There Are Always Licensing Issues With State-Legal Marijuana

I still remember when my home state of Florida legalized medical cannabis. There was no shortage of entrepreneurs expecting to be able to jump in and get rich quickly. But that is rarely the way it works. Among all the hurdles business owners need to overcome is state licensing. It’s a bigger issue than most people realize.

Hemp farmers in Kentucky are experiencing their own licensing issues in the lead up to legalized medical cannabis in the Bluegrass State. Medical cannabis goes live there on January 1, 2025. But hemp growers ready to start cultivating marijuana don’t know where they stand. They are waiting for the state to figure out licensing issues.

Different Kinds of Licenses

Regardless of the state you are talking about, there are different types of licenses to deal with. Utah is a good example due to its very strict medical cannabis law. The Beehive State issues five types of business licenses depending on the activity an entrepreneur wants to engage in:

1. Cultivator License – This license goes to an operation that grows cannabis plants. Those plants can be sold to processors to be converted into medical cannabis products.
2. Processor License – The processor license goes to operations that convert plant material into retail medical cannabis products. There are two types of processor licenses: one for operations that actually handle plant material and another for those that simply package and label.
3. Tester License – A tester license goes to businesses who offer cannabis testing services. All medical cannabis sold in the state must meet minimum safety and purity requirements.
4. Pharmacy License – All medical cannabis products sold in Utah must be sold through a state-licensed pharmacy. Pharmacy licenses are hard to come by.
5. Courier License – A courier license allows a business to offer home delivery services on behalf of a licensed pharmacy.

Beehive Farmacy holds two licenses in Utah. One is for the Brigham City location and the other for their Salt Lake City pharmacy. The state has only issued fifteen licenses to date. There are no plans at this time to issue more.

Note that a Utah operation can have more than one license. For example, a business can be licensed as both a growing and processing operation. The business would need both licenses to perform both types of tasks.

A Lot Still Up in the Air

Much of what will eventually become Kentucky’s medical cannabis program is still up in the air. It is reasonable to assume that Kentucky regulators are looking at what other states do for guidance. Utah would be a good state for them to study. Although Utah’s medical cannabis law is among the most restrictive, it is well-constructed and as straightforward as cannabis laws come.

As for why states are so careful about licensing, it boils down to control. Most states use licensing as a means to control production, distribution, and sale of marijuana within their borders. The last thing state lawmakers want is for things to get so out of hand that the federal government is forced to intervene.

Washington has kept the state-legal marijuana industry at arm’s length thus far. State lawmakers and regulators want to keep it that way. One of the tools they use to do so is licensing. Unfortunately, licensing becomes yet another burden faced by entrepreneurs who simply want to set up viable businesses.

Licensing is not going away. Even if Washington ultimately legalizes marijuana across the board, states are going to control the industry through licensing. And licensing is naturally going to limit who can participate in the industry as a grower, processor, or retailer.