Marijuana Licenses in California – Part 3: Manufacturing

The Manufactured Cannabis Safety Branch (MCSB) of the California Department of Health is responsible for licensing cannabis manufacturers in the state. The MCSB offers four types of licenses for cannabis manufacturers:

1. Extraction using a volatile solvent, including but not limited to butane, propane, or hexane
2. Extraction using a mechanical method or non-volatile solvent, including, but not limited to, CO₂, ethanol, water, or food-grade dry ice, cooking oils, or butter.
3. Infusions
4. Packaging and labeling

According to the Cannabiz Media License Database, there are currently 521 extraction licenses, 55 infusion licenses, and 23 packaging licenses in California, which are broken down between 342 medicinal licenses and 257 adult-use licenses. The chart below shows a more-specific breakdown between the four license types listed above as well as medical use as compared to adult-use licenses.

In total, marijuana manufacturing licenses are in 28 of the state’s 58 counties, but two thirds of the marijuana manufacturing licenses in California (66%) are in just five of the state’s 58 counties: Alameda County (19%), Los Angeles County (15%), Riverside County (14%), Humboldt County (10%), and Monterey County (7%).

To go even further, 90% of California’s marijuana manufacturing licenses are in just 12 of the state’s 58 counties: Alameda County, Los Angeles County, Riverside County, Humboldt County, Monterey County, Santa Cruz County (6%), San Bernardino County (4%), Sacramento County (3%), Sonoma County (3%), San Francisco County (3%), San Diego County (3%), and Santa Clara County (3%).

If we examine the license concentration within cities, half of all marijuana manufacturing licenses in California (51%) are in only 10 cities. Oakland holds the most at 97 licenses, which is more than three times as many manufacturing licenses as the next highest city, Cathedral City, which has 32 licenses.

The 10 cities where half of California’s marijuana manufacturing licenses are concentrated are as follows: Oakland (16%), Cathedral City (5%), Arcata (5%), Desert Hot Springs (5%), Adelanto (4%), Los Angeles (4%), Lynwood (4%), Sacramento (3%), Coachella (3%), and San Francisco (3%).

The geographical concentration of volatile extraction licenses is a bit different than the concentration of marijuana manufacturing licenses overall, which can be attributed to the fact that some communities don’t want this type of manufacturing facility in their backyards. In total, volatile extraction licenses can be found in 14 counties and more than half (56%) are in only three counties: Los Angeles County (31%), Santa Cruz County (15%), and Humboldt County (11%).

Unlike California’s marijuana cultivation licenses, where a small number of companies have a large number of licenses, there are no clear dominant players in cannabis manufacturing based on current license distribution. The 599 manufacturing licenses in California are held by 351 license holders. 113 marijuana manufacturing license holders have just one license while 446 manufacturers have two or more manufacturing licenses.

Of the license holders who have more than one manufacturing license, four have four licenses, two have three licenses, and 232 have two licenses. What we’ve observed is that license holders with multiple licenses typically hold a strategic pair of licenses. For example, a license holder with an Adult-Use Infusions licenses tend to also have a Medicinal-Use Infusions license.

When it comes to cannabis manufacturing, most license holders are limited by their size and capacity, not by acreage like cultivation license holders are. Therefore, there is no real necessity to hold a lot of licenses. Instead, manufacturers will generally seek to obtain licenses for adult use and medicinal use in the manufacturing areas they specialize in.

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