How to Get a Cannabis License in Iowa

By Eric Schneider, a seasoned cannabis industry expert. He’s a sought-after speaker at industry seminars and a regular writer for respected cannabis journals such as the American Bar Association

The state of Iowa began its state-wide cannabis journey in 2020, as 1st January marked the beginning of the implementation of their new cannabis laws.

The Cannabis Regulation and Tax Act (CRTA) provided the legalization of adult-use cannabis under strictly regulated terms. The Medical Cannabis Pilot Program (MCPP) was expanded, and the new Opioid Alternative Pilot Program (OAPP) was implemented for patients requiring medical cannabis.

According to the Iowa Department of Financial and Professional Regulation (IDFPR), the number of adult-use sales hit $1.5 Billion in 2022, showcasing the industry’s success so far.

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Historical Context

We’ll start with a lesser-known fact that the first cannabis-related encounter the state of Iowa had was long before 2013. Back in 1978, The Department of Human Services was permitted by the state to allow cannabis prescriptions under the Cannabis Control Act. However, they never acted on it. 

So, in Iowa, the trial of medicinal use of cannabis began thanks to the Compassionate Use of Medical Cannabis Pilot Program Act in 2013. The state stipulated that cannabis and cannabis-infused products were legal for patients with debilitating medical conditions. 

Soon after, in 2019, the Medical Cannabis Pilot Program was formally accepted as a permanent fixture in the law and expanded further. Plus, the Iowa Cannabis Regulation and Tax Act (ICRTA) was introduced to legalize the use and sale of recreational cannabis within the same year. 

Types of Cannabis Licenses in Iowa

The state allows businesses complete participation in the cannabis supply chain, which is beneficial for all parties involved. You can obtain a license for the following purposes:

  • Cultivation Center License: Cultivation centers are businesses that cultivate cannabis crops and supply other cannabis businesses in the state. They may also process and transport products if they possess the other licenses required.
  • Craft Grower License: Craft Growers are businesses that may cultivate cannabis as well as dry, cure, and package it as products. The cannabis canopy space must be limited to 5,000 feet and under.
  • Dispensary License: Dispensaries (Adult-Use and Medical) are establishments that deal with the sale of cannabis and cannabis-related products with buyers aged 21 and up.
  • Infuser License: Infusers are businesses that manufacture products incorporating cannabis. Under Iowa law, a cannabis-infused product is a commodity that is not smokable.
  • Transporter License: Transporters are businesses or vocational programs that handle and deliver cannabis and related products.

Note: All businesses (except Transporters) must be classified under “Special Use” by the Zoning Board of Appeals.

How to Obtain a Cannabis License in Iowa?

Step 1. Conduct Comprehensive Research and In-depth Preparatio

  • Market Analysis: Initially, you should judge the overall size of the market and its trends to see potential growth or falls. Later, you can focus on the location you wish to operate in to understand the consumer demographic, economic factors, and area-specific challenges. 
  • Consumer Insights: You should start by considering the nature of your products and who your target consumers would be. If you open your business in a location where the majority age, income levels, or geographic obstacles make sales difficult, you’ll be a sinking ship.
  • Regulatory Proficiency: In Iowa, cannabis and cannabis-infused products are legal according to the federal allowance of THC levels. The CRTA provides guidelines for your registration and operation as a legal business. But there can be hurdles beyond these rules. You must also comply with local laws and authorities, which municipalities or other legal bodies may create. 
  • Competitive Analysis: Considering the limited number of licenses the state of Iowa has allowed, your competition in the market may be less initially but will grow as they increase the caps. To succeed, you can search for the market share, strategies, strengths, and weaknesses of your competitors. Based on your findings, you can analyze potential opportunities and threats for your own business. 
  • Site: Ideally, you should have a spot in mind when you’re planning for the business. It would help if you chose the city or general area according to the value of opportunity present there, but you must finalize a site according to the zoning rules. 
  • Risk Assessment: The cannabis industry is notoriously high-risk. There are regulatory and compliance-based hurdles. Additionally, supply and demand fluctuations can threaten your stability. The best step is being aware of the potential risks you’ll face and having cannabis insurance coverage
  • Network Building: Cannabis entrepreneurs are growing by the day, giving us all the opportunity to network and form a professional community. Knowing the right people will open greater opportunities for you to grow your business and increase your professional experience in the industry.  

Step 2: Develop a Solid Business Plan 

  • Draft a robust business plan detailing your target market, financial projections, and marketing strategies.

Step 3: Assemble the Necessary Documentation 

All license applications require a list of documents which can provide: 

  • Extensive disclosure for principal officers and those with controlling and financial interests in the licensee
  • Ownership and management of the establishment/business
  • Compliance plans
  • Operations plans
  • Proof for Social Equity applicants criterias

Plus, the application should have a cover page that clearly states the applicant’s name, address, mailing address, e-mail, phone number, and intended location.  

Step 4: Submit the Application 

1. How to Apply for a New License

For each license, you’ll fill and submit the relevant application form. You must gather all necessary documents and present them in the order the office describes. Once your application is complete, you must pay the application fee for your license type. 

2. How to Renew Your License

You must submit a renewal application (or prescribed document) and all relevant documents to renew your license. Your premises may be subject to an inspection by the department in charge of your license. You’ll also need to submit a renewal fee, which varies based on your status (social equity applicants benefit from discounted fees).

3. Agent Card Requirements

The applicant must be employed at a cannabis business. The card takes 30 days to be processed and is valid for a year. The applicant must have a clear criminal record, with no serious offenses. All agents must receive an annual 8 hours of training, which includes 2 hours of Responsible Vendor Training.

4. Limitations on Employment

All employees handling cannabis and related products must be 21 years of age or older. Each employee also provides fingerprints to check their criminal record. Employee who directly handle cannabis must own Agent cards.

5. How to Apply for an Agent Card

Start by registering for an account on the DOA website. Create a New Application and opt for “New Agent Registration.” Provide the required demographic information and write about the facility you’ll work in. Then, upload the mentioned documentation and pay the $100 application fee to complete your submission.

6. Payment and Fees

Application fees for Craft Grower, Infuser, and Transporter licenses are $5,000 for normal applicants and $2,500 for those under social equity. You must pay between $5,000-$40,000 once the license is awarded. As for cultivation centers, license application and later renewal are $100,000. You have to pay the same amount once you’ve received the license. 

Step 5: Application Review and Compliance Inspection 

The relevant departments normally issue an applicant notice of their decision within 60 days. The selection is based on a point system, out of which an applicant must score 75% to be a successful candidate. 

Once the successful applicant obtains their location and passes their compliance inspection, they can begin operating their business.

Step 6: Post-Application Steps 

Your application may be approved or rejected due to a limited number of licenses and a high volume of applicants; the process is competitive and doesn’t guarantee each applicant one. 

Once you receive approval, you must remember the compliance regulations for both medical and recreational cannabis use. Here’s a brief about medical cannabis-related law in Iowa:

Buyers must consult a medical marijuana doctor who may recommend cannabis treatment based on medical records. A medical cannabis patient, once diagnosed, can apply for an Iowa medical marijuana card through the Health and Human Services Department.

The medical cannabidiol program overseen by the state ensures that Iowa medical card online applications are processed efficiently. The program focuses on alleviating symptoms associated with various conditions, including chronic pain and other qualifying conditions specified by the state.

The online portal streamlines the application process for eligible individuals seeking to join Iowa’s medical cannabis program. These people must provide their Iowa Medicaid member card for the application process. This step ensures that individuals meet the necessary criteria and are indeed adult patients eligible for inclusion in the medical cannabidiol program.

Caregivers must submit a separate caregiver registration application to assist medical cannabis patients effectively. Note that caregivers must comply with the state’s regulations and possess a valid Iowa driver’s license.

As a cannabis business owner, you must be mindful about who you’re selling your products too as non-compliance can result in strict legal procedures and hefty fines.

Types of Cannabis Licenses in Iowa 

Cannabis businesses in Iowa can hold more than one cannabis business license. They can be similar or varied, depending on the needs of the business. 

However, an individual or entity can only be directly or indirectly involved in up to three business operations.

1. Craft Grower License

Craft Grower licenses are similar to cultivation center licenses but with more operations permitted by the single license. Craft growers may cultivate, dry, cure, and package cannabis products to prepare them for sale. 

Details

  • Can grow, process, and supply cannabis to other licensed businesses 
  • A craft grower licensee can only possess 2 of the same licenses
  • There is a limit of 150 Craft Grower licenses in the state

Requirements

  • An operation must be 5,000 square feet of canopy space (for cultivation in the flowering stage)
  • Based on the performance of the operation, the IDOA may authorize expansions up to 14,000 square feet

2. Cultivation Center License

Cultivation centers grow cannabis as suppliers for product manufacturers or process products for sale. 

Only registered patients or their caregivers are allowed to grow cannabis for their use; so, cultivators are the sole source of cannabis for recreational users. 

Details

  • Cultivation centers can grow cannabis, process it (separate extracts, manufacture infused products, etc.,) and sell cannabis wholesale to other licensed businesses 
  • The state limit for Medical cultivation licenses is 21, and Recreational cultivation Licenses are 30

Requirements

  • Centers can occupy up to 210,000 square feet of canopy space for planting cannabis
  • Cultivators may grow marijuana inside locked and enclosed facilities

3. Dispensary License

Currently, medical dispensaries holding the Early Approval Adult-Use Dispensing Organization License carry out Iowa’s recreational sales. 

New applicants first receive the Conditional Adult-Use Dispensing Organization License, a temporary license making them eligible for the adult-use dispensing license.

Details

  • A dispensary license allows the buying and selling of cannabis and its related products 
  • A business may purchase cannabis from a licensed supplier
  • Dispensaries may only sell cannabis and infused products to buyers above the age of 21

Requirements

  • Dispensing organisations must comply with security provisions of 410 ILCS 705/15-100
  • Dispensaries may not sell alcohol (except for 100ml tinctures)
  • Cannabis products sold must be in sealed or resealable packaging, with the contents clearly mentioned

4. Infuser License

The infuser license is the only manufacturing license available in Iowa. A cannabis-infused product is not meant to be smoked. So, it can be any other product, such as an edible good, topical product, etc. 

Details

  • Cannabis-infused products can include foods, beverages, oils, ointments, topical products, and any other commodities containing cannabis
  • The license only allows businesses to possess cannabis raw materials required for producing their commodities
  • There are 100 licenses available in the state

Requirements

  • An infuser business cannot grow, transport, or partake in any sale of cannabis to users
  • Infuser establishment cannot be in residential areas

5. Transporter Organization License

No business in Iowa can transport any cannabis goods without a transporter license. So, all businesses are advised to apply for a transporter license or work with a licensed transporter company. 

Details

  • Transporters are authorized to move cannabis and cannabis products all around the state
  • Issued in conjunction with the Commercial Occupancy Certificate (COC)
  • There is an unlimited number of transporter licenses in Iowa

Requirements

  • No transporter can carry cannabis across the state boundary
  • Transporter Organization licenses can be stand-alone

Each of these marijuana licenses, including those for adult use cannabis establishments, comes with its own set of challenges and responsibilities. It’s crucial to stay updated with the ever-evolving regulations and the licenses issued, especially those related to adult use cannabis, by regularly checking the official Iowa government pages. As the cannabis industry in Iowa continues to flourish, ensuring compliance and understanding the nuances of each business license and type will pave the way for a successful venture.

Risk and Compliance Factors From AlphaRoot

The cannabis industry, while burgeoning with opportunities, is not without its complexities and inherent risks. Understanding and mitigating these risks is crucial for long-term success. AlphaRoot, a prominent insurance and risk management firm specializing conduct business in the cannabis sector, sheds light on the key risk and compliance factors

Labyrinthine Regulations The cannabis industry is highly regulated, and compliance with state and local laws is paramount for cannabis establishments. Navigating the intricate web of regulations, which can vary significantly from one jurisdiction to another, poses a substantial challenge for cannabis establishments. Failure to comply can result in fines, license revocation, or legal consequences.

Federal Ambiguity Cannabis remains illegal at the federal level in the United States, despite state-level legalization of recreational marijuana. This dichotomy creates uncertainties and exposes businesses that sell recreational marijuana here to potential federal enforcement actions.

Cash-Intensive Operations Due to federal banking restrictions, many cannabis businesses operate primarily in cash. This not only presents security risks but also complicates financial management and taxation.

Taxation Challenges Cannabis businesses face unique tax challenges, including limitations on deductions and potential audits. Understanding and complying with tax regulations is essential to avoid financial penalties.

Theft and Robbery Cannabis businesses are susceptible to theft and robbery due to the high value of their products. Implementing robust security measures at a marijuana cultivation facility, including surveillance systems and secure storage, is vital to mitigate these risks.

Cybersecurity As with any industry, cannabis businesses are vulnerable to cyberattacks. Protecting sensitive customer data and business information is critical.

Product Liability Claims Ensuring the safety and quality of cannabis products is crucial to prevent product liability claims. Contaminated or mislabeled products can lead to legal and financial repercussions.

Testing and Quality Assurance Collaborating with reputable independent testing laboratory and facilities, as required by regulations, is essential to verify the safety and potency of cannabis products. Consistent quality control is essential to maintain consumer trust.

Saturated Markets in regions with a high concentration of cannabis businesses, competition can be fierce. Navigating market saturation requires effective differentiation and marketing strategies.

Price Volatility The price of cannabis products can fluctuate significantly, impacting profitability. Businesses must adapt to market dynamics and price changes.

Resource Intensity Cannabis cultivation and processing can be resource-intensive, including water and energy consumption. Businesses need to address sustainability concerns and adhere to environmental regulations.

Waste Management Proper waste disposal and recycling practices are essential to minimize environmental impact and meet regulatory requirements.

Talent Shortages the cannabis industry often faces challenges in recruiting and retaining qualified personnel due to its specialized nature. Employee turnover can disrupt operations.

Training and Compliance Businesses must invest to ensure employees are well-informed about compliance and safety protocols.

Expert Insights

Isaac Bock, a well-known figure in the cannabis sector, emphasizes that success in Iowa’s cannabis industry hinges on keeping cannabis establishment of regulations, maintaining ongoing community involvement, and upholding the highest standards of product quality.

Conclusion

The state of Iowa has created a well-structured and strictly regulated market. The regulatory system pays off, as the existing market is controlled and produces significant revenue for the government. Now, they’re working on expanding their adult-use market with deserving new applicants like you.

FAQ Section

Q. How Do I Renew My Iowa Cannabis Establishment License?

You can renew your cannabis business license at the department that issued it. If your business has been found to be non-compliant or your previous license has been revoked, you may not receive a new license. 

Q. What Are the Tax Rates for Cannabis in Iowa?

The wholesale of cannabis by growers is taxed at 7%. For recreational cannabis, there’s a 10% tax on merchandise with less than 35% THC, a 20% tax on cannabis-infused products, and a 25% tax on any commodities with more than 35% THC. Plus, local governments can impose an excise tax of up to 3%. 

Q. What Are the Advertising Guidelines for Cannabis in Iowa?

Generally, public areas and state-owned buildings are off-limits for cannabis advertisement. Plus, no cannabis advertisement can display visuals of cannabis.

Q. How Can I Work in the Cannabis Industry in Iowa?

To work in the cannabis industry in Iowa, you must be 21+. Individuals handling cannabis are called “Agents” and must possess an Agent Identification Card according to the nature of the business.

Additional Resources

Visit the official websites of regulatory authorities and learn of the ever-evolving marijuana landscape in Iowa.