Alabama Cannabis Licensing and How to Prepare as an Operator
This article provides an overview of the Alabama Compassion Act Bill and how to prepare if you intend to apply for a license in Alabama.
Alabama became the 36th state to allow cannabis for medical use when Governor Kay Ivey signed into law the Darren Wesley ‘Ato’ Hall Compassion Act on May 17, 2021. A commercial licensing process is expected to begin in September of 2022. The following is a summary of what is known so far about this process and how to prepare to take advantage of this unique and monumental opportunity.
Alabama Compassion Act Bill Summary
On February 24, 2021, the Alabama legislature overwhelmingly approved and passed the bill in a 20-10 vote. The House of Representatives followed suit, approving a modified version of the bill in a 68-34 vote on May 6, 2021. Senate swiftly concurred with the House’s changes to the details.
Regulatory Authority
A 14-member Alabama Medical Cannabis Commission licenses and regulates the medical cannabis program, with input from the Alabama Department of Agriculture and Industries for cultivation matters. The act requires that the Commission and the department adopt regulations that allow licenses applications by September 1, 2022.
Medical Cannabis Establishment Licensing
The act establishes a process through which applicants will compete for a limited number of licenses in the following categories: cultivator; processor; dispensary; and integrated facility, as well as a to-be-determined number of licenses for secure transporters and testing laboratories.
The Medical Cannabis Commission will license:
Social Equity Requirements
Depending on the business type, either at least one-fourth or one-fifth of all licenses must be awarded to a business entity that is 51%+ owned by individuals of African American, Native American, Asian, or Hispanic descent, and managed and controlled by such individuals in its daily operations.
Timeline Highlights
Rules must be adopted in time to allow applications to start being filed by September 1, 2022.
Applications will be granted or denied within 60 days or, if a deficiency is identified, the application may have 60 days to cure it. – This means the State's first licenses may be issued as early as Nov 1st, 2022.
Ways To Prepare If You Intend to Apply for A License in Alabama
There is no doubt that there will be a lot of competition when it comes to winning a medical cannabis license in Alabama. You can get ahead of the curve by starting the application process early.
Global Go has assisted and participated in competitive license contests at both the local and state levels in multiple states, including Florida, Ohio, New Jersey, California, Alaska, Illinois, and Nevada. Having helped Clients to receive well over 200 licenses in multiple states and countries, they have the extensive knowledge and experience necessary to help you acquire all State and local licenses and permits necessary to be one of Alabama’s first legal commercial cannabis operators.
If you intend to apply for a license in Alabama, don’t wait, here are some helpful tips on ways to prepare for the September 1st, 2022, initial round of applications.
1. Have Experience in the State and Commercial Horticulture or Agronomic Production. We recommend that majority of the ownership, at least 51%, be owned by an individual with proof of residency for 15 continuous years before the application date. These local majority shareholders for cultivation/integrated licenses also will need a cumulative 15 years of commercial horticulture or agronomic production experience. We recommend structuring the company as a minority-owned business to score extra points by meeting the criteria of the bill summary above. Being a veteran-owned business would also be an added value to any application.
2. Prepare To Go to Market Quickly. Note that the State Medical Cannabis Commission wants cultivation and integrated businesses to be up and running within 60 days of being licensed. A phased approach in build-out, harvest times, and production are key in this application. Our team of Cannabis experts is available to discuss various approaches that will meet the 60-day requirement. In the meantime, securing licensed contractors and narrowing down property early is critical to meeting this portion of your application.
3. Ensure You Have Sufficient Capital. Be prepared to show that you have funds. Sufficient Capital is always key to a successful operation, especially for those that are intended to go to market within 60 days of licensure. In fact, the more, the merrier. The state requires at least $2 million in liability and casualty insurance, $250,000 of liquid assets in addition to the proof of capital to maintain operations for at least two years.
4. Support Municipalities Where You Intend to Operate. Integrated licenses come with five dispensaries that need to be in five separate counties. Separately, dispensaries have up to three locations which need to be in three different counties. We suggest getting involved with the municipalities you hope to operate emphasizing your interest and support in passing ordinances that will allow cannabis businesses to operate there. Once an ordinance has been passed, you will want to obtain a letter of recommendation from the city planner or city administrator. By proving that your desired operating location(s) will comply with the local municipal code, you will likely score higher points in this section of your application.
5. Understand the Market. If you want to get your slice of the market, understand it first before reaching out to investors. According to MJBizDaily, Alabama’s medical cannabis program could generate $80 million - $90 million in sales in its first year and $450 million - $545 million in annual sales by its fourth year.
Resources:
https://legiscan.com/AL/text/SB46/2021
https://www.natlawreview.com/article/applying-license-to-cultivate-medical-cannabis-alabama
https://www.mpp.org/states/alabama/alabama-compassion-act-bill-summary/
https://mjbizdaily.com/alabama-medical-cannabis-program-might-roll-out-slower-than-expected/