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Acquiring a Cannabis License? Here’s What You Need to Know

Marijuana plant

Are you looking to get into the cannabis industry by acquiring a license? If so, there are several things you should know that factor into a smooth (or not) approval process. The industry might be going through a downturn at the moment, but it still holds potential for business opportunities and profitable operations if owners and operators follow best practices and strong due diligence.

Cannabis License Applications

The first step is to apply. Most applications are fairly straightforward, but having an experienced cannabis attorney guide you through the process and keep you moving in the right direction efficiently and effectively can save a lot of time and headaches. Unlike some cannabis law firms that charge by the hour, at Cantafio & Song, we use a flat-fee model with no upcharges so you can be confident that your application will be done properly and affordably.

As you might expect, applying for a cannabis license in a highly regulated industry requires more information than other business sectors. Cannabis is a controlled substance and there are several suitability requirements that must be met. For example, in Colorado all applicants must demonstrate at least two years of Colorado residency when applying for a license, and pass criminal and credit background checks. That means you might have trouble if you have a juvenile record.

Moratoriums on Cannabis Licenses

It’s also important to be aware that states and municipalities make on-the-fly changes to their cannabis policies.

In response to an oversaturation of product and dropping wholesale cannabis prices, Oregon officials passed legislation in October 2022 requiring regulators to stop issuing cannabis business licenses to anyone who submitted applications on or before Jan. 1, 2022. That moratorium will last until March 31, 2024, and comes after the state paused on approving new licenses from mid-2018 until November 2021.

Some cannabis operators here in Colorado (as well as Michigan and elsewhere) have called on their state leaders to follow Oregon’s example and enact a licensing moratorium. They cite Denver as an example of how the moratorium can be successfully rolled out; Colorado’s capital city is no longer issuing new business licenses for non-social equity applicants.

On the other hand, some communities that initially closed their doors to cannabis have now opened them. Just look at Colorado’s Western Slope, where in recent years Mesa County and towns such as Cedaredge moved to allow adult-use cannabis businesses in a large underserved market.

Cannabis License Transfers

As a result of the caps on cannabis licenses and the potential for additional moratoriums, there are increasing opportunities to acquire licenses via transfer. In the distressed cannabis industry, some legacy or long-term independent operators are ready and motivated to sell their cannabis business license(s).

At Cantafio & Song, our lawyers have the industry experience to carefully match sellers with potential buyers in the closed loop of cannabis licenses. We like to think of it as Cannabis Matchmaking, and it is an effective way to bring two parties together in a mutually beneficial transaction. Those seeking to enter the industry have an opportunity to obtain an often difficult to get cannabis license in a competitive market, while giving the current license holder the chance to pass the torch and move on to another sector or even retirement.

As one of the top cannabis law firms in Colorado, Cantafio & Song understands the complex nature of the cannabis industry and what it takes to be successful. We are also a full-service law firm, and assist clients in other areas of law such as criminal defense, estate planning, litigation, real estate and more. If you have needs in any of these areas, contact Cantafio & Song’s legal team today.
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