Hash Oil Extraction License – What you need to know

URGENT LEGAL NOTICE: For those with past marijuana-related offenses, California now allows certain specified crimes to be dismissed or reduced to less serious charges.  Therefore, those who wish to participate in the new regulated cannabis industry are strongly urged to take advantage of these new laws.  Read More: Remove Marijuana Charges

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Many are surprised that there is such as thing as a hash oil extraction license.  By now you may already know that the cultivation, selling, transportation, and manufacturing of cannabis related products will be a legal and regulated activity in California.  Therefore, the hash oil extraction license will be available. But until January of 2018, this activity remains illegal. What you need to know is that these licenses will be very specific and the requirements in obtaining them will necessitate strict compliance.  Even after California sets up its licensing scheme, extracting hash oil will remain illegal where it is prohibited or where no license exists in that city or county.

Before we jump into the topic however, know that this subject matter is vast and can branch off to specialized areas (cultivation, ownership interests, background checks, business structures, etc.). For the purposes of this article, it is specific to hash oil extraction licenses.

The Medical Adult Use Cannabis Regulation and Safety Act establish different departments in handling the many aspects of the cannabis industry. Accordingly, the California Department of Public Health is one of these agencies and will be the primary governmental body that will be in charge of issuing and regulating hash oil extraction licenses.

1.  The Requirements for Hash Oil Extraction Licenses is HEAVY & Detailed

Not only are there four different types of specific licenses, but the regulatory structure will demand to see all legitimate documents showing: true ownership interests, business entity, tax identification numbers,
and full descriptions of the premises in which the activity will take place in.

For the license types, there are two that are most specific to extraction: Type 6 and Type 7. Type 6 deals with nonvolatile solvents and mechanisms that separate the plant portions of cannabis from the more THC rich resins. Type 7 licenses will be issued for volatile solvents such as hexane, butane, and ethanol, and propane. Only one license will be issued per location. This is similar to how alcohol licenses are issued to bars and restaurants.

As you would imagine, each method you intend to use will have to be provided in great detail including the safety measures your facility will provide for each. This does not include the extra regulations required by the local municipality you may be operating in.

2. Prior Criminal Records Will Be Looked At for Hash Oil
Extraction Licenses

Just like a prior DUI creates a lot of problems for someone looking to get an alcohol license, regulators will
be watching out for those who have been arrested or convicted (i.e., persons with criminal records). Therefore, upon applying for a hash oil extraction license, you will need to disclose this prior criminal history and subject yourself to a background check. In some jurisdictions, a violation of certain marijuana offenses prohibits that person from engaging even in legally related activities for a span of one to three years. It’s important to check the terms of your probation just in case that applies to you. Even non-drug-related charges could become issues during the application process. A more in-depth analysis of someone particular situation might be needed.

Bottom line, if you have past charges or convictions that could be a detriment to your hash oil extraction license, it’s best to take care of those matters now so that they will have less of an impact on your application. Contact us to help you get started with this.

3.  Taxes and Gross Receipts, and Licensing Fees

Prior to submitting your application for a hash oil extraction license, the department will be expecting you to have already established a bona-fide business entity: fictitious business name (FBN), operating agreements, bylaws, articles of incorporation, registration with the Board of Equalization, franchise tax board, etc. Keep in mind that there will be a cost of doing business depending on your estimated annual revenues. For instance, a new license application will coast roughly 1,000 dollars. However, upon renewal, you will be expected to disclose your gross revenues due to the sliding scale calculation of what you will owe subsequently. For a business that generates $500,000 to 2 million in annual gross revenue, the renewal fee for the license will be $15,000. There will be up to five tiers designating licensed premises and what their respective fees will be. So proper accounting methods are a must.

As a final note, obtaining a hash oil extraction license means something pretty significant to the California governments that will regulate it: that those who have such a license will be expected to uphold safety standards where they operate their business. The state has taken a leap of faith in entrusting those that will be engaging in cannabis related enterprises to treat their place of businesses as any other industry that uses electricity, water, and the once-in-a-while police or fire services. This is a rare moment that some generations thought they would never see but it is now upon us. For the ones that will carry forward the direction of cannabis as it penetrates everyday society, a great burden rests on their hands to ensure it’s safety and responsible use.