You know what they say… Sharing is caring!

With the new S License, cannabis manufacturing facilities can now share their space with other cannabis manufacturers that need a place to make their products!

This is exciting news for small cannabis businesses that can’t afford to build out of their own manufacturing facility because it will allow them to conduct their manufacturing in other legally approved facilities.

Whether you’re a small Canna-business owner or large cannabis manufacturing facility we’ll explain exactly how to obtain an S License and register a shared-use facility; including documents needed and the fees you’ll have to pay! To finish, we’ll cover S License regulations so you can keep your business compliant.

 

Why is the S License for Cannabis Valuable?

The S License now provides opportunities for small manufacturing businesses to launch their business without having to buy a warehouse and go through all the hoops that have already been jumped through by more established Canna-businesses.

Do you know how much it costs to open a Cannabis Manufacturing Facility?  No? Good thing you have TWI to walk you through it! Read more below.

First rule of real estate is location, Location, LOCATION!  And depending on the size and location of your new cannabis manufacturing facility, you’re looking at anywhere from $2.5 million to $5 million dollars (good ole California real estate).

Before you go diving into those couch cushions for extra change, remember you’ll also need extraction equipment.

The cost of your equipment will be dictated by how much marijuana product you have to extract. Commercial extraction equipment ranges from $5,000 – $40,000 but you can also get setups made for home use for about 10% of the cost ($500).  Extraction equipment designed for personal use is not going to yield as much as the fancy commercial ones will.

Lastly, there’s also the cost of electricity, people to handle the manufacturing process, and that high quality H²O!  Once you’ve got all these main pieces in place, you’ll get to pay taxes to the great state of California!

If you utilize a shared facility that has its S License, you can bypass the headache of establishing a manufacturing facility! The owner of the shared use facility will make extra money and your small business can get on their feet with minimal cost for a location. The S License helps everybody win!

 

How Does the S License Work?

Sharing professional facilities is nothing new.  In fact, the culinary industry often rents commercial kitchens in order to allow smaller businesses to use their space and equipment to make their products. And just like those commercial kitchens, your Canna-Business can rent space in a shared cannabis manufacturing facility to make your own products! Except the brownies coming out of these facilities will get you high.

Before the creation of the S License, each manufacturing licensee had to have its own separate and distinct premises. No sharing of facility space with other businesses was allowed.

Both the owner of the facility (aka Primary Licensee) and the cannabis manufacturers that plan to use the space (AKA S Type Licensee) must be registered, licensed, and approved by state and local law before any sharing can go down.

So let’s get into the process of getting an S License and registering for a shared-use cannabis manufacturing facility!

 

How Do I Obtain a Type S License?

The owner of a cannabis manufacturing facility and the S Type Licensee must have an S Type license.

Until all the kinks are worked out only Temporary S Licenses will be offered.

Forms Needed to Apply for a S Type License

  1. Form CDPH 9038 – Temporary License Application: Type S
  2. Form CDPH  9037 – Shared Use Facility Registration-Temporary Licensees – This is about the location of a registered shared-use facility to be used by the licensee. City or county authorization to conduct commercial cannabis activity.
  3. The Annual S License form is not available yet! – Register for MCSB email list to be notified when it’s available.
  4. Property owner consent form (sample here)

 

Required Documents for S Type License

  1. Valid license, permit or other authorization issued by local jurisdiction that enables the applicant to conduct commercial cannabis activity.
  2. A copy of the use agreement signed by the primary licensee and the applicant.
  3. A diagram designating the applicant’s area of operation and storage of cannabis, cannabis concentrates, and cannabis products.

Since sharing space is hot off the press, many local jurisdictions haven’t explicitly addressed the issue of licensees sharing space. We wouldn’t want you wasting your time and money because you didn’t get the right local permits and licenses before applying!

Make sure you’re following CA cannabis regulations. We suggest you speak directly with your local government to determine what the licensing and permitting requirements will be for shared-use facility designation and a Type-S license in your area.

 

Cost of S Type License

There will be a $500 non-refundable application fee for each new application.

The annual license fee will range from $2,000 to $100,000 based on the business’ annual gross revenue.

Plus a $5000 surety bond mentioned later.

 

How do I Register Shared-Use Facilities for Cannabis Manufacturing?

Before registering for a shared-use cannabis manufacturing facility, the owner or operator of the cannabis manufacturing facility must first have either a Type 7, Type 6, or Type N license and an S License.

The primary licensee can then register the space as a shared-use cannabis manufacturing facility with the MCSB.

You can prepare by gathering information on the business, owners and financial interest holders, operating premises, and descriptions of procedures. This would include procedures for waste disposal, inventory and quality control, transportation and security.

Before applying for the annual license, review this checklist and list of required documents that the CDPH has provided to make sure you have everything you’ll need to be approved!

Documents Needed to Register as a Shared-Use Facility:

  • Form CDPH 9041 – Temporary License Application Cannabis Manufacturing
    • Not necessary but, highly suggested since you’ll be able to use your space as a Shared-Use Facility as the CDPH reviews your application.
    • The CDPH will have 10 days to reply to the temporary license, which is valid for 120 days and may be extended for 90 days.
  • Form CDPH 9039 – Annual License Application-Cannabis Manufacturing
  • Form CDPH 9039 A – Annual License Application-Cannabis Manufacturing Owner Information
  • Commercial Cannabis License Bond form for $5,000
  • Live scan fingerprinting form
  • Property owner consent form
    • Acknowledging the property’s use for cannabis manufacturing
    • Owner or property agent signature and contact info
  • Document outlining the
    • operation locations (packaging, labeling, extracting, infusing)
    • days and hours your manufacturing business will allow S Licensees to conduct manufacturing operations.

Once approved by the MCSB, other cannabis manufacturers wishing to use the space can apply for a Type S license for that location.

 

Cost of Registering for a Shared-Use Cannabis Manufacturing Facility

There is a $5,000 surety bond that must be paid to the State of California.

A surety bond is a contract between three parties—the principal (you), the surety (us) and the obligee (the entity requiring the bond)—in which the surety financially guarantees to an obligee that the principal will act in accordance with the terms established by the bond.

 

Regulations on the S License

The primary licensee or owner must assign designated area(s) and time(s) for shared use and must include storage for the Type-S licensee’s cannabis and cannabis products. There is no limit on the number of S Type licensees that can use the shared area, but only one licensee can use the space at a time and each of the manufacturers must be licensed by the state.

It is not allowed to conduct any non-cannabis manufacturing on the premise.

Type S licensees may only conduct the following activities:

  • Infusions
  • Packaging and labeling
  • Extractions with butter or food-grade oils

Note: Extractions can only be used in the Type S licensee’s infused products.

It is the primary licensees responsibility to ensure that the facility is in accordance with state and local regulations for cannabis manufacturing including security, waste management, contamination controls, and providing secured storage.

 

Is your canna-business compliant yet? We can help!

Make sure your business and the businesses you plan to work with are compliant by using the compliance review we offer for FREE.

Compliance Check Application (it’s FREE!)

 

When Can I Apply for an S License or Register a Shared-Use Facility?

As of right now, there haven’t been any S Licenses issued to any cannabis manufacturing facilities mainly due to California moving at the speed of government. We sat down with Dallin Young, from the Association of Cannabis Professionals, about when the S Licenses will be issued; and if you’re lucky enough to live in San Diego (like TWI), it will take about 2-3 years until San Diego will start implementing S Licenses.

San Francisco and Oakland will most likely be the first to start utilizing the S License, but San Diego, could take about 2-3 years until starting to implement the S Licenses.

It’s a long process, but we gotta start somewhere!

Is the S License Right for my Small Canna-Business?

We’re sure these guys would be willing to extract your THC for you.

The S license will benefit small Canna-business owners by providing them a place to legal manufacture product and manufacturing facility owners can get extra cash for businesses renting their space.

The S type license will only allow you to do infusions packaging, labeling, and extractions at the shared-use facility which could be a barrier to your business based on your planned operations.

Currently, the annual S license application is not available, but the temporary license is available in some areas so check with your local jurisdiction to confirm an S License will be offered by filling out forms 3038 and 3039.

There will be a $500 non-refundable fee for each application and the annual license fee will be between $2,000 and $100,000 depending on the gross income of the business applying.

For cannabis manufacturers planning to register as shared-use cannabis manufacturing facility, all forms are ready to go! We suggest applying for a temporary license as well since you’ll get a response in 10 days. Again, check with local jurisdiction since you will have to pay a $5,000 surety bond to California.

We expect to see the S license being implemented in San Francisco and Oakland, then it’ll make its way across California. If you’re wondering if the S License will be a good fit for your Canna-Business, contact us to discuss the pros and cons!

 

As always,

Toke and Grow safely!