California Cannabis Business License: Requirements by City

California does not have a single cannabis business license. Every cannabis business needs a state license from the Department of Cannabis Control (DCC) for its activity type, and it needs authorization from the city or county where it wants to operate. In many places, that second step is a flat no. Before you spend money on a lease, a business plan, or a state application, confirm that your local government allows the business type you have in mind.

Why local rules decide the answer

State law gives cities and counties real control over cannabis. Under Business and Professions Code 26200, a local government can adopt zoning rules, business license rules, and other requirements for cannabis businesses, or it can completely prohibit one or more cannabis business types. A city can allow retail sales and ban cultivation. It can allow distribution and ban storefronts. A state license does not get you around a local ban.

The DCC reviewed 540 cities and counties for its February 2026 update. The results show how common prohibition is:

Measure	Jurisdictions	Share
Allow some cannabis business	256	47%
Allow no cannabis business	284	53%
Allow no retail	302	56%

Check the DCC's page on where cannabis businesses are allowed for your jurisdiction. Then confirm the answer with the city or county directly. A state page is a snapshot, and local codes change.

The steps to a licensed cannabis business

Cannabis adds layers to the standard formation process. Work through these steps in order:

1. Confirm the license type is allowed locally. Ask whether the city or county permits retail, cultivation, manufacturing, distribution, microbusiness, or testing in the zone you want. A type that is allowed in one city may be banned next door.
2. Find a site that meets zoning and spacing rules. Zoning and the state spacing default (covered below) decide which parcels qualify.
3. Get local authorization. This is the city or county permit or approval that lets the DCC process your state application.
4. Apply to the DCC for the state license that matches your activity.
5. Register with the CDTFA for a seller's permit and sales tax reporting.
6. Complete background checks and fingerprinting, and pass any inspections the DCC or your city requires.
7. Learn the track and trace and reporting rules before you open or ship product. Check the current requirements with the DCC.

The 600 foot spacing default

Under Business and Professions Code 26054(b), a licensed premises cannot be within 600 feet of a school providing kindergarten through grade 12, a day care center, or a youth center that exists when the license is issued. The DCC or the local government can set a different radius. Local rules can be stricter or looser than the state default. Ask the city how it measures that distance before you sign a lease.

State license fees

The DCC charges a $1,000 retail application fee. Annual license fees depend on gross annual revenue, except for cultivation and event organizer fees, which are not revenue based.

License type	Annual state license fee
Retail	$2,500 for revenue up to $500,000, rising to $96,000 above $7,500,000
Microbusiness	$5,000 to $300,000, based on revenue
Distributor	$1,500 to $240,000, based on revenue
Cultivation and event organizer	Not revenue based (check the DCC fee table for amounts)

Because the annual fee tracks revenue, a retailer that grows into a higher tier pays more. Check the DCC fee table for the current schedule before you build a budget. Local permit fees are separate and vary by city. No single range applies, so request the fee schedule from each city's cannabis office.

Local business taxes and general business licenses

Outside of cannabis, California has no general statewide business license. The Secretary of State issues none, and the CDTFA seller's permit is not a business license. Most cities charge a local business tax or registration certificate. Of the 483 cities, 445 report revenue from one. There is no common formula, so the amount depends on the city. Counties license only regulated activities. A cannabis business may owe both the city's general business tax and its cannabis permit, so ask whether both apply.

Taxes: the 15 percent excise tax plus sales tax

Cannabis retailers collect two layers of tax from customers at the point of sale:

• A 15 percent cannabis excise tax on the gross receipts of the retail sale.
• Sales and use tax at the 7.25 percent statewide base, plus any district tax. City combined rates run from 7.25 percent to 11.75 percent.

Two rules catch new operators off guard. A local cannabis business tax that the retailer passes on to the customer is part of gross receipts, so it is also subject to the excise tax and sales tax. The excise tax is itself included in the sales tax base. Build both into your pricing model before you set shelf prices.

Whether and when the 15 percent rate changes is a question to confirm with the CDTFA, since tax rates can change. Hemp products fall under separate rules after AB 8, so check with the DCC before you add hemp products to a cannabis operation.

The CDTFA's sales and use tax page is at cdtfa.ca.gov. The seller's permit itself is free.

The entity and registrations underneath the license

The cannabis license sits on top of a regular business entity. Form the entity first, then add the cannabis licenses. Entity costs at the Secretary of State, through bizFile Online, include:

• Articles of Organization (Form LLC-1): $70. Corporation articles of incorporation: $100.
• Name reservation: $10, which holds the name for 60 days.
• Statement of Information: $20 every two years for an LLC, and $25 every year for a corporation. A missed filing can lead to a $250 penalty from the Franchise Tax Board after a Secretary of State notice.
• Franchise tax: An LLC organized or registered in 2024 to 2026 owes the $800 minimum annual franchise tax from its first year. The LLC fee is $900, $2,500, $6,000, or $11,790, once California-source total income reaches $250,000, $500,000, $1,000,000, or $5,000,000. An LLC whose first taxable year begins in 2027 to 2029 may pay $400 in year one under RTC 17941(g)(2). Confirm that amount with the Franchise Tax Board.
• Series LLCs: California does not allow a domestic series LLC, so plan the entity structure for each license with your attorney.
• Employees: Register with the Employment Development Department (EDD) before you hire.
• Fictitious business name: If you operate under a name other than your legal entity name, file a Fictitious Business Name Statement with the county clerk within 40 days of starting. Publish it in a newspaper once a week for four weeks. It expires after five years.

How to get the city answer

Each city's cannabis office holds the answers that matter most. Ask these questions in writing:

1. Which cannabis license types are allowed, and in which zones?
2. What local permit fees, business taxes, and registration certificates apply?
3. Does the city apply any spacing rule stricter or looser than the 600 foot state default, and how does it measure distance?
4. What local approvals and inspections come before the DCC application?
5. What documents does the city need, and how does it want them submitted?

Local rules change, so verify every answer with the city in writing before you commit money. Free help is available through the California Small Business Development Center network at californiasbdc.org.

Next steps

Start with the question that decides everything: does your city or county allow your license type at all? If the answer is yes, confirm the zoning, the spacing, the local permit, and the state fee schedule. Then form your entity and register for taxes. Keep your records clean from day one, because the DCC, the CDTFA, and the city will each review them.

This content is informational only. It is not legal or tax advice. Cannabis rules come from state law, DCC regulations, and local ordinances, and they change often. Consult a qualified cannabis attorney and a CPA before you apply, sign a lease, or set up your tax filings.