California Cannabis Laws: Everything Businesses Need to Know About

Treez Team
A photo of the Golden Gate Bridge over the sunrise

The cannabis laws in California have undergone an intense transformation since the passage of the "Compassionate Use Act" in 1996, which was the inception of legalized medical marijuana use in the state. 

Then, 2016's Proposition 64, also known as the Adult Use of Marijuana Act (AUMA), further shaped the legal framework of recreational marijuana use by extending the legalization. 

With each stride forward, California cannabis laws have continued to evolve rapidly. 

These regulation changes promise new challenges and opportunities for businesses operating within the cannabis industry. It’s necessary for businesses in the industry to have a keen understanding of the intricacies involved to remain compliant. 

While 2024 holds promises of increased protection for cannabis users outside of work, let’s revisit the fundamentals of who can use cannabis, when, and where in California. 

Information on California cannabis laws for businesses 

The information mentioned in this post has been gathered from government websites and directories and explained for ease of compliance. Let’s dive right in! 

1. General California cannabis laws 

In California, the legalization of recreational cannabis in 2018 brought about a set of rules and regulations designed to ensure a safe and delightful experience for consumers while maintaining public safety. 

Here are the key points and guidelines businesses and consumers need to be aware of: 

Age restrictions 

To possess, purchase, or use recreational cannabis, individuals must be 21 years of age or older. This encompasses various consumption methods, including smoking, vaping, and consuming cannabis-infused products. It’s also strictly illegal to gift or sell cannabis to anyone under the age of 21. 

Possession limits 

Adults in California can purchase up to 28.5 grams of non-concentrated cannabis and 8 grams of concentrated cannabis and are allowed to cultivate 6 immature cannabis plants per day. Medical marijuana patients have a daily purchase limit of 8 ounces of medical cannabis.

Impaired driving 

Operating a vehicle or riding a bike under the influence of cannabis is illegal. Open containers of cannabis are prohibited within vehicles during transportation, and any cannabis present must be in a sealed container or stored in the vehicle's trunk. 

Interstate travel 

It is illegal to transport cannabis across state lines, even if you travel to another state where cannabis is legal. Even within California, TSA agents may confiscate cannabis since they operate under federal jurisdiction. 


The Department of Cannabis Control is responsible for overseeing the legal marijuana market in California. They employ the Metrc system as its state track-and-trace system to monitor and regulate the cannabis industry. 

2. Cannabis dispensary licensing requirements in California 

Obtaining a license to operate a cannabis dispensary in California is a multi-step process with specific requirements to ensure compliance with California cannabis laws. 

Here's a breakdown of the key licensing requirements for cannabis dispensaries in California: 

  • Applicants must be residents of California to qualify for a cannabis dispensary license. 
  • A thorough background check is conducted to assess the applicant's suitability for licensure. 
  • Applicants must provide proof of a legal right to use the proposed location for the dispensary. 
  • Applicants are required to apply for and obtain a valid seller’s permit. 
  • Proof of bond is a prerequisite for licensing, ensuring financial responsibility. 
  • Detailed operating procedures must be submitted as part of the application process. These procedures should outline how the dispensary intends to operate, ensuring transparency and adherence to regulations. 
  • In California, applicants can apply to one of three agencies for licensing, depending on the nature of their cannabis business: Bureau of Cannabis Control, Department of Cannabis Control, and Manufactured Cannabis Safety Branch. 
  • The type of license and associated requirements can vary based on the category of the cannabis business — cultivation, retail, edibles, or investors. 
  • Some states, like Nevada and Colorado, have licensing requirements for employees of cannabis businesses. Nevada requires all employees or volunteers to obtain a Cannabis Agent Card, which involves a background check. 
  • Local jurisdictions in California have the authority to determine which cannabis activities are permitted. 

Some cities may require additional local licenses or prohibit certain cannabis-related activities altogether. 

3. California cannabis laws packaging and labeling 

Compliance with packaging and labeling regulations is crucial for businesses in California's cannabis industry. It ensures the safe and responsible use of cannabis products. 

Here are the key requirements and guidelines for this: 

  • Cannabis and cannabis products must be placed in resealable, tamper-evident, and child-resistant packaging before delivery to retailers or microbusinesses authorized for retail sales. 
  • Packages and labels must not be designed to attract children or minors. 
  • For edible products, the term "cannabis-infused" must be placed immediately above the product identity in bold type and in a larger text size than the product identity. 

Mandatory Label Information 

  • All cannabis and cannabis product labels must prominently display specific information clearly and legibly, following font size requirements set by the Department of Cannabis Control. This information includes: 

4. Cannabis track and track laws in California 

Ensuring the transparent and accountable movement of cannabis products from cultivation to sale is a fundamental aspect of California's cannabis regulations. 

The state's track and trace requirements, overseen by the Department of Cannabis Control (DCC), play a crucial role in maintaining compliance and accountability within the industry. 

Here are some crucial track and trace requirements for cannabis businesses in California: 

  • Metrc is the designated track and trace system for cannabis reporting in California. It facilitates comprehensive tracking of cannabis activity and movement from "seed-to-sale."
  • State-licensed cannabis businesses must designate and train individuals who will use the track and trace system.
  • Data entry errors must be promptly corrected within three days to maintain accurate records.
  • All cannabis inventory must be tagged and entered into the track and trace system.
  • Regular reconciliation of inventory must occur at least every 30 days to ensure accuracy.
  • Unused package tags cannot be transferred, and used tags must be discarded when they are no longer in use. 
  • Specific cannabis activities must be recorded in the track and trace system within 24 hours of occurrence. These activities include:
  • Recent regulations mandate that licensees must record the receipt of tags in Metrc within three calendar days of receipt.
  • If ordered tags are not received, licensees must notify the DCC, ensuring transparency in the tag procurement process. 

5. Cannabis taxation in California 

In California, there have been some significant changes to the taxes related to cannabis. These changes were made through AB 195, which was signed into law by Governor Newsom. Here's what you need to know:

1. No More Cultivation Tax:

As of July 1, 2022, the cannabis cultivation tax is no longer in effect. This means those who grow cannabis won't have to pay this tax anymore.

2. Retailers Collect Excise Tax:

Retailers are now responsible for collecting and sending in the 15% excise tax. This tax is added to the price of cannabis products and is collected by the store when you purchase.

3. Changing How Tax is Calculated:

Starting in 2023, retailers will calculate the excise tax differently. Instead of using the average market price, you will base it on 15% of the money you get from selling cannabis products.  

4. State Sales and Business Taxes:

In addition to the excise tax, there are also state sales and business taxes for recreational cannabis sales in California. The exact rates for these taxes can vary depending on where you buy cannabis. 

Your key to success — compliance with California's cannabis laws 

As essential as staying compliant with the California cannabis laws is, meeting all the requirements can be a challenging task. 

With stringent licensing protocols, strict inventory tracking rules, and limits on advertising and work policies, cannabis businesses have significant compliance responsibilities

Having proper systems in place to manage regulatory workflows is essential for success. And this is where cannabis POS and business software solutions like Treez come in. 

This system simplifies the tracking and reporting process and streamlines data management for your cannabis business. 

By using Treez and making compliance a top priority, cannabis businesses in California can avoid penalties for minor oversights. Instead, you can focus on sustaining growth through exceptional products and customer service. 

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