Cannabis Business

Non-Storefront Retailer (Delivery), Cultivators, Volatile and Non-Volatile Manufacturer, Distributor, and Testing Laboratory business types are not subject to the lottery system. There is no limitation on the number of use permits allowed for these commercial cannabis business types. Interested parties may apply by visiting the City of Stockton Permit Center.

All applicants must meet Land-Use requirements for the property, have a Business License for the business itself, a Commission Use Permit (Administrative Use Permit for Non-Storefront Retail), an Operator Permit for the business operator, Owner, and Employee Permits, and a Business License Certificate. An applicant must obtain all City-issued permits and State licenses.

For more information regarding these types of permits and requirements, see Stockton Municipal Code Section 16.80.195.

The City of Stockton has the following components of the Equity Program:

• Equity Pool in the Annual Commercial Cannabis Business Lottery
• Workforce Diversity Incentive Program
• Technical Assistance and Financial Incentives Program

Each year, the City will select at least two (2) Equity Applicants using the annual lottery process for the following business types: Retail Storefront and Microbusiness.

Approved Equity lottery applications are placed into the lottery in both the Equity Pool and the General Pool, providing increased odds of being selected during the lottery drawing process. Equity applicants must meet the requirements outlined in SMC 16.80.195 (K).

The Workforce Diversity Incentive Program is a voluntary program for Commercial Cannabis businesses. Businesses can apply for the program during the business license application process and the annual business license renewal process.

• To qualify, at least 50 percent of the business's employees must reside within the SB 535 Disadvantaged area of the City of Stockton boundaries or reside in the Kelley Drive Neighborhood area. Commercial Cannabis Businesses must meet a 50% diverse workforce requirement during the time of application for the business license or at the time of renewal. Neighborhood addresses can be found here.
• If the threshold is met, the commercial cannabis business will be provided a 50 percent reduction of the total amount due in taxes based on estimated gross receipts at the time of application for a new license or actual gross receipts provided at the time of renewal of business license.
• Existing Commercial Cannabis Businesses will be able to participate in the voluntary program at the time of their annual business license renewal.

Applicants who qualify as equity applicants, per requirements set forth in SMC 16.80.195, regardless of cannabis business type, are subject to the following additional resources, provided by the City, subject to availability of resources:

• Technical Assistance (i.e., entrepreneur seminars or courses, etc.)
• Financial Incentives (i.e., zero/low-interest rate loans or fee waiver)

All equity applicants must remain over 50% owner of the cannabis business for at least five (5) years from the date of the operator's permit approval.

Equity Applicants may be allowed to sell their interest/business prior to the 5-year requirement if they encounter undue financial hardship. Qualifying undue financial hardship is as follows:

1. Equity Applicant's debt exceeds the amount earned monthly to run the business evidenced by a letter explaining the financial hardship and documentation of financial burden; or
2. Equity Applicant's debt exceeds the amount earned monthly to run the business due to circumstances beyond the Equity Applicant's control, evidenced by a letter explaining the financial hardship and documentation of the hardship. Circumstances beyond the Equity Applicant's control include injury, illness, natural disasters, death, divorce, and military deployment.

All equity applicants shall annually report City-requested metrics for tracking purposes for a minimum of five (5) years from the date of the operator's permit approval.

Each applicant is responsible for reviewing the Stockton Municipal Code and submitting a complete application compliant with all laws and regulations.

To start a cannabis business in Stockton, the City requires these permits:

• Land Use Permit
• Provides authorization for land use and location requirements
• Issued by the Community Development Department
• Planning Application (Commission Use Permit and Administrative Use Permit)
• Business License
• Required for all businesses within the City of Stockton
• Issued by the Administrative Services Department, Business Licensing Division
• Business License Application
• Operator's Permit
• Required for the business operator
• Issued and approved by Stockton Police Department
• Delivery (Retail, Non-Storefront) Security Guidelines
• Operators Permit Application

The Annual Fee Schedule for FY 2023-24 has been adopted:

• Application for Permit to Operate - $3,570.00 (page 30)
• Permit to Operate - $16,973.00 (page 30)

In accordance with SMC 5.99.010, operators are required to pay a semiannual Commercial Cannabis Business Tax based on the revenue (gross receipts) received. Every business operating as a cannabis business shall pay a semiannual business license tax to the City in the following amount:

• Retail Storefront (Dispensary) — 5%
• Non-Storefront Retail (Delivery Only) — 5%
• Cultivation — 5%
• Manufacturing (Volatile and Non-Volatile) — 3%
• Distribution — 1%
• Testing Laboratories — 0%
• Microbusiness — 5%

Cannabis businesses must apply for semiannual business licenses. Business license tax required shall be due and payable on the first day of January and July of each year.

Cannabis Temporary Events occur in designated venues identified in SMC 12.72.390 which includes the sale and on-site consumption of cannabis products.

To apply for a permit for Cannabis Temporary Events, please use the Special Events Permit through Community Services starting July 23, 2020.

For information on Cannabis Temporary Events, visit the Community Services Special Events website.

There are several sections within the Stockton Municipal Code on Commercial Cannabis Businesses. 

• SMC Title 5 - Chapter 5.98, 5.99, and 5.100
• Development Code Title 16 - Chapter 16.20, Section 16.20.020; Chapter 16.64, Section 16.64.040; Chapter 16.80, Section 16.80.195; and Chapter 16.240, Section 16.240.020

The most recent changes were approved on March 1, 2022 and went into effect on March 31, 2022.

• City Council Video