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Top 3 Items Common To All Local & State Cannabis Application In California

By Heather Schafer



As we prepare for another 30 California jurisdictions to begin the process of bringing commercial cannabis activities into California, I am getting many calls asking how to best prepare for applications being made available. Although each city and county are a bit different, in their requirements, you can assume that a few will be common across the state. The following three items can take a bit of time but will be required in every new jurisdiction you intend to operate in:


Business Structures

Every commercial cannabis business, in California, will require you to form a business structure. Although the options include sole proprietorship, partnership, limited liability corporation, and corporation, many cannabis accountants would encourage you to consider a general C-Corporation (C-Corp) in California. According to Michelle Elder CPA, a cannabis knowledgable accountant in the Sacramento area, “a C-Corp will provide tax benefits that a Limited Liability Corporation will not”. These tax benefits can include a shield against personal liability and a flexible capital structure. Additionally, a C-Corp can be inviting to venture capitalists. When deciding upon a business structure, it is important to hire a legal professional, and consult with a cannabis accountant, before making a final decision.


Business Plan

Writing your business plan can be a personal and time-consuming experience. Although many entrepreneurs hire consultants to assist them in the process, some information can only be conceptualized by the business owner themselves. This information can be boiled down to a few basic questions:

Who Are you? - Executive Summary

SCORE has a really wonderful business plan template that helps to identify your Executive Summary this way: “The Executive Summary should briefly explain each of the below.


  1. An overview of your business idea (one or two sentences).

  2. A description of your product and/or service. What problems are you solving for your target customers?

  3. Your goals for the business. Where do you expect the business to be in one year, three years, five years?

  4. Your proposed target market. Who are your ideal customers?

  5. Your competition and what differentiates your business. Who are you up against, and what unique selling proposition will help you succeed?

  6. Your management team and their prior experience. What do they bring to the table that will give your business a competitive edge?

  7. Financial outlook for the business. If you’re using the business plan for financing purposes, explain exactly how much money you want, how you will use it, and how that will make your business more profitable.”


It is advisable to take your time and really think about how you see your business in the big picture when developing your executive summary.


What Are Your Business Goals? - Company Description

A good Company Description will include these items:

  1. Mission Statement - What is your reason for being?

  2. Company philosophy and vision - What are the values of your business and what is your long-term vision?

  3. Company Goals - What are your long-term goals and what are the milestones that will show your steps to getting there?

  4. Target Market - Who are you targeting as a customer?

  5. Legal Structure - This can be answered once you make a decision on your business structure.


What Products or Services Will You Sell? - Products & Services

This is where you will detail what you will do and how you will do it. For instance, the Small Business Administration suggests that you “Describe what you sell or what service you offer. Explain how it benefits your customers and what the product life cycle looks like.” Make sure to include how you will price your product or service and any proprietary advantages it brings.


Once you have determined your Executive Summary, Company Description, and Products & Services, you will be well on your way to a completed document.


Standard Operating Procedures

Your Standard Operating Procedures (SOP’s) show the local jurisdiction and state how your daily operations will be conducted. This is your best opportunity to display the intent for local and state regulatory compliance. From how you will conduct operations during a disaster to cash handling procedures and your waste management plan, you will detail it all within your SOP’s. It is advisable that you remember that your local application, and submission documents, are subject to public records requests so you want to walk the fine line of giving enough information to show that you are capable of running a cannabis industry business yet not enough to give away safety or proprietary information.


Conclusion

As you have seen, above, business structures, a business plan, and standard operating procedures are consistently required for submission across the state and local jurisdictions. Although this can seem like a daunting list of to-do’s, Agora C Business Services has several tools to assist you in the process. We offer a business structure package that combines the legal and accounting consultations and completes the business structure process through your Founder’s Meeting and meeting minutes should you choose a C-Corp. Additionally, we offer templates for the business plan and standard operating procedures and by-the-hour fees for assistance in completing those templates. We look forward to assisting you.