicinal users have higher possession limits, can grow more plants at home if their physician recommends it, and buy more cannabis each day if their physician recommends it.
On January 1, 2018, marijuana usage for recreational purposes became legal in California. The approval of Proposition 64 by the state’s voters in November 2016 led to the legalization of cannabis regulation and the use of cannabis by adults. It set taxes on sales and cultivation and legalized the possession, growing, sale, and consumption of cannabis for adults aged 21 and older for recreational use.
California law currently allows adults over 21 to possess up to one (1) ounce of dried marijuana or eight (8) grams of cannabis concentrate. Additionally, they are permitted to cultivate up to six (6) plants for personal use, subject to specific regulations.
The Department of Cannabis Control (DCC) issues licenses per the cannabis-related activities your company plans to engage in. You could require more than one license if you plan to engage in many activities.
Retailers of cannabis offer delivery and storefront sales of cannabis products. The sale of cannabis products requires a retail license. The retail license necessary will depend on whether the business has a storefront where customers can come in person.
To operate a cannabis consumption lounge in California, you need to apply for a Type 10-Retailer license with a lounge designation. The lounge must follow specific regulations, such as closing between 2 a.m. and 6 a.m., and only selling cannabis in quantities reasonable for onsite consumption. Customers are allowed to remove the packaging from products purchased within the lounge, but the sale of live plants or seeds is prohibited. Additionally, customers can smoke, vape, and consume edibles inside, provided these activities are not visible from public areas or non-age-restricted spaces.
Cultivation license types are based on production methods, lighting, and canopy size (the area for mature plants). License categories include:
Manufacturing licenses are categorized based on the activities performed, the chemicals used for extraction and post-processing, and whether the manufacturer operates in a shared-use facility.
To transport cannabis and cannabis products throughout California, you need to get a distribution license.
The type 12 microbusiness license is intended for establishments with at least three operations in a single location: cultivation, manufacturing, distribution, and retail sales.
Temporary cannabis events are gatherings where people can buy and use cannabis for several days. These gatherings typically occur at a city or county-approved site and run anywhere from one to four days. A cannabis event organizer license and a temporary cannabis event license are both required to stage a cannabis-related event.
Facilities that test cannabis products before they are sold to retailers must have a Type 8 testing laboratory license. The Department of Cannabis Control (DCC) requires that every batch of cannabis-related products undergo a series of tests before they can be sold.
Here are the costs associated with opening a cannabis business in California:
License type | Application fee | License fee |
Cultivation license | $135 – $8,655 | $1,205 – $77,905 |
Manufacturing license | $1,000 | $2,000 – $75,000 |
Distribution license | $1,000 | $1,500 – $180,000 |
Testing laboratory license | $1,000 | $3,000 – $112,000 |
Retail/Dispensary license | $1,000 | $2,500 – $96,000 |
Microbusiness license | $1,000 | $5,000 – $300,000 |
Cannabis event license | $1,000 | $3,000 – $20,000 |
You may petition to have your license fee waived if you were adversely affected by the illegality of cannabis. Check your eligibility for a waiver before applying.
The DCC details the important actions that must be taken to submit an application for a cannabis dispensary license and other cannabis business licenses.
As the state expands its cannabis program, particularly the recreational program, we will keep you up-to-date on all relevant news and legislation on opening a dispensary in California. By adding yourself to our California Cannabis Mailing List (below), we will keep you updated on all relevant news that matters, and not so easy to find news and comments based on California Legalization below. This includes, but is not limited to:
How To Open A Dispensary In New York (2025 Guide) Key Takeaways Medical Marijuana in New York: Legal since 2014, New York’s medical marijuana program allows patients with qualifying conditions
How To Open a Dispensary in Kentucky Key Takeaways Medical Marijuana in Kentucky: Kentucky has legalized medical marijuana for patients with qualifying conditions. Recreational Marijuana in Kentucky: Recreational marijuana remains
How to Open a Dispensary in Delaware Delaware Key Takeaways Medical Marijuana in Delaware: Delaware legalized medical marijuana in 2011, allowing patients with qualifying conditions to obtain cannabis through state-licensed
