How to Set Up a Legal Medical Marijuana Shop in California

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With passage of the Compassionate Use Act of 1996, medical marijuana use was legalized in California. Although still against federal law, the state initiative allows patients and their caregivers to possess and cultivate cannabis plants for their personal medical use with the recommendation of a doctor. The drug is used to treat a number of ailments and conditions, including chemotherapy side effects, multiple sclerosis and glaucoma. The law has been amended to allow collectives and cooperatives to sell the drug through dispensaries, shops and delivery services.

Hire a lawyer to help you understand the implications and rules of the Medical Marijuana Program Act, known as California Senate Bill 420. Call the attorney general's office for current guidelines on cultivation and possession limits, usually a maximum of 8 oz. and six mature or 12 immature plants. Consult the State Department of Health Services for current protocols on the issuance of identification cards through the county departments of health. They usually require a doctor's written recommendation for medical marijuana and proof of residence.

Find a location to open the dispensary. Look up the laws for the county you wish to locate the dispensary in because the regulations vary widely from county to county. Check the zoning laws for location rules. Ask the sheriff's department about required security guards and prohibitions in unincorporated areas.

Get copies of the city ordinances for your chosen location. They vary from city to city and might change frequently as city supervisors vote for bans or moratoriums on dispensaries.

Buy or rent a building for the dispensary, and tell the landlord your plans in advance. A suitable location is generally one that is away from schools, churches and parks.

Formulate a business plan for your venture. Decide if it will be a cooperative, a collective or a delivery service to home-bound patients. Start a general corporation, known as a c-corp, a partnership or a state not-for-profit corporation.

Set up meetings with city and county officials to learn the procedures for record keeping, business forms and other types of documentation for your daily activities. Apply for and obtain the required county and city business licenses for a dispensary. Get a California sales tax permit and the necessary sales record forms. Keep all records current.

Secure funding and arrange financial backing for your business venture through banks or private individuals. Buy the furnishings, computer and security systems, insurance and supplies for the business. Hire employees, security guards and a bookkeeper.


  • Know all the local laws in advance, and follow them strictly to avoid legal problems.

    Keep a lawyer on retainer to interpret and follow changes in state and local laws.


  • Know that you are in violation of federal laws and could be arrested and jailed by federal officials.