Occupational and Business Licensing of Recreational Marijuana

OCCUPATIONAL AND BUSINESS

LICENSING OF RECREATIONAL

MARIJUANA

by Allie Howell

December 2018

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TABLE OF CONTENTS

OCCUPATIONAL AND BUSINESS LICENSING OF RECREATIONAL MARIJUANA ....................................... 1

Licensing Comes at a Cost ................................................................................................................ 1

Overview of State Licensing............................................................................................................. 3

Restrictions on Who Can Apply ....................................................................................................... 4

Criminal Convictions ........................................................................................................................... 6

Fees ........................................................................................................................................................... 7

Local Control.......................................................................................................................................... 9

Potential Impact on Economic Gains .......................................................................................... 11

Conclusions .......................................................................................................................................... 12

APPENDIX: WANT TO START A NEW MARIJUANA BUSINESS? .............................................................. 14

State: Alaska ......................................................................................................................................... 15

State: California .................................................................................................................................. 16

State: Colorado .................................................................................................................................... 17

State: Massachusetts ......................................................................................................................... 19

State: Nevada ....................................................................................................................................... 21

State: Oregon ....................................................................................................................................... 22

State: Washington .............................................................................................................................. 23

ABOUT THE AUTHOR ................................................................................................................................... 25

Allie Howell | Occupational and Business Licensing of Recreational Marijuana

OCCUPATIONAL AND BUSINESS LICENSING OF RECREATIONAL MARIJUANA

1

OCCUPATIONAL AND

BUSINESS LICENSING OF

RECREATIONAL

MARIJUANA

LICENSING COMES AT A COST

Occupational licensing, while presented as a form of consumer protection, is oftentimes a

tool used by industry incumbents to prevent competition and keep wages high.1 In a new

industry like recreational marijuana, there are few incumbents. Rather than preventing new

market entry by adding licensing requirements to existing professions, occupational

licensing for marijuana reduces all market entry by raising application costs and

requirements. Not only can this reduce economic opportunities, but by preventing a legal

market from developing, the black market will continue to be the chief supplier of

recreational marijuana¡ªfundamentally undermining the goals of legalization.

1

Carpenter II, Dick M. et al. ¡°License to Work.¡± The Institute for Justice. May 2012.



Allie Howell

OCCUPATIONAL AND BUSINESS LICENSING OF RECREATIONAL MARIJUANA

2

In the U.S., only nine states and Washington D.C. have legalized recreational marijuana, and

marijuana businesses are legal in seven (Maine, Vermont, and D.C. do not have laws in

place for legal sales). In the states with regulations for legal sales to take place (Alaska,

California, Colorado, Massachusetts, Nevada, Oregon, and Washington), starting a business

that cultivates, distributes, or sells retail marijuana requires a state-issued license (see

appendix for specific licensing regulations for these states).

Licensing for marijuana businesses is presented as necessary for public safety by ensuring

those involved in the new industry meet high standards of safety and quality. Requiring

licenses makes it easier for the state to regulate the marijuana industry and limit the supply

of marijuana.2 Fees to start a marijuana business, in addition to taxes, are an incentive for

states to implement a legal recreational market as well.

It is important to realize, however, that all government regulations and licensure processes

come with a cost. All state and local license applications must be approved or denied by

government employees. In California, the Bureau of Cannabis Control had 102 positions

authorized for FY 2017¨C2018 and 215 have been approved for FY 2018¨C2019.3 The

Bureau¡¯s budget proposal states that if only half of the proposed licensing staff had been

approved, ¡°The Bureau will not be able to issue licenses in a timely manner. This may

encourage prospective licensees to remain in the illegal market.¡±4

It is important to realize, however, that all government regulations

and licensure processes come with a cost.

2

Murphy, Patrick and John Carnevale. ¡°Regulating Marijuana in California.¡± Public Policy Institute of

California. April 2016.

3

Budget Request. Bureau of Cannabis Control. State of California.

; email

correspondence with the Bureau of Cannabis Control.

4

Budget Request. Bureau of Cannabis Control.

Allie Howell | Occupational and Business Licensing of Recreational Marijuana

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